July 2017 Legal Report

Strategic Security

​​​Photo by Peter Hershey​

July 2017 Legal Report
 

​JUDICIAL DECISIONS

Discrimination. Discrimination on the basis of sexual orientation is a form of sex discrimination that is prohibited under Title VII of the U.S. Civil Rights Act of 1964, a U.S. federal court of appeals ruled. 

The ruling stems from a lawsuit brought by Kimberly Hively, an open lesbian and former adjunct professor at Ivy Tech Community College in South Bend, Indiana. Hively began teaching at Ivy Tech in 2000 part-time and applied for at least six full-time positions between 2009 and 2014. She was not hired, however, and in July 2014 her adjunct contract was not renewed.

Hively, according to court documents, thought she was not being hired because of her sexual orientation and filed a claim with the U.S. Equal Employment Opportunity Commission (EEOC) in December 2013.

“I have applied for several positions at Ivy Tech, fulltime, in the last 5 years,” Hively wrote. “I believe I am being blocked from fulltime employment without just cause. I believe I am being discriminated against based on my sexual orientation.”

Hively received a right-to-sue letter from the EEOC, and filed it with a district court. Ivy Tech sought to have the case dismissed because it claimed sexual orientation was not a protected class under Title VII. The court agreed with the college and dismissed the case for Hively’s failure to state a claim.

Hively appealed the dismissal, which reached the U.S. Court of Appeals for the Seventh Circuit. A panel of judges on the court initially heard the case, and upheld the district court’s dismissal—but only because it was bound by previous Seventh Circuit decisions, which the panel found dubious. 

To address those concerns, the full appeals court agreed to hear the case to decide what it means to discriminate on the basis of sex, and if actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex.

To support her case, Hively argued that sex discrimination includes discrimination based on sexual orientation. She alleged that “if she had been a man married to a woman…and everything else had stayed the same, Ivy Tech would not have refused to promote her and would not have fired her,” the lawsuit said.

The court agreed and found that what Hively described was “paradigmatic sex discrimination.” The court said that Ivy Tech was “disadvantaging her because she is a woman” because she represents the “ultimate case of failure to conform to the female stereotype” because she is not heterosexual, according to court documents.

“Hively’s claim is no different from the claims brought by women who were rejected for jobs in traditionally male workplaces, such as fire departments, construction, and policing,” the court said. “The employers in those cases were policing the boundaries of what jobs or behaviors they found acceptable for a woman (or in some cases, for a man).”

The court reversed the district court’s ruling and remanded Hively’s case. 

“We hold only that a person who alleges that she experienced employment discrimination on the basis of her sexual orientation has put forth a case of sex discrimination for Title VII purposes,” the court wrote. “It was therefore wrong to dismiss Hively’s complaint for failure to state a claim.” (Hively v. Ivy Tech Community College of Indiana, U.S. Court of Appeals for the Seventh Circuit, No. 3:14-cv-1791, 2017)


Whistleblowers. Employees who make internal complaints to their companies but fail to make external complaints to the U.S. Securities and Exchange Commission (SEC) are still protected whistleblowers under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a U.S. federal appeals court ruled.

Paul Somers was a vice president at Digital Realty Trust, Inc., from 2010 to 2014. During his employment, Somers made several reports to senior management about possible securities law violations by Digital Realty, which later fired him. Somers, according to court documents, was unable to report his complaints to the SEC before his termination.

Somers then filed a lawsuit against Digital Realty, alleging it violated a section of Dodd-Frank, “Securities Whistleblower Incentives and Protection,” by firing him in retaliation for making internal complaints.

This section of Dodd-Frank includes an anti-retaliation provision. Some U.S. federal courts have determined that in using the term “whistleblower” in this provision, Congress “did not intend to limit protections to those who disclose information to the SEC,” according to court documents. 

Digital Realty, however, attempted to have the suit dismissed because Somers did not report his complaints to the SEC, so he was not a “whistleblower” entitled to Dodd-Frank protections, according to court documents.

This is because Dodd-Frank’s anti-retaliation provision defines a whistleblower as “any individual who provides…information relating to a violation of the securities laws” to the SEC. However, SEC regulations have defined whistleblowers to protect individuals who make internal and external reports about violations from retaliation.

The U.S. district court denied Digital Realty’s dismissal and deferred to the SEC’s interpretation that “individuals who report internally only are nonetheless protected from retaliation” under Dodd-Frank, the lawsuit said.

Digital Realty appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit, which upheld the lower court’s ruling.

The regulation created by Dodd-Frank “accurately reflects congressional intent that [Dodd-Frank] protects employees whether they blow the whistle internally, as in many instances, or they report directly to the SEC,” the appeals court wrote. (Somers v. Digital Realty Trust, U.S. Court of Appeals for the Ninth Circuit, No. 3:14-cv-05180-EMC, 2017)


LEGISLATION

Canada

Marijuana. Canadian Prime Minister Justin Trudeau introduced legislation that would legalize recreational marijuana use in Canada. 

The Cannabis Act would create a legal framework for the production, distribution, sale, and possession of cannabis in Canada. Canadians 18 years of age and older would be allowed to purchase and possess up to 30 grams of marijuana, and grow up to four plants per household.

Canadian provinces and territories would authorize and oversee the distribution and sale of marijuana under a set of federal minimum conditions. 

“In those jurisdictions that have not put in place a regulated retail framework, individuals would be able to purchase cannabis online from a federal licensed producer with secure home delivery through the mail or by courier,” according to a fact sheet on the bill.

The bill would also amend the current Canadian Criminal Code to make it a criminal offense to sell cannabis to a minor, to create a “zero tolerance approach” for those who drive under the influence of marijuana or other drugs, and to authorize new tools to enhance the police’s ability to detect drivers under the influence.

If the legislation is enacted, Canada will join Uruguay as the only nations to legalize marijuana as a consumer product.


New York City 

Wages. New York City Mayor Bill de Blasio signed a bill into law that prohibits employers from inquiring about prospective employees’ salary history during the hiring process.

The law (formerly Int. 1253) is designed to “reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay equity,” according to the law. 

The law prohibits employers from asking about an applicant’s salary history—including the applicant’s current or prior wages, benefits, or other compensation—and also cautions that if the employer becomes aware of the applicant’s salary history, it cannot rely on that information when determining his or her prospective salary. The law does not apply to internal candidates.


United States

Workplace Safety. U.S. President Donald Trump signed into law legislation that nullifies a rule requiring employers to create and maintain records of work-related injuries and illnesses.

The resolution (P.L. 115-21) eliminates the rule created by the U.S. Department of Labor in 2016, which required employers to record injuries and illnesses on U.S. Occupational Safety Health Administration (OSHA) 300 Log and 301 Incident Report forms within seven calendar days of becoming aware that the injury or illness occurred. The rule also would have allowed OSHA to issue citations to employers for failing to record workplace injuries or illnesses up to six months after the five-year record retention period that would have applied to the record.

U.S. Representative Bradley Byrne (R-AL) introduced the resolution. “The role of the executive branch is to enforce the laws—not rewrite them,” Byrne explained in a statement. “This OSHA power grab was completely unlawful,” he said. It would have done nothing to improve workplace safety while creating significant regulatory confusion for small businesses.


LEGISLATION

United States

Fair Pay. U.S. President Donald Trump issued an executive order that rescinds former U.S. President Barack Obama’s Fair Pay and Safe Workplaces executive order.

The executive order required contractors vying for a U.S. government contract of more than $500,000 to disclose involvement in any administrative merits determinations, arbitral awards or decisions, or civil judgments during the previous three years.

The executive order also required contractors to provide wage records on all individuals performing work under the contract, and it prohibited contractors from forcing employees into arbitration without the consent of both parties if a sexual assault or harassment accusation arose.​

Elsewhere in the Courts

Age Discrimination

Restaurant chain Texas Roadhouse will pay $12 million and other relief to settle an age discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC). The suit charged that the chain violated U.S. law by engaging in a pattern of age discrimination by failing to hire front-of-house staff, such as servers, hosts, and bartenders, because they were 40 years of age or older. In addition to the $12 million, Texas Roadhouse will create a diversity director position and pay for a consent decree compliance monitor, which will increase its recruitment and hiring of employees older than 40 for front-of-house positions. (EEOC v. Texas Roadhouse, U.S. District Court for the District of Massachusetts, No. 1:11-cv-11732-DJC, 2017)

Discrimination

A Houston manufacturing facility will pay $150,000 and other relief to settle a religious discrimination and retaliation lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC). The suit accused the facility of violating U.S. law when it revoked a worker’s verbal job offer because he declined—for religious reasons—to have a lock of his hair cut from his scalp for a drug test. Instead, the man offered alternatives, such as pulling hair from his beard, but was told to go home and denied an opportunity to reschedule the drug test. (EEOC v. U.S. Steel Tubular Products, Inc., U.S. District Court for the Southern District of Texas, Houston Division, No. 4:14cv2747, 2017)

Hacking

A co-owner of HNA Engineering pleaded guilty to intentionally accessing a competing engineering firm’s computer network without authorization to obtain proprietary information. Jason Needham, 45, confessed that during a two-year period he accessed the servers of a competing firm to download engineering schematics and PDF documents that contained project proposals and budgetary documents. He also admitted to accessing an employee’s email account to gain access to the firm’s marketing plans, project proposals, company fee structures, and rotating account credentials for its internal document-sharing system. Needham’s sentencing is scheduled for July 14. (U.S. v. Needham, U.S. District Court for the Western District of Tennessee Western Division, No. 2:17-cr-20097)