Are your company’s practices perpetuating sexual harassment?

By Stacey Mark
November 28, 2017

Scandals involving sexual harassment are nothing new.  The televised testimony of Anita Hill at the 1991 senate confirmation hearings on the appointment of Clarence Thomas to the U.S. Supreme Court increased public awareness of the issue when Ms.Hill testified to persistent and graphic instances of sexual harassment she endured while working for Mr.Thomas at the EEOC.  Her account was largely dismissed and Justice Thomas’ appointment to the Supreme Court was affirmed by the senate. 

Today, we hear almost daily news reports about sexual harassment as bad or worse than what Ms. Hill testified to almost 17 years ago.  One has to wonder, how there could be so little progress on the sexual harassment front? 

Historically, sexual harassment and sexual assault have been used as a tactic to keep women in their place.  Indeed, it has long been recognized that sexual harassment is more often about power than ignorance or lust.  It is precisely for this reason that sexual harassment remains rampant, despite laws and processes designed to protect employees from it.

To rid the workplace of sexual harassment, companies need to take a hard look at what they might be doing to perpetuate it.  Here are just a few practices that are contributing to the problem:

  • Maintaining policies that direct or require victims of harassment to tell the offending employee to stop. Some employers believe that most sexual harassers don’t realize their conduct is offensive and will stop if the victim speaks up.  This belief is misguided and sends the wrong message.  A victim of sexual harassment has sustained a real injury.  Forcing the victim to confront the perpetrator subjects the victim to further injury and discourages the victim from reporting in the first place.
  • Providing a vehicle for reporting sexual harassment, but without making a report mandatory for victims and bystanders. One of the many (not so) recent revelations about sexual harassment is how much of it goes unreported by victims as well as bystanders.  There are many reasons that people don’t report, including a genuine and often justifiable fear of being blamed, shamed, or retaliated against.  Bystanders may also experience a lack of emotional response or empathy with the victim, a concern about being the only one who makes an issue of it, or a feeling that nothing will be done about it.  Employers need to create a culture in which the entire workforce understands that by remaining silent, they are complicit.  One way to eliminate some concerns that inhibit reporting is to provide a hotline for confidential, anonymous reporting through an outside portal, such as ethicspoint.
  • Failing to promptly address sexual harassment every time it occurs. Another reason employees don’t report harassment is that they believe the information will fall on deaf ears.  Employers need to act promptly to remedy sexual harassment every time it occurs.  Failing to act or selective enforcement (e.g., excluding top executives, best performers, family members) significantly undermines any efforts to curb sexual harassment.
  • Entering contracts that fail to include sexual harassment as a “cause” for termination or forfeiture of termination benefits. It is not unusual for executive and professional employment contracts to permit termination only for “cause” and to provide substantial severance benefits in the event employment is terminated for any other reason.  Many such contracts don’t include sexual harassment in the definition of “cause,” which emboldens sexual harassers by immunizing them from the consequences of their behavior.
  • Failing to take any action in response to an unsubstantiated complaint.  When there are no witnesses to sexual harassment, employers unable to verify the complaint may choose to do nothing.  However, the inability to corroborate the event does not mean it didn’t happen or that the employer should not take any action to protect the alleged victim. 
  • Altering the job of the victim. Employers may respond to a complaint by reassigning the victim to another position, shift, location, or supervisor.  However, even if well-intentioned, imposing such changes on the victim may be perceived as retaliatory, especially if the perpetrator’s terms of employment remain unchanged. 
  • Failing to maintain records of complaints and unsubstantiated reports and purging disciplinary actions from personnel files. Whether or not a complaint of sexual harassment is substantiated, employers must maintain a record of all complaints that are received.  Especially when there is turnover in management, the failure to maintain such records may protect sexual harassers from appropriate scrutiny when there is a subsequent complaint.  Having a record of past complaints may reveal a pattern of sexual harassment that previously was not substantiated or warrants more serious discipline.
  • Dispute resolution procedures that allow reinstatement of a sexual harasser. Some employers, particularly in the union context, have been frustrated in their efforts to terminate employees for sexual harassment by arbitrators who ordered reinstatement, finding that the harasser’s behavior was not sufficiently egregious to warrant termination, the employer was inconsistent in its discipline of employees under similar circumstances, and even sometimes for technical reasons, such as the employer’s failure to act promptly when it learned of the harassment. Arbitrators may believe such decisions are fair from disciplinary perspective, but they are certainly not fair to the victims and do little to promote an environment that is free of sexual harassment.  In the absence of legislation to address this issue, employers and unions need to work together on disciplinary procedures that protect the victims and promote the employer's policy objectives.

Most companies have anti-harassment policies and complaint procedures.  Clearly, just having a policy and procedure in place is not enough in most cases.  Employers need to recognize that ridding the workplace of sexual harassment requires some serious introspection and a willingness to remedy whatever they may be doing to perpetuate the problem.

Ater Wynne's employment group can review your workplace policies and provide training and other solutions to prevent and address workplace harassment.

DOL increases fringe rate under Service Contract Act, issues reminder

By Stacey Mark
July 28, 2017

On July 25, the Department of Labor issued an all agency memorandum announcing an increase in the fringe rate contribution required under the Service Contract Act (SCA).  The rate will increase from $4.27 to $4.41 per hour, effective August 1, 2017.  The SCA sets prevailing wages and benefits that federal contractors who provide certain services to the federal government must pay to their employees.  

The memorandum also reminds federal contractors of their obligations under Executive Order 13706, which requires covered contractors to provide employees with up to 56 hours of paid sick leave annually.  Executive Order 13706 applies to new contracts with the federal government arising out of solicitations issued on or after January 1, 2017.  Sick leave paid to comply with Executive Order 13706 may not be credited to satisfy contractor obligations under the SCA.

DOL seeks comments on proposed federal overtime rule

By Stacey Mark
July 25, 2017

In response to court challenges to the federal overtime rule that was scheduled to go into effect on December 1, 2016, the Department of Labor (DoL) has decided not to advocate for the minimum weekly salary ($913) required by the final rule. Instead, the DoL plans to issue a Request for Information (RFI) to aid in formulating a proposal to revise the current overtime regulations contained in CFR Part 541.  In response to President Trump's Executive Order 13777, entitled "Enforcing the Regulatory Reform Agenda," the RFI is directed at reducing regulatory burden.  The RFI, which is scheduled to be published on July 26, 2017, asks for comment on the following questions:

  1. In 2004 the Department set the standard salary level at $455 per week, which excluded from the exemption roughly the bottom 20 percent of salaried employees in the South and in the retail industry. Would updating the 2004 salary level for inflation be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used? Alternatively, would applying the 2004 methodology to current salary data (South and retail industry) be an appropriate basis for setting the salary level? Would setting the salary level using either of these methods require changes to the standard duties test and, if so, what change(s) should be made?
  1. Should the regulations contain multiple standard salary levels? If so, how should these levels be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method? For example, should the regulations set multiple salary levels using a percentage based adjustment like that used by the federal government in the General Schedule Locality Areas to adjust for the varying cost-of-living across different parts of the United States? What would the impact of multiple standard salary levels be on particular regions or industries, and on employers with locations in more than one state?
  1. Should the Department set different standard salary levels for the executive, administrative and professional exemptions as it did prior to 2004 and, if so, should there be a lower salary for executive and administrative employees as was done from 1963 until the 2004 rulemaking? What would the impact be on employers and employees?
  1. In the 2016 Final Rule the Department discussed in detail the pre-2004 long and short test salary levels. To be an effective measure for determining exemption status, should the standard salary level be set within the historical range of the short test salary level, at the long test salary level, between the short and long test salary levels, or should it be based on some other methodology? Would a standard salary level based on each of these methodologies work effectively with the standard duties test or would changes to the duties test be needed?
  1. Does the standard salary level set in the 2016 Final Rule work effectively with the standard duties test or, instead, does it in effect eclipse the role of the duties test in determining exemption status? At what salary level does the duties test no longer fulfill its historical role in determining exempt status? 
  1. To what extent did employers, in anticipation of the 2016 Final Rule’s effective date on December 1, 2016, increase salaries of exempt employees in order retain their exempt status, decrease newly non-exempt employees’ hours or change their implicit hourly rates so that the total amount paid would remain the same, convert worker pay from salaries to hourly wages, or make changes to workplace policies either to limit employee flexibility to work after normal work hours or to track work performed during those times? Where these or other changes occurred, what has been the impact (both economic and non-economic) on the workplace for employers and employees? Did small businesses or other small entities encounter any unique challenges in preparing for the 2016 Final Rule’s effective date? Did employers make any additional changes, such as reverting salaries of exempt employees to their prior (pre-rule) levels, after the preliminary injunction was issued?
  1. Would a test for exemption that relies solely on the duties performed by the employee without regard to the amount of salary paid by the employer be preferable to the current standard test? If so, what elements would be necessary in a duties-only test and would examination of the amount of non-exempt work performed be required?
  1. Does the salary level set in the 2016 Final Rule exclude from exemption particular occupations that have traditionally been covered by the exemption and, if so, what are those occupations? Do employees in those occupations perform more than 20 percent or 40 percent non-exempt work per week?
  1. The 2016 Final Rule for the first time permitted non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. Is this an appropriate limit or should the regulations feature a different percentage cap? Is the amount of the standard salary level relevant in determining whether and to what extent such bonus payments should be credited?
  1. Should there be multiple total annual compensation levels for the highly compensated employee exemption? If so, how should they be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method? For example, should the regulations set multiple total annual compensation levels using a percentage based adjustment like that used by the federal government in the General Schedule Locality Areas to adjust for the varying cost-of-living across different parts of the United States? What would the impact of multiple total annual compensation levels be on particular regions or industries?
  1. Should the standard salary level and the highly compensated employee total annual compensation level be automatically updated on a periodic basis to ensure that they remain effective, in combination with their respective duties tests, at identifying exempt employees? If so, what mechanism should be used for the automatic update, should automatic updates be delayed during periods of negative economic growth, and what should the time period be between updates to reflect long term economic conditions?

Interested employers are encouraged to weigh in on all of these important questions.  


What Oregon’s expanded version of the Equal Pay Act of 2017 means for employers

By Stacey Mark
July 5, 2017

The Oregon legislature recently enacted an expanded Equal Pay Act designed to eliminate discriminatory pay practices based on race, color, religion, sex, sexual orientation (as defined in ORS 174.100), national origin, marital status, veteran status, disability, or age. 

Section 2 of the Act (amending ORS 652.220) prohibits discrimination in the payment of compensation based on protected class for work of "comparable character," defined as work requiring “substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title.”  To insure that employers do not perpetuate the effect of other employers' past discriminatory pay practices, the law precludes employers from screening applicants based on current or past compensation, determining compensation for a position based on an applicant’s current or past compensation, or seeking a salary history of an applicant until an offer of employment has been made.  

Differentials in pay for work of comparable character are permissible only when they are based solely on one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production, including piece-rate work; (4) workplace locations; (5) travel, if travel is necessary and regular for the employee; (6) education; (7) training; and (8) experience.  Amounts owed to an employee because of the failure of the employer to comply with the Act are defined as “unpaid wages.” 

Individuals may address violations of Section 2 by filing a complaint with the Commissioner of BOLI under ORS 659A.820, a civil action under ORS 652.230, or a civil action under 659A.885.  Violations of Section 4 of the Act, which makes it unlawful under Chapter 659A to request a salary history of an applicant, may also be addressed under ORS 659A.885.  Each of these options affords a prevailing plaintiff a different remedy:

  • In a private action under ORS 652.230, an individual may recover up to one year of back pay, an equal amount as liquidated damages, attorney fees and costs.
  • If the individual files an administrative complaint under ORS 652.820, the BOLI Commissioner is empowered to award the lesser of (1) two years’ back pay plus back pay for the period during which the complaint is pending, or (2) pay for the period the individual is subject to an unlawful wage differential plus the period during which the complaint is pending. 
  • Under ORS 659A.885, the remedies available are injunctive and equitable relief, including reinstatement or hiring with or without back pay, up to two years’ back pay, the greater of compensatory damages or $200, attorney fees, and costs. In addition, punitive damages are available if it is shown by clear and convincing evidence that the employer (1) engaged in fraud, acted with malice or with willful and wanton misconduct, or (2) was previously found to have violated ORS 652.220 in a proceeding under ORS 659A.885 or ORS 659A.850.  An employer may avoid liability for compensatory and punitive damages by showing that it completed an appropriate equal-pay analysis of its pay practices in good faith that related to plaintiff’s protected class, eliminated the wage differentials for the plaintiff, and made reasonable and substantial progress toward eliminating wage differentials for plaintiff’s protected class.  Evidence of such an analysis is not admissible in any other proceeding.

The potential ramifications of Oregon’s Equal Pay Act are significant.  An employer’s inability to substantiate a pay differential based exclusively on permissible factors may be sufficient to establish liability without the need to prove discriminatory intent.  This means that employers who have never intentionally discriminated, but historically set compensation by relying on salary history or other factors made impermissible under the Act could face monumental financial exposure.  Employers may not reduce the compensation of an employee to comply with their obligations under Section 2, so employers who wish to correct the results of past practices will presumably need to raise salaries of all of the employees who were negatively impacted.  Also, it is unclear whether a violation of ORS 652.220 may also result in a late payment penalty under Oregon’s final pay law, or whether an individual must elect between the available statutory remedies.  

The good news is that employers who want to get ahead of this issue have some time to comply.  The prohibition on requesting salary histories of applicants goes into effect 91 days after the end of the current legislative session, but the private right of action to enforce it does not go into effect until January 1, 2024.   The rest of the Act's provisions go into effect on January 1, 2019.  

Employers who need help analyzing their pay practices and complying with the Equal Pay Act may contact Ater Wynne's employment group for assistance. 

Supreme Court Finds Law Banning Registration of Disparaging Trademarks Unconstitutional

By Alexandra Shulman
June 23, 2017

Earlier this week, in Matal v. Tam, the United States Supreme Court unanimously ruled in favor of Portland-based rock band, the Slants, finding that the section of the Lanham Act banning offensive trademarks was an unconstitutional restraint on free speech.

Slants founder Simon Tam attempted to trademark the band's name in 2011, but the U.S. Patent and Trademark Office denied the request pursuant to 15 U.S.C. § 1052(a), the section of the Lanham Act that bans offensive or disparaging trademarks. The band members, who are Asian-American, selected the name to reclaim the derogatory term and to drain its denigrating force.

The Lanham Act contains provisions that bar certain trademarks, including 15 U.S.C. § 1052(a) (the disparagement clause), which prohibits the registration of a trademark "which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."  When determining whether a trademark is disparaging, an examiner at the PTO applies a two-part test -- first, considering the likely meaning of the trademark, and second, considering whether a substantial composite of persons find the term offensive.  Mr. Tam argued that the disparagement clause violated the Free Speech Clause of the First Amendment.

The Government argued that the disparagement clause did not violate the Free Speech Clause because: (1) trademarks are government speech, not private speech; (2) trademarks are a form of government subsidy; and (3) the constitutionality of the disparagement clause should be tested under a new "government-program" doctrine.  The Supreme Court rejected all three arguments, and ultimately concluded that the disparagement clause was the "essence of viewpoint discrimination," as it reflects the Government's interest in preventing speech expressing offensive ideas.

Patent Trolls Must Choose a New Bridge to Hide Under

By Daniel Lis
May 23, 2017

Yesterday, the U.S. Supreme Court issued an 8-0 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC that should put an end to “patent trolls” filing lawsuits in “friendly” venues of their choosing.

Patent trolls are individuals and companies that profit from suing over patents, instead of using their patents to make products.  Trolls consistently file lawsuits in the most plaintiff/troll-friendly courts they can find, such as the rural Eastern District of Texas.  The Supreme Court’s decision could save the companies targeted by patent trolls millions of dollars per year in fees spent litigating patent disputes in jurisdictions that are far away from where those companies are headquartered or incorporated. 

In rendering its decision, the Supreme Court construed the word “resides” in 28 U.S.C. § 1400(b), the venue statute for patent lawsuits, to require plaintiffs to file patent claims in the state where the defendant is incorporated.  Before Kraft, patent trolls were able to file lawsuits wherever the defendant could be subject to personal jurisdiction, which effectively allowed trolls to subject companies to the jurisdiction of courts in states where they merely sold a minimal number of products.

Now that patent trolls are required to sue companies in less friendly jurisdictions, oftentimes where the companies are located and their employees live, they may think twice before filing a lawsuit.

State cannot limit enforcement of arbitration agreement signed by agent, US Supreme Court holds

By Lori Irish Bauman
May 17, 2017

Earlier this week, the US Supreme Court again invoked the federal policy of enforcing arbitration agreements.  The Court reversed a Kentucky state court opinion holding that an arbitration agreement is unenforceable if it is signed by an individual with power of attorney, unless the power of attorney expressly authorizes waiver of the right to a jury trial.

In Kindred Nursing Centers LP v. Clark, two individuals who had power of attorney for their elderly relatives signed paperwork to move the relatives into a nursing home.  The paperwork included an agreement to arbitrate any disputes.  When the relatives later sued claiming substandard care, the nursing home moved to dismiss, citing the arbitration clause.  The Kentucky Supreme Court observed that the state constitution declares the right of access to the court and trial by jury to be “sacred” and “inviolate.”  On that basis, the Kentucky court held that an agent – in this case, a person with a power of attorney – cannot deprive her principal of such rights unless it is expressly so provided in the power of attorney.

On review, Justice Kagan, writing for the majority, stated that the Federal Arbitration Act (FAA) requires courts to place arbitration agreements on an equal footing with all other contracts.  Regardless of whether access to court and right to trial by jury are given special status by the state constitution, the Kentucky court’s ruling would impermissibly put arbitration agreements on a different footing than other contracts entered into pursuant to a power of attorney.  On that basis, the lower court’s holding was reversed.   

See our discussion of earlier US Supreme Court cases applying the FAA here and here.

Are your confidentiality agreements up to date?

By Stacey Mark
April 27, 2017

The Defend Trade Secrets Act (DTSA) provides an important tool for protecting trade secrets from misappropriation by affording owners a federal right of action for misappropriation of trade secrets related to a product or service used, or intended for use in interstate or foreign commerce.  The DTSA provides a variety of remedies that track those available under state uniform trade secret statutes, such as actual damages, damages for unjust enrichment, royalties, injunctive and exemplary relief, and attorney fees.     

However, the DTSA differs from uniform state laws in some significant respects.  The DTSA provides, in extraordinary circumstances, for the ex parte seizure of property to prevent the propagation or dissemination of the trade secret.  The DTSA further expands trade secret protection by enabling trade secret owners to seek nationwide relief, without preempting state law remedies. Another significant feature of the DTSA is the immunity from criminal and civil liability it provides to whistleblowers who comply with the Act's reporting provisions.  

Employers are required to notify employees and contractors who are subject to confidentiality agreements of the DTSA's immunity provisions.  An employer may comply by including the notice in the confidentiality agreement, or by including a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for suspected violations of the law.  An employer that fails to comply with the notice requirement may not be awarded exemplary damages or attorney fees in an action under the DTSA.  The statute applies to contracts governing confidentiality entered into on or after May 11, 2016.

Confidentiality provisions are commonly included in employment and independent contractor agreements, confidentiality/proprietary rights agreements, noncompete and nonsolicitation agreements, and in separation/release agreements, among other employment documents. Employers who have written contracts with employees or contractors entered into on or after May 11, 2016, containing confidentiality obligations should consider adding the DTSA disclosure and perhaps also reviewing their handbook.

Employers may contact Ater Wynne's employment group for assistance with DTSA compliance.

Legislators introduce bill to address BOLI's new interpretation of manufacturing overtime rule

By Stacey Mark
March 7, 2017

We recently reported on BOLI 's new guidance overturning its long-standing interpretation of ORS 652.020, Oregon's overtime rule applicable to manufacturing establishments.   The Oregon Legislature has now weighed in on this issue.

Under ORS 652.020, nonexempt employees working in mills, factories, and manufacturing establishments must be paid overtime for hours worked in excess of 10 in any day and hours worked in excess of 40 per week.  BOLI's prior interpretation of that rule required employers to calculate overtime hours worked on both a daily and weekly basis and pay the greater of the two.  Under the new guidance, employers are required to pay both daily and weekly overtime.  

The revised BOLI guidance has raised many questions.  Not only has BOLI done an about-face, the timing of the new guidance is puzzling as the interpretation of the manufacturing overtime rule is the subject of a pending class action filed in Multnomah County Circuit Court, which is likely to resolve the issue.  

In an attempt to address the uncertainty created by the new guidance in the manufacturing sector, the Oregon Legislature introduced a bill last Thursday to put the issue to rest.  Under SB 984, manufacturers would only be required to pay the greater of the daily or weekly overtime.

Ater Wynne's employment group is available to answer questions regarding the application of the manufacturing overtime rule and other wage and hour concerns.


Litigators beware: two acts designed to curb litigation abuse

By Daniel Lis
February 10, 2017

On January 30, 2017, the House Judiciary Committee received two bills that could have a significant impact on litigators and their clients. One bill seeks to impose mandatory penalties on lawyers, law firms, and parties who file frivolous lawsuits. The other bill seeks to prevent fraudulent joinder of parties and prevent plaintiffs from adding defendants solely for the purpose of destroying federal jurisdiction, only to drop those defendants later.

The Lawsuit Abuse and Reduction Act, H.R. 720, would amend FRCP 11 to require judges to sanction attorneys, law firms, or parties who file frivolous pleadings.  The mandatory sanction under the new rule would require parties to pay costs and attorneys’ fees. The rule would also give the court broad discretion to impose a variety of other sanctions, including striking pleadings, dismissing the lawsuit, and requiring that a party pay a penalty to the court. Further, the amendment would eliminate a party’s ability to avoid sanctions by voluntarily withdrawing claims within 21 days.  The House Judiciary Committee already voted 17-6 in favor of H.R. 720. If it is passed, it will likely cause a substantial decrease in lawyers asserting frivolous claims, as they will have to consider the possibility of mandatory sanctions.

The Innocent Party Protection Act, H.R. 725, seeks to prevent small businesses from being subject to fraudulent joinder. The bill seeks to protect these small businesses by allowing judges more discretion to see through an attorneys’ motives for naming a party and dismiss a party that was fraudulently joined in a lawsuit.  The House Judiciary Committee already voted 17-4 in favor of H.R. 725.  If it is passed, it may help protect small businesses from the hardship caused by paying attorneys’ fees in a lawsuit in which the business should have never been involved in the first place.