PREGNANCY COSTS J.C. PENNEY $40,000 - WHAT WILL IT COST YOU?

On January 16, 2014, the EEOC issued a press release advising the public that J.C. Penney had agreed to pay $40,000 to settle a pregnancy discrimination lawsuit brought by the EEOC. In the lawsuit, the EEOC charged J.C. Penney refused to hire a female applicant for a salon position after she told the manager she was pregnant. Such actions are in violation of the Pregnancy Discrimination Act ("PDA"). The EEOC tried to resolve the matter without litigation, but was unsuccessful. The settlement also requires J.C. Penney to implement an equal employment opportunity training and reporting program including posting of anti-discrimination notices.

The EEOC reports 4,901 pregnancy discrimination charges were filed in FY2006, up approximately 1,000 cases over FY 1997. However, there was a jump in cases beginning FY2007 that has remained high. In FY2011, 5,797 complaints were filed with the EEOC. Importantly, in FY 2011, employers paid out $17.2 million in monetary benefits, excluding amounts awarded in litigated cases, arising out of pregnancy discrimination claims. Such cases are costly not just in terms of cash outlay, but also in terms of employee morale, workplace environment and employer reputation.

Are you next? The PDA was passed in 1978 as an amendment to Title VII of the Civil Rights Act of 1964. Unfortunately, after such an extended period of time, employers become lured into a false sense of security that everyone understands what they can and cannot do in the workplace. That simply is not true and employers who want to avoid costly claims such as that experienced by J.C. Penney must be proactive.

Construction companies are not immune to PDA claims. There are ways for all employers to reduce the risks to such claims. If you do not have a plan in place to address discrimination in the workplace, contact an attorney experienced in employment law to assist you in developing a program.

Dismissal of claim for sexual harassment does not mean the battle is over

Consider these facts: You hire a female to work as your leasing manager for your apartment complex on Monday, August 3rd. The manager’s workplace is a desk in a small front office. During her first week, two male maintenance workers enter her office and hover over her at her desk and "sniff" her. The two men sometimes go to the office alone and at other times go together. Despite being told several times by the female worker that their behavior was bothering her, the men continued the conduct. In fact, over the course of her first few days, the men "sniffed" her twelve times each.

On Wednesday of this first week of employment, the female worker complained to her supervisor. The supervisor responded to "let it slide" because "you know how men are like when they get out of prison." By Thursday, the supervisor decided to have a meeting to air the complaints. In the meeting, the female worker said that she did not like the men "sniffing" her. One maintenance worker claimed to have a medical condition, while the other worker stated that he "needed to get a release."

How would you handle this situation? What do you do now? In this case, the supervisor fired the female worker the same afternoon as the group meeting. The supervisor gave no reason for the firing. Unsurprisingly, the female worker sued for sexual harassment and retaliation. Before the case was ever tried by a jury, the lower court granted summary judgment in favor of the employer. The lower court determined that the conduct of the maintenance worker was not objectively unreasonable so as to create a hostile work environment so there could be no sexual harassment. The lower court then concluded that, because a reasonable person would not believe that sexual harassment had occurred, the female could not have been fired for complaining about an unlawful employment practice and thus her claim of retaliation was unsupported.

The employer was probably rejoicing at this point, but the celebration didn’t last long. The U.S. Court of Appeals for the Fifth Circuit in Royal v. CCC&R res Arboles, L.L.C. considered the case on appeal. Click here to read the decision.  For whatever reason, the female worker did not appeal the sexual harassment claim itself, but only appealed the claim of retaliation. Needless to say, the Fifth Circuit reversed the judgment and sent the retaliation claim back to the lower court for trial.

In evaluating the case, the Fifth Circuit first discussed whether the maintenance workers’ conduct could constitute an unlawful practice under Title VII of the Civil Rights Act of 1964. The conclusion was that a reasonable jury could determine that the workers’ conduct violated Title VII because it was carried out in a small, confined space over a short period of time with multiple instances of such behavior. The appeals court concluded that, in fact, "the only thing interrupting this conduct seems to have been [the female worker’s] termination." The court then addressed whether the female could have been fired in retaliation for her reporting of the conduct. The employer claimed the female was fired for "swatting a fly harder than was necessary and slamming a door." The court noted that those reasons are "legitimate," although they may not be "plausible." However, the termination of the female worker on the same day as the meeting was clearly an adverse employment action that, combined with all the other factors, could lead a reasonable jury to believe that the termination was done in retaliation. Therefore, the case was sent back to the lower court for a jury to decide.

If you are thinking that this must be a very old case because the facts are so far-fetched, think again. These events occurred in 2009 and the Fifth Circuit just issued its opinion on November 21, 2013. Even though Title VII has been around since 1964, it does not mean that employees know what they should and should not do in the workplace, nor does it mean that supervisors know how to properly handle complaints. Many employers become trapped in a false sense of security that everyone knows how to act. Don’t be one of those employers. A training program for all employees—both workers and supervisors—will educate your workforce on acceptable behavior and will go a long way in defending against claims of this kind.

If you need assistance training your workforce you should call your attorney to review your current program, develop a training session for you and do on-site training at your convenience. Don’t wait until you face a claim in court to decide to be proactive!

Who can be a "Qualifying Party" for a Contractor's Certificate of Responsibility - Update

On May 13, 2009, I published a blog titled "Who can be a "Qualifying Party" for a Contractor’s Certificate of Responsibility". [Click to view blog post] The blog article states that the requirement for a contractor’s Certificate of Responsibility for a public contract is $50,000 and a private contract is $100,000. Since the writing of that blog article, the statute has been amended and effective July 1, 2010, a Certificate of Responsibility is required on all contracts, both public and private, in excess of $50,000.

Who Can be a "Qualifying Party" for a Contractor's Certificate of Responsibility?

To perform any public contract of at least $50,000 or private contract of at least $100,000, a contractor must hold a Certificate of Responsibility issued by the Mississippi State Board of Contractors.  It makes no difference whether the "contract" to be performed is a prime contract or subcontract at any tier.  Miss. Code Ann. 31-3-15.

Moverover, Mississippi law does not permit the "borrowing" of certificates of responsibility.  Only a responsible managing officer, employee, or member of the executive staff of the applicant for the certificate can serve as its qualifying party.  The statutes creating the State Board of Contractors, which governs the licensing of contractors, and that Board's regulations implementing those statutes are designed to prevent one person from serving as the qualifying party for entities in which he or she has not personal or managerial stake or responsibility.  To allow otherwise would dilute the requirements which are meant to ensure the integrity, financial capacity, and technical capability of all entities performing construction in Mississippi.

Miss. Code Ann. 31-3-1 defines a "certificate of responsibility" as a "certificate numbered held by a contractor issued by the board under the provisions of this chapter after the payment of the special privilege license tax..."

Miss. Code Ann. 31-3-13(a) defines who can be the "qualifying party" or an applicant of a certificate of responsibility, whether such application is for a new certificate or a renewal certificate.  Specifically, it states:

The board shall take applicants under consideration after having examined him or them and go thoroughly into the records and examinations, prior to granting any certificate of responsiblity.  If the applicant is an individual, examination may be taken by his personal appearance for examination or by the appearance for examination of one or more of his responsible managing employees; and if a co-partnership or corporation or any other combination or organization, by the examination of one or more of the responsible managing officers or memebers of the executive staff of the applicant's firm, according to its own designation.

The intent clearly is that a qualifying party be a responsible managing employee for or officer of the applicant, whether it's a sole proprietorship or corporation.  The true "responsibility" for which the certificate is issued cannot be determined otherwise.  In construing this requirement the State Board of Contractors promulgated the following regulation which, again, leaves no doubt that the "qualifying party" must be intimately involved in the management and/or ownership of the entity claiming him or her as their qualifying party.  Rule L states:

When the qualifying party terminates employement with the Certificate holder, the Mississippi State Board of Contractors must be notified in writing, by the qualifying party and the Certificate holder, within thirty (30) days of the disassociation and another party must qualify within one hundred eighty (180) days or Certificate holder will be subject to suspension or revocation of its Certificate of Responsibility.

(Emphasis added).

Thus, where a purposed "qualifying party" for Company A is neither a managerial employee nor an officer of that company but, in fact, owns or is the officer of another, unrelated Company B, but Company B routinely serves as a subcontractor to Company A, Company A and its purported "qualifying party" are in violation of MIssissippi law and the Rules and Regulations of the State Board of Contractors.  (This is typically done where owners of two companies do not want to commingle business assets, finances, or interests, but they do want to pursue and perform contracts together.)  Company A's Certificate of Responsibility is null and void as a matter of law.