How employment law has changed during the Obama administration and how those changes will affect your company Featured

8:00pm EDT May 26, 2010

There have been many changes to employment and labor laws since President Obama moved into the Oval Office. For most busy executives, it’s difficult to keep track of them all.

That’s why Lynn C. Outwater, managing partner of Jackson Lewis LLP, says employers should meet often with an employment law specialist to make sure they don’t make any costly mistakes.

“Employers need to consult with employment counsel before taking adverse action, not after,” Outwater says. “Because once action is taken, it’s too late to fix it.”

Smart Business spoke with Outwater about how the new employment laws are affecting employers and what to expect in the future.

What has happened in employment law during the Obama administration?

The U.S. Equal Employment Opportunity Commission received 93,277 charges of discrimination in 2009, a decrease from 95,402 in 2008. Although discrimination claims in general have decreased, some types of claims, like retaliation claims, have increased. The number of charges is still very high, and the amount being paid out to victims of discrimination is still very high: $376 million in 2009.

Also, the new chair of the EEOC, Jacqueline Berrien, was recently sworn in with a commitment from the administration to improve enforcement. Berrien has been granted greater resources, including a proposed budget of more than $300 million to be used to hire additional staff, including investigators, mediators, attorneys and support staff.

The EEOC added 155 new employees in 2009, so enforcement efforts and results will significantly increase.

How do these changes affect employers?

This is noteworthy because it increases the emphasis on doing things correctly and appropriately so as to avoid any type of claim. Do what you can to avoid litigation, because you don’t want to create bad fact patterns that would trigger someone going to the EEOC or the state agency.

The greatest increase in overall employment litigation is the area of class action claims. In particular, wage and hour (FLSA) class actions continue to outpace class actions involving other employment claims.

Another reason to avoid claims is employers’ courtroom record. Employers lost 61 percent of employment practice liability trials in 2008 — an increase of 5 percent from 2007. Their record is even worse in age discrimination cases, in which employers lost 67 percent of the time. Employers can’t control enforcement or how much money is being spent on enforcement, but they can control what they themselves are doing.

What other employment-related laws have had an impact?

The Pennsylvania Human Relations Commission has proposed a new guidance for investigating claims of employment discrimination based on race and national origin. Should an employer reject a black or Hispanic applicant because of his or her criminal record, the PHRC will presume the rejection is due to discrimination in violation of the Pennsylvania Human Relations Act.

If an employer is going to screen out someone based upon a criminal conviction, it should comply with current and proposed regulations. There’s no question that the burden of dissuasion is on the employer. The only way you can prove your decision is not discrimination is by proving that the conviction was related to the job in question.

If somebody stole a candy bar 10 years ago but has had a stellar work record since then, that’s not job related. However, if someone stole $10,000 worth of tools from a retail company a year ago, that’s job related.

A related law is the Age Discrimination in Employment Act. This act makes it clear that when a victim shows discrimination was a ‘motivating factor’ behind a decision, the burden is on the employer to show it complied with the law. It also makes clear that this ‘motivating factor’ framework applies to all anti-discrimination and anti-retaliation laws — treating all workers, and all forms of discrimination, equally.

If you abruptly fire someone who is in the protected age category, without relevant justification and documentation, and you replace him or her with someone 15 years younger, you’re going to have a problem. Or if you conduct a RIF and 100 percent of the people selected for the RIF are older than 55, you’re going to have a problem.

What are the continuing impacts of the Lilly Ledbetter act?

The Lilly Ledbetter Fair Pay Act of 2009 was the first piece of legislation President Obama signed. In a Pennsylvania case, a female asked for a raise because she felt she was paid less than a similarly situated male but didn’t get a response. Using the Ledbetter Act as a precedent, that failure to answer was ruled a compensation decision, so the female could sue for discrimination.

As a result of this act, employers have to be much more careful about justifying payroll decisions. You should have some type of review system in place so a rogue manager or supervisor can’t make a decision that would be (or would appear to be) biased.

You need to retain your documents longer, because people have the ability to bring lawsuits based upon things that may have happened a decade ago. Also, you need to train your management team to know every compensation decision has legal implications.

How can employers avoid these lawsuits?

People aren’t going to sue you unless you create facts that cause them to question your intent or they think you are violating the law. Obviously, the best thing to do to avoid these high costs is to spend a bit of money on prevention. Make sure you consult with experts on the proper way to classify people — exempt or nonexempt — and the proper way to pay people — what is work time, what is not — to avoid catastrophic results.

Lynn C. Outwater is managing partner of Jackson Lewis LLP. Reach her at (412) 232-0232.