Protecting GLBT Population from Discrimination Makes Business Sense
By Pete Wolfinger, September 2008
Gays and lesbians have garnered the support of the largest corporations in the United States looking to improve their public image, widen their consumer base, and strengthen their inclusion of the gay, lesbian, bisexual and transgender (GLBT) community in the workplace.
According to a recent study by Equality Forum, a nonprofit dedicated to advancing GLBT rights, nearly 95 percent of 2008’s Fortune 500 companies voluntarily include sexual orientation in their employment nondiscrimination policies.
The number is the highest in the study’s five-year history and marks a drastic increase since 2003, the study’s inaugural year, when just 64.6 percent of Fortune 500 companies included sexual orientation in their employment nondiscrimination policies.
“The largest corporations have figured out that [GLBT support] is a way to recruit, retain and encourage the very best in the workforce,” says Malcolm Lazin, executive director of Equality Forum. “Their decision has helped support meritocracy in the U.S.”
It is also in these companies’ best financial interest to get the GLBT community on their side. In June 2008 Witeck-Combs Communications and Packaged Facts estimated the U.S. GLBT community’s buying power to be $712 billion.
But despite gains over the last five years, just one Fortune 500 company was added to the Equality Forum’s “compliant” list since 2007, suggesting the once sharp increase in support may have reached a plateau.
Resistance Remains
Corporate giant Exxon Mobil, which trails only Wal-Mart Stores in 2008 revenue, is the only company in the top 75 companies on the Fortune list that does not specifically provide sexual orientation protection. Other companies that do not provide sexual orientation protection include GMAC Financial Services (78th in 2008 revenue), Plains All American Pipeline (121st), Cenex Harvest States Inc. (145th), and DISH Network (240th). Liberty Mutual Insurance Group (94th) was on Equality Forum’s “noncompliant” list in 2007, but added explicit GLBT rights in the past year.
Exxon’s largest competitors, Chevron (third in 2008 revenue), ConocoPhillips (fifth), and Valero Energy (16th) all include explicit sexual orientation protection in their policies. Shell Oil Co., another of Exxon’s competitors, recently announced it had achieved a rating of 100 percent in the latest Corporate Equality Index (CEI), scoring top marks for their treatment of lesbian, gay, bisexual and transgender employees and consumers. “We believe creating an inclusive workplace that brings out the very best from our employees is fundamental to our success,” said Francene Young, vice president of diversity, inclusion and talent at Shell Oil Company, in a press release.
According to Lazin, before the 1998 merger of Mobil and Exxon, Mobil offered both sexual orientation discrimination protection and domestic partnership benefits.
Now Exxon Mobil has neither.
“Exxon Mobil says they don’t discriminate against gays and lesbians,” Lazin told SHRM Online. “Well, if they don’t, then why do they specifically protect other categories such as race and religion, but have nothing about gays and lesbians?”
Political Efforts Continue
The debate about whether or not to include sexual orientation in the federal Employment Non-Discrimination Act (ENDA) is at the forefront of this year’s presidential election. Sen. Barack Obama, D-Ill., favors this inclusion while Sen. John McCain, R-Ariz., opposes it.
Section four of ENDA prohibits employers, labor organizations, training programs and employment agencies from discriminating against anyone because of perceived sexual orientation. The sexual orientation protection was added in 2007, when the House of Representatives voted 235 to 184 in favor of the amendment. Two hundred of the 235 “yeas” were Democrats.
Public support for nondiscrimination remains strong.
According to Gallup’s May 2008 values and beliefs poll, 89 percent of Americans believe gays and lesbians should have equal rights in terms of job opportunities, mirroring the percentage reported by Gallup in 2004.
A majority of Americans have supported equal rights in job opportunities for gays and lesbians since the 1970s.
Equality Forum works with Professor Louis Thomas, Wharton School of the University of Pennsylvania, and Ian Ayres, William K. Townsend Professor, Yale Law School, on the annual Fortune 500 project.
Pete Wolfinger is an editorial intern for SHRM.
Survey: Staffing Employment Down from Same Period in 2007
By Theresa Minton-Eversole, September 2008
Staffing industry employment was lower in the second quarter of this year than the same period last year, and flat compared with the first quarter of this year, according to data released Aug. 25 by the American Staffing Association.
U.S. staffing firms continued to employ an average of 2.8 million temporary and contract workers per day from April through June—virtually the same number as in the first quarter—but average daily employment during the period was 6.5 percent lower than in the same period last year. It was the third consecutive quarter of year-to-year employment declines, and the fifth of the last seven quarters in which the temporary and contract jobs market contracted compared to the same period of the previous year.
“As American businesses have cut jobs and reduced hiring, staffing employment has been directly affected, even more so in the last quarter,” said ASA President and Chief Executive Officer Richard Wahlquist. “But we have not seen anything like the precipitous drop characteristic of previous recessions.”
At the beginning of the last recession, for example, staffing employment dropped 15.7 percent in the second quarter of 2001 and continued to fall at double-digit rates for three more quarters. By contrast, U.S. sales of temporary and contract staffing totaled $18.2 billion in the second quarter of this year, an increase of 2.9 percent over the first quarter, but 1.3 percent lower than in the same period last year, according to the ASA survey.
Weathering 2008 will remain a challenge, however, according to ASA Vice President Steven P. Berchem, who recently summed up the association’s industry projections in a report on the ASA’s web site. “Earlier this year, SAI [Staffing Industry Analysts] projected that 2008 temporary help revenues would grow 0.9 percent and that search and placement revenues would increase 4.3 percent over 2007. That was assuming GDP [gross domestic product] growth of 1.8 percent. As the calendar reaches midyear with GDP well below 1 percent, those SAI projections look optimistic.”
Theresa Minton-Eversole is an online editor/manager for SHRM.
Can Merit-Based Rewards Increase Gender and Race Bias?
Keys to pay fairness are formalization, accountability and transparency
By Stephen Miller, September 2008
Merit-based rewards and other common performance management practices now used by a majority of U.S. companies can actually increase bias and reduce equity in the workplace, says Prof. Emilio J. Castilla of MIT’s Sloan School of Management.
Such practices and policies can result in women and minorities receiving less compensation than white men despite equal scores on their performance evaluations, Castilla’s research found. But such “performance-reward bias” can be overcome by increasing accountability and transparency in the processes that connect performance evaluations and wage increase decisions, he advises.
“Already in 2005, it was estimated that close to 70 percent of organizations offered variable bonuses based on employee performance. Today even more companies rely on performance-related rewards,” Castilla observes.
“Perhaps these merit-based practices are intended to increase workers’ job satisfaction and motivation to work hard, but to what extent are these practices working to solve workplace inequality?,” he adds. “I found evidence of what I call ‘performance reward bias’ where even assuming that employers successfully find fair and unbiased ways of measuring employee merit during the performance evaluation stage, they can still potentially introduce bias and discretion in the way performance evaluations are used to determine employee compensation and promotions during the performance-reward stage.”
False Meritocracies
Castilla’s article, “Gender, Race, and Meritocracy in Organizational Careers,” recently published in the American Journal of Sociology, examines the relationship between performance evaluations and wage growth by drawing on personnel data from a large (and unnamed) U.S. service organization. The organization used a two-step process that separates performance evaluations from pay decisions. While the organization adopted a merit-based practice intended to ensure that rewards were allocated meritocratically, Castilla found evidence that this was not necessarily the case.
“The key finding was that women and minorities in the same job and work unit, with the same supervisor, and who had the same human capital received lower pay increases than white males, even when they were given the same performance evaluation scores,” he says, interrupting this as evidence of “performance reward bias.” While women and minorities did not initially receive lower starting salaries or performance ratings than white men, Castilla says he found bias in the translation of performance ratings into amounts of salary over time.
Castilla contends that his findings point to a critical challenge faced by employers who adopt merit-based practices to fairly reward and motivate their employees. “Ironically, although these merit-reward policies create the appearance of meritocracy, this study shows that the less formalized, less transparent, and less accountable stages of the performance appraisal process can actually create a greater opportunity for … bias to emerge, negatively affecting the fair distribution of rewards among employees in a way that is more or less invisible to everyone in the organizational setting,” he wrote.
Subjectivism and Bias
Castilla believes that this bias can be introduced at two points in the performance appraisal process. These two entry points are:
- • When a head of a unit (or head of supervisors) recommends to HR a specific salary increase amount for an employee using the performance evaluations received from the evaluating managers. The head of a unit may request a lower salary raise for an equally performing minority employee than for a non-minority employee, resulting in a lower average for minorities in reward recommendations going to HR.
• When HR makes the decision to approve or reject a given salary increase recommendation made by the head of the unit, as HR may reject more minority rewards than non-minority rewards.
Unmasking Unfairness
Because large organizations may be unaware of the unintended consequences of such merit-reward practices, increasing accountability and transparency in the performance-reward system will likely reduce bias, says Castilla. “We know from the social-psychological literature that accountability motivates decision makers to make fair decisions, which can help reduce judgmental biases,” he explains. Also, “the timing of accountability is crucial, because accountability appears to be much more effective in preventing rather than in reversing biases.” In the organization Castilla studied, unit heads were not accountable for their decisions regarding the amounts of salary increases.
Castilla also found that while greater transparency reduces the incidence of bias, there are several reasons why lower levels of transparency continue to exist. For example, year-to-year salary increases for individual employees are generally not observable to the rest of employees and administrators, eliminating any salary comparisons among employees and potentially masking unfairness.
Also, he notes that “because most yearly salary increases are quite low, salary disparities among employees are so small that they are not noticeable overall.”
Another factor: Because employees only tended to stay at the organization for just over two years, the shorter tenures minimized the long-term impact of the small differences in salary increases.
Stephen Miller is an online editor/manager for SHRM.
10th Circuit: Unlawful Disclosure Was Nonretaliatory Reason for Discharge
By John J. Coleman III
The 10th U.S. Circuit Court of Appeals upheld a retirement community’s termination of a nurses aide because of an unlawful disclosure to the Equal Employment Opportunity Commission (EEOC) in violation of the community’s privacy policy and federal and state law as a legitimate nonretaliatory reason for discharge, and that plaintiff failed to show pretext by comparing her disclosure of protected health information to her comparator’s misappropriation of records concerning residents’ daily activities.
Bernadine Vaughn, a nurses aide in a retirement home, was disciplined based on medical recordkeeping errors. She filed an EEOC charge challenging the discipline and provided the EEOC unredacted medical records in an effort to show less harsh discipline against comparators for committing similar errors. Upon learning of her disclosure a year after she filed her charge, but a week after discovering the disclosure, the retirement community discharged her. She filed suit, claiming that her discharge was in retaliation for protected activity under Title VII.
Retaliation claims require proof of protected activity, adverse action, and a causal connection between the protected activity and the adverse action. The protected activity element can be satisfied either by “participation” (a charge or complainor participating in the EEOC’s investigation or the court litigation of either) or by “opposition” (opposing activity that the employee reasonably believes is a violation of the discrimination laws).
Throwing out Vaughn’s retaliation claim, the district court found that her disclosure to the EEOC did not constitute protected participation because she did not redact patient names as state law and federal Health Insurance Portability and Accountability Act criminal provisions required. The district court alternatively found that the employer articulated the disclosure of unredacted records as a legitimate nonretaliatory reason and that Vaughn failed to show pretext.
On appeal, the court of appeals found a prima-facie case because the unlawful disclosure was protected participation, but it affirmed the district court’s decision on the remaining grounds.
The court of appeals first explained that Title VII protects far more as participation than as opposition because participation in EEOC and court proceedings is “essential to the machinery set up by Title VII.” Though raising the possibility that an employee “whose participation in a Title VII proceeding is a sham or is fraudulent before the hearing officer” might not be protected, the court rejected the district court’s conclusion that the law protecting participation imposed “the obligation to resort only to honest and loyal conduct in advancing a claim unless the employee proves that it is necessary to resort to other means.” Hence, Vaughn’s misappropriation and disclosure of unredacted medical records to the EEOC was protected participation in this instance even though it certainly violated state and federal laws relating to medical records.
Nevertheless, the court held that the employer properly could apply its generally applicable privacy policy prohibiting unauthorized disclosures to Vaughn’s disclosure to the EEOC and that the employer could articulate this application as a nonretaliatory reason for discharge. The court of appeals also held that the district court correctly determined that Vaughn’s comparator was not situated similarly to her because the retirement community could reasonably conclude that the misappropriation of records of residents’ activities that enjoyed no legal protection under medical disclosure laws was far less serious than Vaughn’s misappropriation and disclosure of medical records.
Vaughn v. Epworth Villa, 10th Cir., No. 07-6005 (Aug. 19, 2008).
7th Circuit: Failure To Turn In Paperwork Bars FMLA Claims
By Chris Arbery and Valerie Barney
An employee who failed to submit a medical certification form could not proceed with a claim for interference or retaliation under the Family and Medical Leave Act (FMLA), according to the 7th U.S. Circuit Court of Appeals.
Under the FMLA, eligible employees of covered employers may take up to 12 weeks of leave per 12-month period for a qualifying reason such as the birth or adoption of a child, to care for a family member with a serious health condition, or to care for the employee’s own serious health condition. Qualifying leave may be taken in one block of time, on an intermittent basis or as a reduced work schedule. An employer may require medical certification of the serious health condition and of the need for intermittent leave or a reduced work schedule. An employer must allow an employee at least 15 days to submit the medical certification.
Janet Ridings worked as a full-time exempt manager for Riverside Medical Center (Riverside). In January 2003, Ridings requested and was granted three weeks of FMLA leave to have her thyroid removed. In connection with the surgery, Ridings took hormonal supplements that made her tired by the end of the day. Through 2003, Ridings worked fewer than eight hours per day in her office but regularly took work home with her. She believed that she was working a full-time schedule.
Ridings’ supervisor, Kyle Hansen, told Ridings twice in early 2004 that she must return to a regular schedule of eight hours per day. Ridings made no change to her schedule. In March 2004, Hansen gave Ridings a corrective action for failing to meet work hours requirements. Ridings acknowledged receipt and, later on the same day, provided a note from her doctor stating that she could not work an eight-hour day until further notice.
On April 1, Hansen instructed Ridings to complete an FMLA application and medical certification form. On April 16, Hansen followed up about the FMLA forms. Hansen gave Ridings another corrective action on April 21 for failure to provide the FMLA forms for “intermittent leave” within the 15-day period. This notice required that Ridings return the forms by April 28. Ridings received a third corrective action on May 10 suspending her for three days without pay. When she returned to work on May 13, 2004, without the FMLA paperwork, her employment was terminated.
Ridings filed a lawsuit against Riverside alleging interference and retaliation under the FMLA, among other claims. The district court granted Riverside’s motion for summary judgment, finding that Ridings failed to come forward with sufficient evidence that Riverside’s request for medical certification interfered with her FMLA rights or was retaliatory. Ridings appealed.
Although the 7th Circuit noted that Riverside initially had failed to explain its need for completed medical forms, ultimately the court held that there was no evidence of interference because Riverside later provided the FMLA forms and gave Ridings more than ample time to return them.
Ridings argued that Riverside had incorrectly specified “intermittent” FMLA leave (leave taken in separate blocks of time because of a single qualifying reason) as opposed to “reduced schedule leave” (leave taken by working fewer hours per day or per week) in asking her to return completed FMLA forms. However, the court found that Ridings’ obligation to provide medical certification was the same under both types of leave and that the reference to intermittent leave did not negate Ridings’ obligation to provide the medical certification.
The court concluded that Ridings’ termination was neither unlawful interference with her right to FMLA leave nor retaliation. Ridings never applied for FMLA leave because she believed that she was working full time and therefore did not need FMLA leave. Riverside was entitled to require Ridings to work her full schedule in her office. It gave Ridings a choice either to do so or to apply for FMLA leave. Riverside provided Ridings with the FMLA forms, including the medical certification form, and gave her more time than required to submit them. Ridings was no longer on approved leave after she failed to work eight hours per day in her office and failed to return the forms. Accordingly, Ridings was subject to Riverside’s discipline procedure, including termination. As the court stated, “An employer cannot be deemed to retaliate against an employee by asking her to fulfill her obligations under the FMLA.”
Ridings v. Riverside Medical Center, 7th Cir., No. 06-4328 (Aug. 11, 2008).
Professional Pointer: This case illustrates that an employer must be sure to provide FMLA paperwork once it has notice that an employee may have a need for leave. If the employer initially fails to request completed paperwork, it can protect itself by making the request later and providing sufficient time for the employee to complete it. The case also shows that, while an employer has an obligation to provide information, it also may require the employee to comply with a request to return medical certification of the need for leave within a reasonable period of time.
Chris Arbery and Valerie Barney are attorneys on the Labor & Employment Team at Hunton & Williams LLP.
7th Circuit: Corrections Officers Prove Sex Bias
By Amy Onder
The 7th U.S. Circuit Court of Appeals held that two female corrections officers at a juvenile detention facility proved unlawful sex bias because the county’s policy of staffing the facility solely with officers the same sex as the juveniles in each particular unit deprived female officers of opportunities for overtime and premium pay.
Ersol Henry and Terri Lewis, both females, worked for Milwaukee County’s Juvenile Detention Center, a facility housing juveniles awaiting court proceedings. The center instituted a policy that required each unit of the facility to be staffed at all times by at least one officer of the same sex as the detainees housed on that unit. During the day shifts, when two juvenile corrections officers (JCOs) staffed each unit, one of the two JCOs could be of the opposite sex. However, during the night shift, when only one JCO staffed each unit, the sole JCO on duty had to be of the same sex as the juveniles in that unit.
Because there were far more male units than female units, this policy had the effect of reducing the number of shifts available for female officers. Those officers assigned to the night shift received premium pay and were afforded the most opportunities for overtime. As such, Henry and Lewis were no longer able to get the same number of overtime hours as they previously had received. Rather, male employees with less seniority were allowed to work these shifts. As a result, the plaintiffs received significantly less compensation than they had received prior to the institution of the same-sex policy.
Prior to the institution of the same-sex policy, the plaintiffs each had filed an unrelated Equal Employment Opportunity Commission (EEOC) complaint alleging harassment and discrimination. Thereafter, the plaintiffs filed additional grievances regarding the sex-specific requirements of the night shift.
Henry and Lewis brought an action against Milwaukee County in district court alleging that they had been denied overtime assignments because of their sex. They also alleged that the defendants had retaliated against them for filing complaints of discrimination. After a bench trial, the district court concluded that the gender-specific policy was based on a bona fide occupational qualification and that no discrimination or retaliation occurred.
In reversing the district court in part, the 7th Circuit acknowledged that the administrators of juvenile detention facilities are entitled to substantial deference when fashioning policies to further the goals of that facility. The court noted, however, that such discretion is not unlimited. The 7th Circuit disagreed with the district court’s conclusion that the policy of assigning shifts according to an employee’s sex was based on a reasonable belief that the policy would “promote” the center’s goals of rehabilitation, security and privacy. The court held that the county’s contention that sex-based assignments are reasonably necessary to achieve these goals was not supported by the evidentiary record for the following reasons:
- • There had not been a single instance of staff-on-inmate sexual assault at the center on any shift, by either sex, nor had there been a significant problem with false accusations against the staff.
• The county offered no reasons why the numerous alternatives to same-sex staffing suggested by the plaintiffs at trial, such as improving the alarm system, installing additional cameras, leaving the doors open between the units at night or increasing the frequency of supervisor patrols, would not have mitigated any concern.
• As for the proffered privacy justification, the center allowed JCOs of the opposite sex to monitor the units during both of the daytime shifts, when the juveniles were most likely to be unclothed.
• The JCOs were not trained or expected to act as counselors, and, even if they were, the county offered only marginal evidence that same-sex role model/mentoring was more effective that cross-gender programs.
Consequently, the county failed to meet its burden to introduce sufficient evidence to support the conclusion that a same-sex presence at all times was reasonably necessary to meet the center’s goals. As such, the dramatic reduction in the opportunity for women to work on the overnight shift constituted an adverse employment action in violation of Title VII.
As for the retaliation claim, the 7th Circuit concluded that the district court did not err in its determination that the alleged incidents did not rise to the level of harassment, because the actions constituted petty slights and minor annoyances and the plaintiffs had failed to prove a causal connection between their discrimination complaints and the alleged harassment.
Henry v. Milwaukee County, 7th Cir., No. 07-2534 (Aug. 20, 2008).
Professional Pointer: Employers should routinely review their policies concerning pay and overtime to ensure compliance with federal law. Even though this decision concerned a juvenile detention center, it serves as a reminder for all companies that gender pay differentials can invite claims of discrimination.
Amy Onder is general counsel of iXP Corp. in Cranbury, N.J.
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