Titling

On April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued important new guidance impacting the way employers use criminal arrest and conviction records of prospective employees to make hiring decisions.  Motor carriers (including last-mile carriers, household goods carriers, and couriers) dealing directly with homeowners, residents, and retail consumers are quite often required by their retailer customers to perform criminal background checks.  Although the EEOC’s guidance applies to “employers” as opposed to contractors of owner/operators, caution and attention are warranted.  Employers seeking to avoid liability for claims of discrimination under the disparate impact and disparate treatment prohibitions contained in Title VII are advised to evaluate their application and hiring policies to ensure compliance with the EEOC’s new guidance.

Under the EEOC’s new guidance, an employer’s (e.g. motor carrier) blanket policy or practice of excluding applicants with criminal records from employment may violate Title VII to the extent the policy strays far from Federal Motor Carrier Safety Regulations and the commercial motor vehicle driver disqualifications listed at 49 U.S.C. § 31310.  Instead, the EEOC now requires narrowly-tailored individualized assessments, or “targeted screens,” of applicants that consider the nature of the crime, the time elapsed since the arrest or conviction, and the specific responsibilities of the job for which the applicant is applying. 

With the new guidance in place, employers should expect the EEOC to step up its investigative and enforcement efforts, particularly to the extent blanket criminal background policies raise the “pattern or practice” flags most noticeable to the EEOC.  Motor carriers that “employ” drivers and helpers to conduct in-home deliveries should therefore evaluate their application and hiring policies related to the use of criminal arrest and conviction records to ensure narrow tailoring and individualized assessments in light of the new EEOC guidance.  Even contractor-model motor carriers should use reasonable efforts to avoid overly-broad screening of owner/operators.  For additional information on the new EEOC guidance, or to discuss implementing a policy that minimizes your company’s exposure on a claim of discrimination in its hiring practices, contact Greg Feary, Jim Hanson, David Robinson, or Jack Finklea in the Firm’s Indianapolis office at (317) 637-1777.
 

The Supreme Court provided good news to transportation companies facing class action litigation today by issuing an opinion in the Wal-Mart v. Dukes case that reverses the Ninth Circuit Court of Appeals' class certification decision.  In a 5 to 4 ruling, the Court held that plaintiffs failed to demonstrate commonality under Rule 23(a)(2), and unanimously held that the back pay claims could not be properly certified under Rule 23(b)(2).  The decision will make it more difficult for plaintiffs to succeed in certifying class actions going forward.

This decision is a victory for any transportation company faced with a class action lawsuit, as the Court's decision ostensibly makes it more difficult for a putative class action to be certified going forward.  This is especially so in employment law class actions in which the plaintiff cannot point to a specific employment practice of the motor carrier or other transportation entity that violates the law, but rather relies on anecdotal evidence to satisfy the rigid requirements of Rule 23.  How this decision will affect other transportation class action cases such as those involving the Truth-in-Leasing Regulations is unknown at this juncture, but without proof of a class wide policy that violates the law the Wal-Mart case makes clear that certification will be difficult to obtain.

In Wal-Mart v. Dukes, the plaintiffs — a group of 1.5 million current and former Wal-Mart employees — claimed that while Wal-Mart had no express corporate policy against the advancement of women, Wal-Mart's decision to give managers discretion to make pay and promotion decisions  itself was a discriminatory policy.  That policy resulted in male employees earning more money than their female counterparts and holding a disproportionate number of leadership positions that could be proven on a class wide basis according to the plaintiffs.  Wal-Mart maintained that the class members’ claims are not similar enough to justify certifying them as a class, as the sheer number of class members and stores, along with variations in positions the plaintiffs held and differences in managers at each location militated against litigating the case on a class wide basis.

The Court agreed.  Focusing on the commonality prong of Rule 23, the Court mentioned that while the purported policy could possibly form the basis of a disparate impact claim under Title VII of the Civil Rights Act of 1964, it does not follow that every potential class member has a common claim as is required to proceed with a class action case.  To prove commonality under Rule 23, the plaintiff must demonstrate that each class member “suffered the same injury” according to the Court, which the plaintiffs could not do because the employment decisions complained of were admittedly left to the discretion of each store manager.  "Respondents wish to sue for millions of employment decisions at once,” Justice Antonin Scalia said. “Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.” Prior to this ruling, the commonality requirement of Rule 23 was often glossed over in any class certification analysis.  This decision establishes a roadmap for approaching this issue going forward and indicates a renewed focus on commonality is warranted in any class certification inquiry. 

The Court also held that a claim for monetary relief could not be certified under Rule 23(b)(2) when, as here, the monetary relief sought is not incidental to the requested injunctive or declaratory relief.  Rule 23(b)(2) applies when the party opposing the class has acted or refused to act on grounds that apply generally to the class so that final injunctive or declaratory relief is appropriate for the entire class.  The Court's ruling clarifies that Rule 23(b)(2) certification is only appropriate when a single, indivisible remedy would provide relief to each class member, and that when individualized monetary damages are appropriate such claims “belong in Rule 23(b)(3)”, which is arguably a more difficult certification standard to meet.

Finally, the Supreme Court also rejected plaintiffs' theory that back pay could be determined with a "Trial by Formula" calculation, i.e. that a sample of class members could be selected, and statistical modeling could yield a result for the entire class wide recovery without further individual proceedings. Such a method of calculating damages would violate the Rules Enabling Act according to the Court, as a class cannot be certified on the premise that an employer "will not be entitled to litigate its statutory defenses to individual claims."
With the renewed focus on the commonality prong of Rule 23 and the favorable findings regarding Rule 23(b)(2), the class action landscape is certainly more favorable to employers than before.  And while employers should be pleased with the decision, it does not provide a silver bullet to defeat class certification.  The bar for plaintiffs’ counsel to meet to certify a case however, has certainly been raised. 

 
The July 1, 2011 deadline for certain motor carriers and equipment leasing companies (including motor carriers that offer equipment purchase programs to owner-operators) to qualify for relaxed enforcement of the California Air Resources Board (“CARB”) greenhouse gas emission rule is fast approaching.  Under the rule, subject to certain limited exceptions, 53’ trailers operated in California (regardless of where the trailer is registered or based) must meet certain minimum requirements aimed at achieving increased fuel mileage.  The rule is already in effect for 2011 and newer model year trailers.  Compliance for 2010 and older trailers is not required until January 1, 2013.  However, CARB is providing trailer owners with the option of staggering implementation of the rule so that 100% compliance for trailers operated in California is not required until January 1, 2016.  In order to qualify for this staggered implementation, a detailed fleet compliance plan must be submitted to CARB by July 1, 2011. 

The July 1, 2011 deadline is only for owners with fleets of 21 or more trailers (regardless of the number of trailers that will operate in California).  For smaller fleets of 20 or fewer trailers, the plan does not need to be submitted until July 1, 2012.  Also, while the rule speaks in terms of “owners,” a lessee may be considered the owner under the rule depending on whether the lessor has issued notifications regarding compliance (in which case, the lessee will be deemed to be the owner of the trailer).  As such, motor carriers that lease equipment may have the obligation to comply notwithstanding the fact they do not hold title to their trailers.

On December 7, 2010, the Supreme Court heard oral argument in Thompson v. North American Stainless regarding the scope of Title VII’s protection against retaliation.  Title VII prohibits discrimination by employers on the basis of race, color, religion, sex or national origin.  In addition, Title VII prohibits retaliation against employees who oppose an unlawful employment practice or engage in protected conduct, such as asserting a complaint of discrimination.

In Thompson, the Supreme Court will determine whether an employer violates Title VII’s anti-retaliation provision by firing the fiancé of an employee who complained about discrimination and, if so, whether the fired employee may sue.  If the Court concludes Title VII prohibits an employer from retaliating against an employee by terminating another employee, one question the Court will likely consider is whether it should require a specific relationship between the two employees before liability will be established.  For example, the Court could hold that Title VII’s protection against retaliation only applies to an employer’s adverse action against a relative. 

The decision could potentially have a substantial impact on how all employers make employment decisions, particularly if the Court takes an expansive view of the relationship that is necessary to support liability.  A decision is expected by the end of June.

Effective as of November 11, 2010, the California Highway Patrol has adopted regulations affecting motor carriers usinig equipment they do not own.  The language closely mirrors the federal leasing regulations found at 49 CFR 376 ("Lease and Interchange of Vehicles" to Title 13).  Under the new California regulations, all intrastate carriers using owner-operators on a non-temporary basis will have a new regulatory obligation, and CHP may now enforce the provisions of CFR 376 "Lease and Interchange of Vehicles" on interstate carriers. This includes the authority to examine lease agreements in order to determine which entity (overlying motor carrier or underlying independent contractor) is responsible for vehicle safety and maintenance during BIT inspections.
 

Note that while they are effective now, subsection (g) of the regulations provides for a transition period:

“For those business entities which have engaged in some sort of vehicle leasing relationship enacted prior to the filing of these regulations, the terms of these regulations will be met no later than June 30, 2011.”

Cal. Admin. Code Tit. 13, § 1235.7(g) (Westlaw 2010).

The EEOC's final rule implementing Title II of GINA, which bars the use of genetic information in the employment context and restricts employers from seeking or disclosing genetic data, appeared in the Federal Register on Nov. 9 and becomes effective on Jan. 10, 2011.

A major concern by companies prior to the EEOC's interpretation of the law was whether GINA would impose an barrier for businesses looking to offer programs to employees to help improve their health or prevent disease.  The EEOC stipulated that employers will be able to request genetic information as part of a voluntary wellness plan without violating the law.

However, the question of whether employers face legal liability under GINA if they inadvertently elicit genetic information remains open.

The EEOC's proposed rule, which came out in March 2009, said that inadvertently requesting or requiring family medical history did not violate GINA, an exception Congress had included in the language of the law to address the so-called water cooler situation, in which an employer unwittingly receives genetic information, either through a casual conversation or overhearing co-workers talking.

Subsequent public comments on the inadvertent acquisition issue highlighted the need for more clarity concerning the exception, and the EEOC's final rule seeks to provide that clarity by including two examples aimed at showing how the exception applies.

An employer that inadvertently acquires genetic information about someone's family member in response to a general question can't follow up with probing questions, such as whether other family members share a particular condition, the final rule stipulates.

In addition, the final rule clarifies that the inadvertent acquisition exception applies not only in the physical confines of the workplace, but also in the virtual realm. If a supervisor or manager inadvertently learns genetic information through a social media platform, such as Facebook, that he or she has permission to access, then the exception applies.

The EEOC's final rule clarifies the agency's stance on employers obtaining genetic information during the course of implementing programs designed to promote employees' health.

Such programs — which can reduce a company's health care costs — include employee smoking-cessation programs, free health screenings or programs that aim to have a worker meet a specific health goal, like a certain cholesterol level.

The EEOC's proposed rule stated that employers could request genetic information without violating GINA as part of a "voluntary wellness program," but the question of whether an employer could offer inducements for participation and still call the program voluntary remained open.

The final rule provides that employers can offer inducements, but not specifically for genetic information. Companies will remain compliant with Title II if they reward individuals for completing a health risk assessment that includes questions about family medical history or other genetic information, as long as those questions are specifically identified and it is made clear that the individual doesn't have to answer the questions on genetic information in order to receive whatever inducement is being offered.

The Ninth Circuit on Monday affirmed a lower court's grant of summary judgment to Dollar Tree in a lawsuit brought by former employee  who was given less paid leave than she requested in order to tend to her ailing mother, saying the company was not a successor to her previous employer and she had not worked at Dollar Tree long enough to be eligible for leave under the FMLA.

The question of when a new employer is a successor-in-interest to a former employer under the statute had only been addressed by a handful of district courts.  The definition matters because an employee is not eligible for the protections of the FMLA until he has worked for a particular employer for at least 12 months, the Ninth Circuit's opinion stated.

According to the Ninth Circuit's ruling, Dollar Tree opened its store after four weeks of renovations and hired Sullivan and only one other former Factory 2-U employee to work there after Sullivan filled out a job application.

Considering Sullivan's appeal, the Ninth Circuit weighed the eight factors laid out by the Department of Labor to determine whether a company is a successor-in-interest under the law.

The court concluded that some factors slightly suggested successorship, but that on balance the factors strongly demonstrated that, as a matter of law, Dollar Tree was not a successor-in-interest to Factory 2-U — noting that when it opened its store Dollar Tree brought in many of its own employees, trained employees in its own methods, changed the plaintiff’s job title and responsibilities and brought in all new inventory.

Taking into account the regulatory factors as a whole, the interests of the plaintiff and Dollar Tree and the policy goals of the FMLA, the appeals court found that Dollar Tree is not a successor-in-interest to Factory 2-U, and upheld the summary judgment ruling.

Final revisions to the DOT regulations governing drug and alcohol testing requirements have been announced. The revisions require testing for additional substances and lower a number of existing thresholds for positive results.

The list of additional substances to be tested for are derived from recently adopted HHS requirements, and add three amphetamine type substances--MDMA, MDA, and MDEA -- as well as 6–Acetylmorphine (6-AM), a marker for heroin use, to the list. In addition, the DOT is adopting the HHS-lowered laboratory testing cutoffs for cocaine, amphetamines, and methamphetamines. The DOT stated that it expects “a significant number of confirmed positive test results for cocaine” and “a 40% increase in screening and a 30% increase in confirmation rates" for amphetamines and methampetamines.  The revised DOT regulations, contained in Part 40 of Title 49 of the Code of Federal Regulations, become effective October 1, 2010. The complete announcement appears at 75 Fed. Reg. 49850 (Aug. 16, 2010).
 

This week, in Murray v. Principal Fin. Group, Inc., __ F.3d __, No. 09-16664, 2010 WL 2902512 (9th Cir. Jul. 27, 2010), the Ninth Circuit held that an insurance agent was an independent contractor and not an employee for purposes of Title VII.

In its opinion, the court specifically addressed Title VII, but generally referred to its analysis as a clarification of the appropriate test to apply in the federal statutory context, mentioning ERISA and the ADEA in addition to Title VII.  The court found the appropriate test to apply is the “common law agency approach.”  Id. at *2.  As such, when determining whether an individual is an independent contractor or employee in this context, the court found it must apply a twelve-factor test, placing emphasis on whether the hiring party has the right to control the manner and means by which the work is accomplished.  Id. (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992).

The Motor Carrier Protection Act of 2010 (Senate Bill S. 3483) was introduced and referred to the Senate Committee on Commerce, Science and Transportation on June 14, 2010.  If passed, Part 139 of Title 49 of the United States Code would be amended to add more regulation and oversight of transportation brokers and freight forwarders, with the purported goal of protecting smaller carriers from fraudulent or abusive brokers.

The bill imposes a number of new requirements on carriers, brokers and forwarders.  Among other things, the bill: 

• Increases the broker bond from $10,000 to $100,000 and applies the bonding requirement to freight forwarders;
• Clarifies that trucking companies must have broker authority or freight forwarder authority in addition to their motor carrier authority to arrange freight through another carrier for compensation; and 
• Creates an annual operating authority renewal requirement for brokers and freight forwarders; and requires the FMCSA to revoke operating authority that is not renewed annually.

The full text of the bill can be viewed at:  http://www.govtrack.us/congress/billtext.xpd?bill=s111-3483.