Significantly expanding the scope of Title VII’s anti-retaliation provision to an ill-defined group of relatives, friends, and close associates of a discrimination claimant, the U.S. Supreme Court has ruled that an employee may sue his employer for retaliation after he was fired because his fiancé filed a sex discrimination charge against their mutual employer. Thompson v. North American Stainless, No. 09-291 (Jan. 24, 2011). The Court unanimously reversed the grant of summary judgment to the employer and returned the case for further proceedings.

Title VII

Title VII of the Civil Rights Act of 1964 provides that “[i]t shall be an unlawful employment practice for an employer

to discriminate against any of his employees … because he has made a charge” under Title VII. 42 U.S.C. §2000e-3(a). The statute permits “a person claiming to be aggrieved” to file a charge with the EEOC alleging that the employer committed an unlawful employment practice, and, if the EEOC declines to sue the employer, it permits a civil action to “be brought

… by the person claiming to be aggrieved … by the alleged unlawful employment practice.” §2000e-5(b), (f)(1).

The Facts

Miriam Regalado filed a charge with the Equal Employment Opportunity Commission alleging that her supervisors discriminated against her based upon her gender. Approximately three weeks after the employer was notified of the charge by the EEOC, Regalado’s then-fiancé and now-husband, Eric Thompson, who worked for the same company, was discharged. Thompson filed his own EEOC charge, claiming that his termination amounted to retaliation for the filing of his fiancé’s EEOC charge. The company maintained that Thompson was fired for performance reasons unrelated to Regalado’s EEOC charge. The EEOC issued a probable cause finding, and Thompson filed suit.

Lower Court Decisions

The District Court granted the employer’s motion for summary judgment, finding that no retaliation claim existed under Title VII for Thompson based upon his association or relationship with his fiancé and her filing of an EEOC charge. On appeal, the Sixth Circuit first reversed then affirmed the lower court, joining the Third, Fifth and Eighth Circuit Courts of Appeals. It ruled that Title VII’s anti-retaliation protection applies only to those persons who have personally engaged in protected activity by opposing a practice, making a charge or assisting or participating in an investigation. Because Thompson did not allege that he had engaged in any statutorily protected activity, the Sixth Circuit held he could not maintain a Title VII retaliation claim.

VOl. 28, NO. 2 FEBRUARy 2011

SPECIAl FOCUSSUPREME COURT

BROADENS SCOPE OF ASSOCIATIONAL

RETALIATION CLAIMS UNDER TITLE VII

WHAT’S INSIDE

E-Verify: The Good, The Bad, And The Unresolved .................................3

Wellness Programs: A Prescription For Participation And Success ....5

Supreme Court Rules Background Checks On Government Contractors Do Not Violate The Constitution .....................................6

(Continued on Page 2)

Supreme Court Decision

After noting that the procedural posture of the case (i.e., before a full trial) required it to assume the employer fired Thompson in order to retaliate against Regalado for filing a charge of discrimination, the Court determined that Thompson had standing to bring a suit against the employer for retaliation under Title VII. According to the Court, this clearly follows its 2006 decision in Burlington N. & S. F. R. Co. v. White, 548 U.S. 53, in which it held that Title VII’s anti-retaliation provision must be construed to cover a broad range of employer conduct and to prohibit any employer action that “well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The Court thought “it obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.”

The employer argued that opening up Title VII claims to third parties “will lead to difficult line drawing problems concerning the types of relationships entitled to protections” and an employer will risk having to defend against claims “anytime it fires any employee who happens to have a connection to a different employee who filed a charge with EEOC.” While recognizing the difficulty for employers, the Court nevertheless held, “Title VII’s anti-retaliation provision is worded broadly [and] no textual basis [calls for] an exception to it for third-party reprisals, and a preference for clear rules cannot justify departure from the statutory text.” It continued,

“We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.”

The Court also determined not to adopt the constitutional “injury in fact” standing standard for Title VII standing as being too broad and instead adopted a test based on whether the plaintiff falls within the “zone of interests” articulated by the Court in Lujan v. National Wildlife Federation, 497 U.S.

871 (1990). The Court holds the term “aggrieved” in Title VII would deny a right of review “if the plaintiff ’s interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” As Thompson was an employee whom Title VII was intended to protect from his employer’s unlawful actions, and since the employer’s allegedly unlawful conduct toward Thompson, if his story is credited, was committed intentionally as a means of retaliating against his fiancé because of her EEOC charge, Thompson fell within the zone of interests protected by Title VII with standing to sue, the Court held.

The Court reversed the lower courts’ grant of summary judgment and allowed the case to proceed.

* * *

In its fiscal year 2010, the EEOC received more charges alleging retaliation than any other basis. (See our article, Charges of Job Discrimination against Employers Hit Record High in Fy 2010, EEOC Reports at http://www.jacksonlewis.com/resources.php?NewsID=3510.) With this decision, the Court adopts the long-standing EEOC interpretations of the scope of the anti-retaliation provision of Title VII to include third parties.

-- Kenneth M. Wentz III Omaha Office WentzK@jacksonlewis.com

-- Vincent A. Cino Morristown Office CinoV@jacksonlewis.com

-- James M. Stone Cleveland Office StoneJ@jacksonlewis.com

SUPREME COURT BROADENS SCOPE OF ASSOCIATIONAL RETALIATION CLAIMS UNDER TITLE VII (Continued from page 1)

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The United States Citizenship and Immigration Services (USCIS) has released an independent report of the E-Verify system, highlighting the successes, failures, and remaining challenges that employers face today.

The Good

USCIS reduced the Tentative Nonconfirmations (TNCs or mismatches) from 8% between June 2004 and March 2007 to almost 2.6% in fiscal year 2009. TNCs result when the information from an employee’s Form I-9 does not match government records and E-Verify indicates the case may require additional action.

Additionally, USCIS data indicates that about 97.4% of almost 8.2 million newly hired employees were immediately confirmed as work authorized by E-Verify during fiscal year 2009, compared to 92% during June 2004 through March 2007.

Conversely, about 2.6% of newly hired employees, or over 211,000, received either a Social Security Administration or USCIS TNC, including about 0.3% who were determined to be work eligible after they contested a TNC, and about 2.3% who received a Final Nonconfirmation (FNC) because their employment eligibility status remained unresolved.

The Bad

Despite the reduction of TNCs overall, it appears that erroneous information is still a way of life. Employee information, like the E-Verify system itself, is constantly being

updated and changed. Also, it is not uncommon to have misspellings or other name variations for first or last names. In these instances, TNCs may result because the employer is uncertain how exactly to enter the name into the system. According to USCIS, of the TNCs resulting from name mismatches in fiscal year 2009, approximately 76% were for citizens and 24% were for noncitizens. USCIS has included information on its website to help employers enter various name combinations to reduce some of these TNCs.

The Unresolved

Over the past two years, USCIS has more than doubled the number of monitoring and compliance staff overseeing employers’ use of E-Verify. Apparently, however, the staff still lacks the appropriate technology to discern instances of suspected employer misuse easily. According to senior E-Verify program officials, such capabilities will be addressed by fiscal year 2012, through an estimated $6 million advanced data system. USCIS expects this system, known as the Data Analysis System, to automate about 80% of the Monitoring and Compliance Branch’s workload.

It looks like E-Verify will be with us for the foreseeable future. The fiscal year 2010 DHS Appropriations Act reauthorized the E-Verify program through September 30, 2012, and provided USCIS with $137 million for program operations. Employers must prepare themselves by implementing appropriate policies, procedures, and technology to address the potential pitfalls of an erroneous TNC or FNC, as well as other challenges, such as identity theft and discrimination.

-- Amy l. Peck Omaha Office Amy.Peck@jacksonlewis.com

E-VERIFY: THE GOOD, THE BAD, AND THE UNRESOLVED

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IMMIGRATION UPDATE

Amy Peck is a nationally recognized immigration attorney practicing out of the Jackson Lewis LLP Omaha, Nebraska office.

4

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Employers continue to experience a rise in the cost of providing health coverage to employees. Whether that will change when Health Care Reform is fully implemented remains to be seen. For the time being, however, employers continue to struggle with escalating costs and many are looking to wellness programs as part of the solution. Congress seems to agree. Under Health Care Reform, beginning in 2014 employers can increase the wellness incentive they provide under their group health plan from 20% to 30% of the premium.

Even before Health Care Reform, many looked to wellness programs as an important tool to lower health care costs by educating employees about their own health and health care options, and by providing incentives to encourage healthier behaviors.

The success of any wellness program depends on three things – participation, participation and participation. you could design the best program but if, for example, employees do not trust that their personal information will be kept private, participation likely will be low. likewise, if rank and file employees do not see management participating or cannot understand the program, they may be less inclined to participate. Without widespread participation, the program will falter.

TIpS For DESIGNING AND DrIVING pArTICIpATIoN IN YoUr WELLNESS proGrAmSSupport from the Top

Having top management lead the company’s initiatives is a significant design element of and impetus for wellness program participation. Without top management’s engagement, experience suggests employees will think the program is not worth the effort or the program is more about reducing costs than improving health. leadership here is critical.

Create a Culture of Health

Few doubt that a significant motivation for wellness programs is the reduction of the cost of providing health coverage.

Successful companies, however, also are just as motivated to improve the health of their workforce. The rewards could be huge – lower health care costs, lower rates of absenteeism, increased productivity, fewer workers’ compensation claims, fewer and shorter disability leaves of absence, increased employee morale, and so on. A culture of health in the workplace, rather than a one-dimensional wellness program (such as just offering a health risk assessment), is good business as well as good human resources policy.

A multi-faceted program may include smoking cessation, screenings, and incentives to reduce weight/body mass index (BMI), cholesterol, and blood pressure. A decision whether to roll out the entire program at once or start small and build on successes frequently involves concerns about cost, administration and employee reaction, among other things.

Striking the right balance is important. On the one hand, rolling out a simple tobacco cessation premium discount program may be a good start, but the program may be seen as one designed solely to reduce plan costs, without regard for the overall health of employees. On the other hand, rolling out complicated point systems with multiple requirements can leave employees confused and less likely to participate.

“Everything in moderation” is a good rule when rolling out a wellness program.

A culture of health does not develop overnight. Over time, goal-based incentives must be blended with appropriate tools, resources or services to help recruit participants and keep them engaged. Health screenings, flu shots, health risk assessments, educational materials, such as newsletters, and a support group or care management are some examples of the latter. This gradual approach provides employees with the support and information to help them along the road to healthier behaviors. At the same time, it reinforces the company’s commitment to employee health.

Be Serious about privacy

Employers also need to address the privacy concerns of potential participants. This is particularly true where wellness programs require significant information from employees. Statements in program descriptions are not enough; confidence must be built through action and example. Avoid communicating about employees’ sensitive, personal issues in hallways or around the water cooler, keep files locked and off your desk when not in use, do not speak to spouses about the employee without the employee’s authorization, maintain written policies and procedures, and implement training

5

BENEFITS CORNER

Randy Limbeck is a partner in the Omaha, Nebraska office of Jackson Lewis LLP and has spent more than 25 years specializing in representation of clients in the areas of ERISA, employee benefits, and executive compensation.

WELLNESS PROGRAMS: A PRESCRIPTION FOR PARTICIPATION AND SUCCESS

(Continued on Page 6)

SUPREME COURT RULES BACKGROUND CHECKS ON GOVERNMENT CONTRACTORS

DO NOT VIOLATE THE CONSTITUTIONThe U.S. Supreme Court has ruled unanimously that the federal government may conduct wide-ranging background checks of workers employed by government contractors. NASA v. Nelson, No. 09-530 (Jan. 19, 2011).

The Court ruled that when conducting background checks, the federal government need not show that certain questions are

“necessary” or the least restrictive means for furthering its intent. Drawing on the widespread use of background checks in the public and private sectors, the government’s role as a “proprietor” as opposed to a regulator, the uncertainty of informational privacy as a constitutional right, and the protections for background check findings under the Privacy Act, the questions in the background check simply have to be reasonable to serve the government’s interests, the Court ruled.

The Facts

In NASA v. Nelson, the plaintiffs, 28 contract employees of

the National Aeronautics Space Administration’s (NASA) Jet Propulsion laboratory (JPl), which is operated by the California Institute of Technology (Cal Tech), were not subject to government background checks when they commenced their employment with the government. However, as a result of policies recommended by the 9/11 Commission in 2004, President George W. Bush ordered the adoption of uniform identification standards for both federal civil servants and contract employees. The Department of Commerce in turn implemented this order by directing that contract employees possessing long-term access to federal facilities undergo a standard background check. Thereafter, NASA amended its contract with Cal Tech to conform to the new requirement and JPl subsequently announced that employees who did not complete the government-mandated background checks would be denied admission to JPl and would be subject to termination by Cal Tech.

6(Continued on Page 7)

concerning privacy and data security. Such steps will help keep this information private and overcome reluctance to participate in wellness programs.

make Your program materials Clear

Some wellness programs are very simple – if you use tobacco products, you will not qualify for the incentive discount (unless the individual qualified for a reasonable alternative). However, many wellness programs can be more robust and, unfortunately, sometimes more complicated. For example, some programs establish elaborate point-based systems for earning rewards. These can be difficult for employees to understand or time consuming to follow. Even if the program is not that difficult to follow, the explanation of it sometimes creates more confusion than the program itself.

The communication strategy for the program, in terms of content, design and delivery, is critical. The objective is to reach all prospective participants, convey the program’s requirements, and convince potential participants of the program’s value and the company’s commitment to privacy and wellness.

oh, Yes, Compliance

Wellness programs are at the crossroads of many laws. These

include the HIPAA nondiscrimination rules, the ADA rules concerning medical inquiries and disability discrimination, the GINA limitations on the collection and use of genetic information (including family medical history), the ERISA requirements to describe plan benefits to participants, the Internal Revenue Code rules related to tax treatment of wellness rewards in different contexts, the Title VII/ADEA prohibitions on discrimination, and state law analogs to these, including protections from “lifestyle discrimination.”

Currently, there is little legal guidance from regulators and the courts. Certainly, companies must consider legal and other risks in implementing a wellness program. However, there also are risks to doing nothing. Experienced counsel and thoughtful third-party vendors can be important members of a company’s team in developing a wellness program that is right for your organization. The benefits of a successful program should far outstrip the cost and effort that went into creating it.

-- Randal M. limbeck Omaha Office limbeckR@jacksonlewis.com

WELLNESS PROGRAMS: A PRESCRIPTION FOR PARTICIPATION AND SUCCESS (Continued from page 5)

7

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SUPREME COURT RULES BACKGROUND CHECKS ON GOV’T CONTRACTORS DON’T VIOLATE THE CONSTITUTION (Continued from page 6)

Lower Court Decisions

The plaintiffs brought suit in federal court for a preliminary injunction, claiming that the background checks violated their constitutional right to informational privacy. The district court denied the preliminary injunction, but the Ninth Circuit Court of Appeals reversed. The appellate court held that portions of the background checks employed by JPl, which it said were not narrowly tailored to meet the government’s interests in verifying the identities of government contractors and promoting JPl’s security, were likely unconstitutional as they furthered no legitimate governmental interest.

Supreme Court Decision

The Supreme Court reversed the Ninth Circuit’s decision. Starting with an assumption that there is a constitutional right to informational privacy, the Court reasoned that since 1871, the President has had authority to gauge a prospective employee’s fitness for the civil service. Furthermore, background checks similar to those involved in NASA v. Nelson became mandatory for candidates for civil-service in 1953. Writing for the Court, Justice Samuel Alito said, “[H]istory shows that the Government has an interest in conducting basic background checks in order to ensure the security of its facilities and to employ a competent, reliable workforce to carry out the people’s business. The interest is not diminished by the fact that respondents are contract employees.” The Obama Administration also had argued the NASA background investigations were reasonable in light of the fact that such inquiries were virtually identical to those conducted by private employers.

To allay concerns of unlawful invasion of privacy, and in support of the Court’s conclusion that the questions in the background check were reasonable, the Court noted that all information collected in connection with these background checks would be subject to non-disclosure pursuant to the Privacy Act.

Implications

This decision is a reminder to all employers that the federal government possesses broad rights to engage in extensive background investigations in connection with procuring the services of contract employees. The decision gives federal government contractors greater assurance that conducting background checks of their applicants and employees will not result in violations of the federal Constitution. However, the same may not be true for government contractors at the state level. At a minimum, public and private employers should evaluate their background checks to ensure the reasonableness of the inquiries being made, and implement safeguards to maintain the privacy and security of the information obtained in the process.

-- Susan M. Schneider Omaha Office SchneiderS@jacksonlewis.com

-- Joseph J. lazzarotti White Plains Office lazzaroJ@jacksonlewis.com

-- Mickey Silberman Denver Office SilbermM@jacksonlewis.com

-- Steven A. Sirota New york Office SirotaS@jacksonlewis.com