Author: Christian Palacios

By Gerald L. Maatman, Jr., Alex W. Karasik, and Christian J. Palacios

Duane Morris Takeaways:  In EEOC v. Keystone RV Company, Case No. 3:22-CV-831 (N.D. Ind. Mar. 27, 2024), Judge Damon R. Leichty of the U.S. District Court for the Northern District of Indiana held that an employer was liable under the Americans with Disabilities Act (“ADA”) for failing to accommodate a former employee after the company terminated the worker for attendance issues stemming from his novel medical condition. This rare summary judgement victory in favor of the Commission illustrates the importance of employers engaging in an interactive process with their employees to provide them with reasonable accommodations under federal anti-discrimination laws, and the legal liability associated with non-compliance. 

Background

The Charging party, Brandon Meeks, was diagnosed with cystinuria at the age of 19, a rare chronic illness that caused kidney stones to develop with irregular frequency. Roughly once every two years, he developed a large kidney stone that required surgical removal. In 2019 Meeks was hired as a painter at Keystone’s Wakarusa, Indiana plant, where he painted the base coat on RV wheels.  Keystone had an attendance policy whereby it would terminate an employee who accrued seven “attendance points” (absences) within a year, and allowed an employee to miss up to three consecutive days from one doctor’s note and accrue just one attendance point without applying for an ADA accommodation.  Id. at 2.  According to the record, Mr. Meeks was a “diligent and hard worker,” but he accrued several attendance points for absences related to his medical condition, including a visit to his urologist, and treatment for kidney stone pain. Id.

On November 13, 2019, Meeks collapsed in a restroom due to excruciating pain.  He was promptly rushed to the hospital and informed by a doctor that he had a “golf-ball-sized kidney stone” in his left kidney that would need to be surgically removed.  Id. at 3.  Meeks informed Keystone that he would require two weeks off of work to schedule and recover from surgery, which his employer agreed to given that Keystone’s Wakarusa plant closed down for several weeks from December to January and Meeks would only need a single day off of work. Prior to this request, Meeks had accrued 6 attendance points.  Id. at 4.  When Meeks returned to work on January 13, 2020, he informed Keystone he would need time off for another surgery scheduled on January 24, 2020. Meeks’ manager forecasted to him that he would be terminated if he missed work, and could reapply for employed 60 days later, per company policy.  Id.  According to the manager, Meeks did not provide a return to work date in connection with his second surgery request.  According to Meeks, he knew he could likely return to work on January 27, 2020, but he never communicated this timeline to Keystone because his employer “never asked.” Id. After Meeks underwent his second surgery, on January 24, 2020, his mother drove him to the plant to pick up his paycheck, upon which he was sent to the corporate office and informed he was terminated due to his attendance points.  Meeks subsequently filed a Charge with the EEOC. After its investigation, the EEOC brought suit on his behalf.  On March 27, 2024, Judge Leichty granted summary judgement in favor of the Commission.

The District Court’s Ruling

Judge Leichty began his 19-page ruling by observing that this case illustrated one reason “why the ADA existed.”  Id. at 1.  Judge Leichty observed that “[n]o one can reasonably dispute that Mr. Meeks was a qualified individual with a disability. Keystone knew of the disability. And Keystone failed to accommodate the disability reasonably. A reasonable jury could not find otherwise on this record.”  Id. at 7.

As the record reflected, the Court reasoned that Keystone clearly could have accommodated providing Meeks with two weeks leave, and yet it had not done so. The Court was unpersuaded by Keystone’s arguments that Meeks did not effectively communicate with his employer, and prior to his January surgery, he did not provide Keystone with an estimated return date.  Rather, the Court determined that Keystone had an affirmative obligation to initiate an interactive process with its employees, and had historical knowledge of Meeks’ disability; because of this, the fault was theirs alone.  Thus, “[a] reasonable jury could not lay the fault at Mr. Meeks’ feet,” and the Court granted summary judgement in the EEOC’s favor on ADA liability.  Id. at 10-11.

Judge Leichty scheduled a trial at a later date to assess the question of damages, as factual disputes remained regarding Meeks’ reasonable diligence at finding comparable employment.

Implications For Employers

As the ruling in EEOC v. Keystone RV Company illustrates, it is imperative that employers engage in an interactive process with employees with respect to disability accommodations, provided the employer has reason to know of the employee’s disability. Significantly, a formal ADA request is not necessary on the part of the employee for a court to find an employer at fault for a breakdown of the interactive process.  Because of this, employers should have robust policies in place to proactively provide their employees with reasonable accommodations for their disabilities. To do otherwise risks receiving a pre-liability judgement in favor of a federal, state, or municipal regulatory agency tasked with enforcing anti-discrimination legislation.

By Gerald L. Maatman, Jr., Alex W. Karasik, and Christian J. Palacios

Duane Morris Takeaways:  On March 11, 2024, the EEOC published its Fiscal Year 2023 Annual Performance Report (FY 2023 APR), highlighting the Commission’s accomplishments for the previous year, including a record-breaking recovery of $665 million in monetary relief for over 22,000 workers, a near 30% increase for workers over Fiscal Year 2022.

Employers should take note of the Commission’s annual report, as it provides invaluable insight into the EEOC’s regulatory priorities, and highlights the significant degree of financial risk that companies face for failing to comply with federal anti-discrimination laws. It is a must read for corporate counsel, HR professional, and business leaders.

FY 2023 Statistical Highlights

The EEOC’s recovery of $665 million in monetary relief over the past fiscal year represents an increase of 29.5% compared to Fiscal Year 2022.  Specifically, the Commission secured approximately $440.5 million for 15,143 workers in the private sector and state and local governments and another $204 million for 5,943 federal employees and applicants.

Furthermore, the Commission reported having one of the most litigious years in recent memory, with 142 new lawsuits filed, marking a 50% increase from Fiscal Year 2022. Among these new lawsuits, 86 were filed on behalf of individuals, 32 were non-systemic suits involving multiple victims, and 25 were systemic suits addressing discriminatory policies or affecting multiple victims. These numbers show an agency flexing its litigation muscles.

The EEOC’s drastic increase in filings was accompanied by a corresponding increase in complaint activity, with 81,055 new discrimination charges received, 233,704 inquiries handled in field offices, and over 522,000 calls from the public, thereby demonstrating the efficacy of the Commission’s outreach and public education efforts.

Other performance highlights from the report included obtaining more than $22.6 million for 968 individuals in litigation, while resolving 98 lawsuits and achieving favorable results in 91% of all federal district court resolutions. The Commission further reduced its private and federal sector inventories by record levels.

Strategic Developments / Systemic Litigation

The Commission also reported significant progress in its “priority areas” for 2023, which included combatting systemic discrimination, preventing workplace harassment, advancing racial justice, remedying retaliation, advancing pay equity, promoting diversity, equity, inclusion and accessibility (“DEIA”) in the workplace, and, significantly, embracing the use of technology, including artificial intelligence, machine learning, and other automated systems in employment decisions.

In 2023, the EEOC resolved over 370 systemic investigations on the merits, resulting in over $29 million in monetary benefits for victims of discrimination. The Commission also reported that its litigation program achieved a 100% success rate in its systemic case resolutions, obtaining over $11 million for 806 systemic discrimination victims, as well as substantial equitable relief.  Further, the Commission made outreach and education programs a priority in 2023, and specifically sought to reach vulnerable workers and underserved communities, including immigrant and farmworker communities, hosting over 680 events for these groups and partnering with over 1,120 organizations, reaching over 107,000 attendees.

Other Notable Developments

Beyond touting its monetary successes, and litigation accomplishments, the FY 2023 APR also highlights the newly enacted Pregnant Workers Fairness Act (“PWFA”), which provides workers with limitations related to pregnancy, childbirth, or related medical conditions the ability to obtain reasonable accommodations, absent undue hardship to the employer.

The Commission began accepting PWFA charges on June 27, 2023 (the law’s effective date) and has conducted broad public outreach relating to employers’ compliance obligations under the new law.

Takeaways For Employers

The EEOC’s Report is akin to a litigation scorecard. By all accounts, 2023 was a record-breaking year for the EEOC. As demonstrated in the report, the Commission has pursued an increasingly aggressive and ambitious litigation strategy to achieve its regulatory goals, and had a great deal of success in obtaining financially significant monetary awards.  Employers should take note of these trends and be proactive in implementing risk-mitigation strategies and EEOC-compliant policies.

We anticipate that the EEOC will continue to aggressively pursue its strategic priority areas in 2024, which could shape out to be another precedent-setting year. We will continue to track EEOC litigation activity, and look forward to providing our blog readers with up-to-date analysis on the latest developments.

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios

Duane Morris Takeaways:  In EEOC v. U.S. Drug Mart, Inc., No. 23-50075, 2024 WL 64766, at *1 (5th Cir. Jan 5, 2024), the Fifth Circuit refused to resurrect an EEOC lawsuit alleging that a Texas pharmacy created a hostile work environment under the Americans with Disabilities Act (the “ADA”) by reprimanding an asthmatic employee for wearing a mask during the beginning of the COVID-19 pandemic.  This case illustrates the Fifth Circuit’s high evidentiary standards associated with establishing the existence of a hostile work environment, especially with regards to demonstrating that the conduct was “sufficiently severe or pervasive to alter the conditions of the victim’s employment.”  Id.

Background

The charging party, David Calzada, was a pharmacy technician at U.S. Drug Mart (d/b/a Fabens Pharmacy).  Id.  Mr. Calzada suffered from asthma, and elected to wear a face mask to work on March 26, 2020. Id.  However, after arrival, the store manager informed Mr. Calzada that mask-wearing violated the pharmacy’s policy, and instead of removing his mask, Mr. Calzada left for the day.  Id.  A few days later, when Mr. Calzada returned to work, his supervisors informed him that the pharmacy’s polices were updated and he was now permitted to wear a mask and gloves at work.  Id.  However, during the meeting, Mr. Calzada was repeatedly belittled by the head pharmacist and at one point called a “disrespectful stupid little kid.”  Id.  Mr. Calzada quit the same day. Id.

Mr. Calzada subsequently filed a charge of discrimination with the EEOC.  Id.  The EEOC brought suit against U.S. Drug Mart on his behalf, alleging the Texas pharmacy created a hostile work environment and constructively discharged Calzada based on the conduct of the store manager and head pharmacist.  Id.  The district court granted summary judgment in favor of U.S. Drug Mart in October of 2022. It determined that “an isolated instance of verbal harassment is generally not sufficient to support a hostile work environment claim.” EEOC v. United States Drug Mart, Inc., No. EP-21-CV-00232, 2022 WL 18539781, at *8 (W.D.Tex. 2022). The EEOC appealed on January 31, 2023.

The Fifth Circuit’s Ruling

The Fifth Circuit, in affirming the district court’s summary judgment decision, held that the EEOC was unable to establish a prima facie case for a hostile work environment claim because it was unable to prove that the head pharmacist’s harsh words were “sufficiently severe or pervasive to alter the conditions of the victim’s employment.”  EEOC, 2024 WL 64766, at *2.  The Fifth Circuit observed that although the head pharmacist’s behavior was “certainly brusque,” it fell well short of the Fifth Circuit’s fairly high standard for “severe” conduct.  Id.  The Fifth Circuit noted that the EEOC’s constructive discharge claim failed for the same reason, because proving constructive discharge required an even “greater degree of harassment than that required by a hostile work environment claim.”  Id.  Accordingly, the Fifth Circuit affirmed the district court’s grant of summary judgment in favor of the employer.

Implications For Employers

The COVID-19 pandemic was accompanied by a variety of novel legal theories and questions of first impression. One thing that remains the same, however, is the high evidentiary standard that plaintiffs need to satisfy to prove their hostile work environment claims, specifically with respect to the element of “severe and pervasive” conduct.

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios

Duane Morris Takeaways: In EEOC v. 1901 South Lamar, LLC, No. 1:23-CV-539, 2024 WL 41202, at *1 (W.D. Tex. Jan. 3, 2024), U.S. District Judge Robert Pitman adopted U.S. Magistrate Judge Susan Hightower’s recommendation to deny Defendants’ three Motions to Dismiss an EEOC pregnancy discrimination lawsuit. As Magistrate Judge Hightower’s recommendation illustrates, even smaller entities that would ordinarily not satisfy Title VII’s numerosity requirement cannot escape the EEOC’s grasp if they collectively operate as a single, integrated enterprise. 

Case Background

Defendants 1901 South Lamar, LLC d/b/a Corner Bar (“Corner Bar”), Revelry Kitchen & Bar, LLC (“RK&B”), and Revelry on the Boulevard, LLC (“ROTB”) (collectively, “Defendants”) hired Kellie Connolly (“Connolly”) in September 2020 to work at the Corner Bar in Austin, Texas.  Id. at *1. On January 31, 2021, Connolly informed the Defendants she was pregnant.  Id.  Two months later, after Connolly became visibly pregnant, the Defendants allegedly reduced her work hours.  Id.  On June 25, 2021, Connolly’s manager terminated her employment, stating that “she was becoming ‘too much of a liability’” and that they would part ways “until after the baby.”  Id.

The EEOC filed suit against the Defendants alleging they discriminated against Connolly on the basis of her pregnancy in violation of Title VII.  Id. In seeking to dismiss the lawsuit, the Defendants argued: (i) Corner Bar was not an “employer” under Title VII because it employed fewer than 15 employees during the relevant time period, and (ii) the Defendants were not an integrated single employer enterprise under Title VII.  Id. at *2.

The Court’s Decision

Magistrate Judge Hightower was unpersuaded by the Defendant’s arguments. As a preliminary matter, Magistrate Judge Hightower held that Title VII’s numerosity requirement was not jurisdictional, and could therefore not serve to support Defendant’s Motion to Dismiss for lack of subject- matter jurisdiction.

The Magistrate Judge then applied a four-factor test to determine whether these separate entities were a “single, integrated enterprise” under Title VII and concluded that the factors weighed in favor of the EEOC.  In particular, the Court found the following facts supported the EEOC’s “integrated business enterprise” allegations: (i) Defendants all shared bartending staff and inventory, (ii) utilized a single Director of Operations to handle all human-resources related services, (iii) jointly marketed their businesses, and (iv) utilized a disciplinary form that bore the logo of each of the Defendants.  Id. at *3.  Accordingly, the Magistrate Judge found that these facts could support a finding of centralized control of labor relations and recommended the District Court deny Defendants’ Motion to Dismiss. Id. at *4.

The Defendants challenged the order by way of Rule 72 objections. On January 3, 2024, District Court Judge Robert Pitman rejected the Rule 72 objections, and accepted and adopted the Magistrate Judge’s report and recommendation.

Implications For Companies

As the ruling in EEOC v. 1901 South Lamar, LLC, illustrates, even employers with fewer than 15 employees that would ordinarily be exempt from Title VII’s requirements may be sued by the EEOC, provided they have sufficiently integrated affiliates that would collectively put them over Title VII’s numerosity threshold.

By Gerald L. Maatman, Jr. and Christian J. Palacios

Duane Morris Takeaways:  In EEOC v. Princess Martha, LLC, et al., Case No. 8:22-CV-2182, 2023 U.S. Dist. LEXIS 219651 (M.D. Fla. Dec. 11, 2023), Judge Charlene Honeywell of the U.S. District Court for the Middle District of Florida ruled that a real estate acquisition firm could not avoid a disability discrimination suit filed by the EEOC, despite the fact that the real estate firm was not named in the original charge of discrimination. The EEOC initially only sent two of the three defendants the operative charge of discrimination, but throughout the course of the investigation the Commission discovered that the real estate acquisition firm was a joint employer, and subsequently sent the real estate firm notice and amended its complaint accordingly. This case illustrates the dangers of joint employer liability for highly integrated corporate entities, and the judicial latitude the EEOC is often afforded to amend its complaints after charging a named party.

Background

In August of 2021, a woman was offered a job at Princess Martha, a Florida retirement community, but her job offer was rescinded after she failed a drug test on account of the medications she took to treat her Post Traumatic Stress Disorder. She promptly filed a charge of discrimination with the EEOC alleging Princess Martha’s hiring practices violated the Americans with Disabilities Act of 1990.

The EEOC sent Princess Martha notice of the charge on November 23, 2021. During the course of its investigation the Commission determined that Princess Martha had a joint employer relationship with TJM Properties, whom it sent notice to on May 26, 2022. After determining that TJM Properties and Princess Martha violated the ADA, and after an unsuccessful conciliation attempt, the EEOC filed a lawsuit against both TJM Properties and Princess Martha on September 21, 2022. The Commission subsequently amended its complaint by adding TJM Property Management to the suit, alleging TJM Property Management received proper notice of the lawsuit because of its interrelated relationship as a single or integrated enterprise and/or joint employer status with the other defendants.

TJM Properties and TJM Property Management moved to dismiss the lawsuit on two grounds: First they argued that the EEOC had failed to exhaust its administrative remedies, including adequately putting the TJM entities on notice and giving them the opportunity to conciliate. Second, they argued that the EEOC’s complaint failed to establish a single/integrated enterprise or joint employer relationship existed between the TJM entities and Princess Martha.

The Court’s Ruling

In ruling in favor of the EEOC, the Court made short work of the defendants’ first argument. TJM Properties participated in the conciliation process and was explicitly notified by the Commission that it was a joint employer to Princess Martha. TJM Property Management similarly received notice due to its interrelated nature with the other defendants, and the TJM entities shared a principal place of business and the same mailing address. Furthermore, the Court pointed to an agreement existed between the defendants that required TJM Property Management to assist in coordinating legal matters with Princess Martha.

With respect to the defendants’ second argument, the Court noted that typically only parties named in EEOC charges could be charged in suits, but courts used a five-factor test to determine whether a non-named party could be sued. Applying the factors to the case, the Court determined that all three defendants were “highly integrated.” Id. at * 8. All three entities shared a mailing address, and the managing members of Princess Martha were also active in the management of TJM. Additionally, the human resources director for Princess Martha was a TJM Properties employee, and all three entities shared a common owner. Because of this, the Court concluded that despite the fact that the EEOC had not named TJM Property Management in the original suit, the highly integrated nature of the defendants made the Commission’s amended complaint appropriate.

Implications For Employers

As the ruling in EEOC v. Princess Martha, LLC illustrates, many courts are reluctant to strictly interpret an EEOC complaint, and the Commission can likely amend its lawsuit if, during the course of its investigation, it discovers that named defendants have highly integrated relationships with non-named entities. Therefore, companies with closely adjacent corporate affiliates should take extra care if they receive a charge of discrimination from the EEOC, as the Commission may later amend its complaint to include a non-named corporate entity.