Latest on Legislative and Regulatory Issues

1. Latest on Legislative and Regulatory Issues Nita Beecher Employment Law & Litigation Group October 4, 2012

2. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin On the recommendation of National Equal Pay Enforcement Task Force to evaluate data collection needs and capabilities the EEOC asked National Research Council Committee on National Statistics (CNSTAT): • Convene a panel of experts to review methods for measuring and collecting pay information from U.S. employers for the purpose of administering Section 709 of the Civil Rights Act of 1964, as amended.  • Evaluate currently available and potential data sources, methodological requirements, and appropriate statistical techniques for the measurement and collection of employer pay data.  • Consider suitable data collection instruments, procedures for reducing reporting burdens on employers, and confidentiality, disclosure, and data access issues.  • Issue a report with findings and recommendations on what data the EEOC should collect to enhance wage discrimination law enforcement efforts, which will assist the EEOC in formulating regulations.

3. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin The panel selected by the National Academies was: • John M. Abowd (Chair), Department of Economics, Cornell University • H. Juanita (Nita) Beecher, Mercer LLC • Marc Bendick, Jr., Bendick and Egan Economic Consultants, Inc. • Charles C. Brown, Department of Economics, University of Michigan • Elizabeth Hirsh, Department of Sociology, University of British Columbia • Mark R. Killingsworth, Department of Economics, Rutgers University • Jonathan S. Leonard, Haas School of Business, University of California, Berkeley • Janice F. Madden, Wharton School, University of Pennsylvania • Aleksandra (Sesa) Slavkovic, Department of Statistics, Pennsylvania State University • Finis R. Welch, Welch Consulting • Valerie Rawlston Wilson, National Urban League Policy Institute

4. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin • Recommendation 1: In conjunction with the Office of Federal Contract Compliance Programs of the U.S. Department of Labor and the Civil Rights Division of the U.S. Department of Justice, the U.S. Equal Employment Opportunity Commission should prepare a comprehensive plan for use of earnings data before initiating any data collection. • Recommendation 2: After the U.S. Equal Employment Opportunity Commission, the Office of Federal Contract Compliance Programs, and the U.S. Department of Justice complete the comprehensive plan for use of earnings data, the agencies should initiate a pilot study to test the collection instrument and the plan for the use of the data. The pilot study should be conducted by an independent contractor charged with measuring the resulting data quality, fitness for use in the comprehensive plan, cost, and respondent burden.

5. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin • Recommendation 3: The U.S. Equal Employment Opportunity Commission should enhance its capacity to summarize, analyze, and protect earnings data. • Recommendation 4: The U.S. Equal Employment Opportunity Commission should collect data on rates of pay, not actual earnings or pay bands, in a manner that permits the calculation of measures of both central tendency and dispersion.

6. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin • Recommendation 5:  In anticipation of increased user demand for microdata on pay information by demographic detail for research and analytical purposes if the data are collected by the U.S. Equal Employment Opportunity Commission, the agency should consider implementing appropriate data protection techniques, such as data perturbation and the generation of synthetic data, to protect the confidentiality of the data, and it should also consider supporting research for the development of these applications. • Recommendation 6: The U.S. Equal Employment Opportunity Commission should seek legislation that would increase the ability of the agency to protect confidential data. The legislation should specifically authorize data-sharing agreements with other agencies with legislative authority to enforce antidiscrimination laws and should extend Title VII penalties to nonagency employees.

7. Recommendations of Panel on Measuring and Collecting Pay Information from US Employers by Gender, Race and National Origin • “The main purpose for which the wage data would be collected, as articulated to the panel by EEOC and OFCCP representatives, is for targeting employers for investigation regarding their compliance with antidiscrimination laws. But beyond this general statement of purpose, the specific mechanisms by which the data would be assembled, assessed, compared, and used in a targeting operation are not well developed by either agency.” • “The panel found no evidence of a clearly articulated plan for using the earnings data if they are collected. The fundamental question that would need to be answered is how the earnings data should be integrated into the compliance programs, for which the triggers have primarily been a complaint process that has generated relatively few complaints about pay matters.” • “Furthermore, the panel concludes that existing studies of the cost-effectiveness of an instrument for collecting wage data and the resulting burden are inadequate to assess any new program. Unless the agencies have a comprehensive plan that includes the form of the data collection, it will not be possible to determine, with precision, the actual burden on employers and the probable costs and benefits of the collection. Therefore, the first recommendation is to develop such a plan.”

8. Impact on EEOC and OFCCP Data Gathering Projects • At NILG in August speakers indicated the panel’s report sets back agencies’ proposed compensation 3-5 years • The OFCCP’s proposed compensation tool is not likely to move forward • Scheduling letter is stalled and the proposed compensation collection is dead • However OFCCP still able to collect all the data it wants based on Frito-Lay and United Space Alliance • But remember hiring discrimination is where OFCCP makes its money

9. OFCCP Scope of OFCCP Audits Frito Lay decision The OFCCP can request data going forward, beyond the year of the scheduling letter. • ARB held that OFCCP’s request for AAP data extending forward to two years after OFCCP issued the Scheduling Letter, was narrow and motivated by an objective deficiency discoveredduring the audit. • Contractor has an ongoing duty to comply with the OFCCP’s audit data requests that are reasonable and consistent with the Agency’s duty to safeguard compliance with federal regulations.

10. OFCCP Scope of OFCCP Audits United Space Alliance OFCCP’s desk audit is not required to end when OFCCP completes its analysis of the initially requested information. “The Court understands that United Space and the entire community of federal contractors are keenly interested in how OFCCP decides whether to request additional data on a contractor's compensation practices, but that interest does not allow those companies or this Court to interfere with the agency's investigatory practices. Submission to such lawful investigations is the price of working as a federal contractor.”

11. OFCCP United Space Alliance and Frito-Lay litigation have reinforced OFCCP’s entitlement to contractor employment information during routine compliance evaluations • Has resulted in increased OFCCP insistence for comprehensive employment data • More difficult for contractors to argue OFCCP not entitled to requested information • May need to rely more on relevance of requested data

12. OFCCP Possible relief for contractors/employers--Christopher v. SmithKline Beecham (S. Ct.)? The U.S. Supreme Court ruled that no deference owed when DOL interpretation (or change in interpretation) of ambiguous regulations would impose massive liability on a party for conduct that occurred before the interpretation was announced. • The Court’s decision held: • Regulations must provide “[f]air warning of conduct [a regulation] prohibits or requires.” • An agency cannot announce its interpretations for the first time in enforcement proceedings that result in unfair surprise.

13. OFCCP • How could Christopher apply? • Factors that the Supreme Court cited in Christopher also apply to OFCCP interpretations: • Ambiguous regulations; • Massive liability; • DOL conspicuous inaction for lengthy period; • Retroactive interpretation—standards were not in effect at time of audit; and • Not based on notice and comment.

14. OFCCP Center for Corporate Equality determined that there have been very few Section 503 or VEVRAA violations. • Reviewed DOL’s OFCCP compliance database and complaint investigations from September 2004 to June 2012 • Of the 285,390 federal contractor/subcontractor establishments • 871 veterans or disability complaints • 60 resulted in violation, averaging 6.67 per year • Majority of these technical violations • 95% closed with no finding of discrimination • In compliance evaluations 3 violations out of 22,104 reviews

15. NLRB Confidentiality in internal investigation violates Section 8(a)(1)—Banner Health Systems d/b/a Banner Estrella Medical Center, 358 N.L.R.B. No. 93 • Hospital investigated ULP of employee • During investigation HR told employees interviewed not to discuss while investigation was under way to protect investigation • Board said it was employer’s burden “to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.” • Blanket policy of asking for employee silence not justified as it “had a reasonable tendency to coerce employees”

16. NLRB Social media policies need to be narrowed to avoid violating Section 8(a)(1) • Costco’s policy barred any electronic statements that damaged the company, defamed an individual or damage any person’s reputation • Board held “broad prohibition…clearly requires them to refrain from engaging in certain protected communications” • The rule allows employees to reasonably assume that it pertains to—among other things—certain protected concerted activities, such as communications that are critical of the respondent’s treatment of employees.

17. EEOC • CRST Van Expedited Inc.-8th Circuit refuses to rehear case • EEOC v. TriCore Reference Labs.—10th Cir. ordered EEOC to pay $140,000 in fees in failure to accommodate case for continuing case after clear there was no case • EEOC v.Nestle—Ky. district court refused to require employer to provide information on acquisition of genetic information based on single employee’s charge • EEOC v. U.S Steel Corp.—Pa. district court held pattern or practice lawsuit subject to 300 day statute of limitations

18. EEOC • EEOC v. Randstad—4th Circuit enforced EEOC subpoena on literary requirements finding EEOC entitled to deference in determining relevance of data needed • EEOC v. Freeman—D. Md. says in EEOC case on use of criminal background and credit checks defendant can depose commission on their use of criminal background and credit checks in their hiring • EEOC v. Cognis Corp.—Ill. district court says employer can’t restrict ability of employees to file EEOC charges in last chance agreements • EEOC v. Kronos—3rd Circuit says EEOC entitled to any info it needs from 3rd party test provider

19. FTC Federal Trade Commission becoming more aggressive on alleged violations of FCRA • Background screening company settled $2.6 million with FTC. Issues were: • failure to ensure accuracy of information • failure to notify individuals when reports sent to employer • failure to provide copies of reports to individuals or to investigate disputes • Failure caused individuals to lose jobs • Employer can be liable for failure as well