May 4, 2021
CFPB Acting Director Uejio And FTC Acting Chairwoman Slaughter Issue Joint Statement On Preventing Illegal Evictions
On March 29, 2021, Consumer Financial Protection Bureau (CFPB) Acting Director Dave Uejio and Federal Trade Commission (FTC) Acting Chairwoman Rebecca Slaughter issued a joint statement regarding their agencies’ work to stop illegal evictions and protect American consumers facing economic hardship due to COVID-19. The joint statement referenced a March 1 CFPB report finding that the COVID-19 pandemic has endangered renters, with over 8.8 million people behind on rent. Of those tenants, people of color are disproportionately affected. The joint statement then noted reports of major multistate landlords forcing tenants from properties despite eviction moratoria, or before such tenants were aware of their rights. As a result, CFPB and FTC staff will monitor and investigate eviction practices—particularly by major multistate landlords, eviction management services, and private equity firms to ensure compliance with applicable law. The joint statement also advised that evicting tenants in violation of applicable law or threatening to evict them without apprising them of their legal rights may violate federal laws such as the Fair Debt Collection Practices Act and Federal Trade Commission Act. The CFPB and FTC concluded the joint statement by warning they will not tolerate “illegal practices that displace families and expose them…to grave health risks.”
CFPB Issues Rule Targeted At Preventing Illegal Evictions
On April 19, 2021, the CFPB issued an interim final rule (“rule”) aimed at preventing illegal evictions. This measure is intended to support an eviction moratorium issued by the Centers for Disease Control and Prevention (“CDC”), which prevents landlords from evicting tenants for failing to pay rent when the tenant is unable to afford full payments and would likely be driven into homelessness or a shared living setting by the eviction. The rule applies to debt collectors—as defined in the Fair Debt Collection Practices Act (“FDCPA”)—who are collecting debts for landlords. Under the rule’s terms, such collectors must disclose the existence of the CDC moratorium and may not misrepresent tenants’ eligibility for protection under the moratorium.
Dave Uejio, the Bureau’s Acting Director, explained the basis for the interim final rule: “With COVID-19 killing hundreds of Americans every day, kicking families out into the street during this pandemic may literally be a death sentence. No one should be evicted from their home without understanding their rights, and we will hold accountable those debt collectors who move forward with illegal evictions. We encourage debt collectors to work with tenants and landlords to find solutions that work for everyone.” In further support of the interim rule, the Bureau cites “CFPB analysis and other data” suggesting that “9 million households [are] at risk of eviction” (compared to a typical year where there are 900,000 evictions), evidence that “stopping evictions saves lives,” and data from a March CFPB report demonstrating that “evictions increase racial inequality.” In addition to the rule and related press release, the Bureau released sample disclosures illustrating the interim rule’s requirements and a set of Fast Facts about the rule.
The rule amends Regulation F, which implements the FDCPA, and takes effect on May 3, 2021. The CFPB is simultaneously soliciting public comment, which will be due 15 days after publication of the rule in the Federal Register. This interim rule comes in the wake of other CFPB measures intended to protect consumers during the COVID-19 pandemic and prevent them from losing their homes.
The rule was “issued…in support of the [CDC]’s eviction moratorium.” According to the Bureau, “the CDC order generally prohibits landlords from evicting tenants for non-payment of rent, if the tenant submits a written declaration that they are unable to afford full rental payments and would likely become homeless or have to move into a shared living setting” and “[t]his prohibition applies to an agent or attorney acting as a debt collector on behalf of a landlord or owner of the residential property.” The rule incorporates the CDC Order by reference and applies during the CDC Order’s effective period. Under the interim final rule, debt collectors “must provide tenants who may have rights under the CDC order with clear and conspicuous notice of those rights” and they “must provide [it] in writing.” The Bureau further wrote that “debt collectors who evict tenants who may have rights under the moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act (FDCPA) and are also subject to private lawsuits by tenants.”
The rule comes two weeks after the Bureau proposed changes to mortgage servicing rules “intended to help prevent avoidable foreclosures” resulting from the “COVID-19 pandemic and ensuing economic crisis.” The Bureau also released a guide to COVID-19 financial relief earlier this month. Taken together, these efforts demonstrate that the Bureau is following through on its promise to seek to ameliorate consumer harm resulting from the COVID-19 pandemic, in line with one of the top policy priorities identified by Acting Director Uejio in his inaugural message to Bureau employees, shared with the public on the Bureau’s blog.
EEOC Issues New Guidance On Religious Discrimination And Accommodation Of Religious Beliefs
Whenever there is a change in federal administrations, employers must be aware of how various employment laws, rules and regulations will change. One hot topic in employment law, which has seen significant change in recent years, is religious discrimination and accommodation of religious beliefs in the workplace.
This issue is pertinent, not only because of the recent change in administrations, but also because of the Equal Employment Opportunity Commission’s (“EEOC”) January 2021 revisions to the agency’s Compliance Manual Section on Religious Discrimination, which is the first such update since 2008. While the Compliance Manual does not have the force of law, it does establish how the EEOC analyzes claims of religious discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”) and provides useful guidance to employers.
Background on Title VII
Title VII prohibits employers from discriminating against individuals because of their religion (or lack of religious belief) in hiring, firing, or any other terms and conditions of employment. The law also prohibits an employer from imposing religion on its employees, with the exception of religious institutions which are immune from federal employment related civil rights statutes brought by certain employees.
In addition, Title VII requires employers to reasonably accommodate the sincerely held religious beliefs and practices of applicants and employees, unless doing so would cause an undue hardship on the employer. A reasonable religious accommodation is an adjustment to the working environment that allows an employee to practice his or her religion. The determination of whether a religious accommodation is reasonable requires a careful fact-based analysis.
Religious Discrimination and Accommodation Since 2008
Since 2008, the law continued to evolve, often spurred by advocacy from various constituencies.
Courts, the EEOC and legislatures have worked to resolve conflicts through legal interpretations, policy changes and enforcement actions, and new legislation. For example, during the period spanning 2008 to 2017, the EEOC experienced a surge in charges under Title VII alleging religion-based discrimination. Beginning in 2013, there has been a steady increase in EEOC sexual-orientation/gender-identity discrimination charges. In 2015, the EEOC, in a federal sector decision, determined that sexual orientation discrimination is, by its very nature, discrimination because of sex. See Baldwin v. Dep’t of Transp., Appeal No. 0120133080 (July 15, 2015).
There have also been important religious discrimination and accommodation decisions handed down by the U.S. Supreme Court in recent years. For instance, in the case of Our Lady of Guadalupe School v. Morrissey-Berru and St. James School v. Biel, the Supreme Court ruled that the “ministerial exception,” which bars ministers from suing churches and other religious institutions for employment discrimination, also extends to suits brought by religious schoolteachers. The Supreme Court issued another landmark Title VII ruling in 2020 in the case of Bostock v. Clayton County, Georgia, in which the Supreme Court ruled that Title VII protects gay, lesbian, and transgender employees from discrimination based on sex.
Other significant Title VII rulings in the last decade include Masterpiece Cakeshop Ltd. v. Colorado Civil Rights Commission, which involved the question of whether a closely-held business has a constitutional right to discriminate based on its owner’s beliefs, and Burwell v. Hobby Lobby Stores, Inc., which held that the government cannot require certain employers to provide insurance coverage for birth control if they conflict with the employer’s religious beliefs.
2021 EEOC Guidance
The January 2021 EEOC guidance on religious discrimination and accommodation builds upon and clarifies many of the judicial, legislative and policy actions that have taken place since 2008. Some of the more noteworthy updates include:
Reasonable Accommodation. The guidance provides that an employer can reasonably accommodate an employee through flexible scheduling, voluntary swaps of shifts, or lateral transfers to enable religious observance. An employer can also modify workplace practices, policies, or procedures. For instance, the EEOC advises that an employer could accommodate a pharmacist who has a religious objection to dispensing contraceptives by allowing a coworker to assist customers who seek to make those purchases.
Undue Hardship. Under the guidance, factors to be considered when assessing undue hardship for an employer include the “identifiable cost in relation to the size and operating costs of the employer and the number of individuals who will in fact need a particular accommodation.” By way of example, the guidance states if an employee does not want to wear a uniform supporting LGBTQ rights on religious grounds, the employer can reasonably accommodate the employee without undue hardship by permitting the employee to wear something else. However, the employer can require the employee to attend diversity training that fosters respect for others.
In another example, the guidance notes that although certain religious beliefs might require proselytizing, conduct disruptive to the workplace may cause an undue hardship on the operation of a business even if it does not rise to the level of harassment under Title VII. In considering whether to allow such actions, such as proselytizing, the guidance explains that an employer should balance the employee’s religious practice with other employees’ rights not to be harassed for their own religious beliefs or lack thereof.
Religious discrimination and accommodation will almost certainly continue to be a hot employment law topic in the years ahead. Some of the important questions that we expect to be at the forefront of debate—and litigation, legislation, and enforcement—include:
Employers May Encourage Employees To Receive COVID-19 Vaccine, But Requiring It Raises Issues
On Dec. 16, 2020, the Equal Employment Opportunity Commission (EEOC) released guidance that stated that COVID-19 vaccinations do not qualify as medical examinations under the Americans with Disabilities Act (ADA) and that employers could therefore mandate vaccination for COVID-19, subject to certain recognized exemptions. However, doing so requires that employers navigate a number of federal laws, including the ADA, Title VII of the Civil Rights Act and the Genetic Information Nondiscrimination Act (GINA)., In addition, some employees have raised challenges to employer-mandated vaccination programs on the basis that the current COVID‑19 vaccines are only authorized through Emergency Use Authorization (EUA), which is not full licensure under the U.S. Food and Drug Administration (FDA) regulations. Many employers have chosen to encourage, rather than mandate, vaccination, although this approach has its own pitfalls.
One recognized exemption to mandating vaccinations is the disability exemption under the ADA. To comply with this exemption, employers mandating vaccination must provide “reasonable accommodations” to those who are unable to receive the COVID-19 vaccine because of a disability. The EEOC says, “[i]f a reasonable accommodation is needed and requested by an individual with a disability to apply for a job, perform a job, or enjoy benefits and privileges of employment, the employer must provide it unless it would pose an undue hardship, meaning significant difficulty or expense.”
The ADA also requires that employers keep employees’ medical information confidential, even if it does not implicate disability. As a result, if the vaccine is administered by the employer or by a third party with whom the employer has a contract, screening questions given before the vaccine is administered must be kept confidential. Because these screening questions may elicit information about a disability, employers must demonstrate that any disability-related inquiries involved in the vaccination process are “job-related and consistent with business necessity.” To meet this standard, employers must demonstrate that, based on objective evidence, the employee is a direct threat to the health or safety of themselves or others. Even if the vaccine is not administered by the employer, the employer cannot require that employees provide any medical information as part of their proof of vaccination. The Centers for Disease Control and Prevention (CDC) says, “If an employer requires employees to provide proof that they have received a COVID-19 vaccination from a pharmacy or their own healthcare provider, the employer cannot mandate that the employee provide any medical information as part of the proof.”
Another recognized exemption to mandating vaccinations is the “sincerely held religious belief” exemption under Title VII of the Civil Rights Act. To comply with Title VII of the Civil Rights Act, employers must provide “reasonable accommodations” to those who are unable to receive the COVID‑19 vaccine because of a sincerely held religious belief, unless such accommodation would pose undue hardship to the employer. EEOC guidance states that employers should assume that an employee’s “request for religious accommodation is based on a sincerely held belief.”
While GINA is not implicated by requiring that employees be vaccinated, Title II of GINA may be implicated by pre-screening questions asked before administering the vaccine, to the extent those questions may ask about genetic information such as an individual’s family medical history. GINA issues are not implicated if the vaccine is administered by a third party, assuming no contract exists between the employer and third party.
Occupational Safety and Health Administration (OSHA) applies to nearly all employers with limited exception (i.e., businesses with fewer than 10 employees, self-employed individuals and churches, among others).
By executive order issued in January 2021, the Biden Administration directed OSHA to consider issuing a COVID‑19 standard and set a March 15 deadline to do so. That date has come and gone, and no standard has yet been issued by OSHA. But OSHA still offers information and guidance for COVID-19 vaccines. For example, employers find themselves facing a workforce at varying stages of vaccination: some employees will be fully vaccinated while others have not yet received their first doses, and still others may not be vaccinated due to a recognized exemption as noted above. OSHA’s Jan. 29 guidance makes it clear that employers may not, with regard to COVID-19 safety protocols, distinguish between employees who have and have not received the vaccine. All employees, regardless of their vaccination history, should continue to fully abide by COVID-19 prevention protocols, including the wearing of masks or facial coverings and the observance of social distancing protocols. OSHA has emphasized the still-in-place recommendations to prevent the spread of COVID-19, particularly because the CDC has noted that vaccinated individuals may still be able spread the virus. Employers should continue to be mindful of their obligations under the General Duty Clause, Section 5(a)(1) of the Occupational Safety and Health Act of 1970, which requires employers to furnish to each worker “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm,” which includes COVID-19.
Emergency Use Authorization
All three of the current COVID-19 vaccines are authorized through EUA, but they do not have full authorization or licensure from the FDA. As a result, they are governed by a distinct set of federal laws. Under 21 U.S.C. § 360e(1)(A)(ii)(III), anyone who receives a vaccine authorized under EUA must be informed “of the option to accept or refuse administration of the product, of the consequences, if any, of refusing administration of the product, and of the alternatives to the product that are available and of their benefits and risks.” Courts have not interpreted this language, and experts have provided multiple interpretations.
Employers Encouraging, Not Mandating, Vaccines
Some large companies have created policies that encourage, rather than mandate, vaccination, including Unilever, Dollar General (paying employees to get the vaccine), Chobani (offering paid time off for employees to get vaccinated) and Target (offering up to four hours of pay and free Lyft rides to and from appointments). But there can be pitfalls of providing incentives for vaccination:
Two lawsuits have been filed on the issue of mandating vaccination. A corrections officer in New Mexico argues that a mandate requiring first responders receive the vaccine should be overturned, and educators in California argue that a mandate requiring school district employees receive the vaccine should be overturned. Both argue that employers cannot mandate the COVID-19 vaccines because they were authorized under EUA.
In addition, some states have introduced legislation banning private employers from mandating COVID-19 vaccinations.
Despite guidance from the EEOC that seems to permit employers to mandate that employees receive the COVID-19 vaccine, several legal, regulatory, and logistical factors may make the mandatory approach a potentially risky one. Employers in the retail space may be on firmer legal ground from a liability risk standpoint if they encourage, rather than mandate, that employees be vaccinated. Although the voluntary approach has pitfalls of its own, it has the potential to sidestep some of the legal and logistical hurdles created by mandating vaccination. Industries highly exposed to COVID-19, such as medical providers, emergency responders and nursing home facilities, may decide there is legal risk doing either, but less risk in mandating vaccines.
New York State Legalizes Recreational Adult Use Of Marijuana
On March 31, 2021, New York Governor Andrew Cuomo signed into law the New York State Cannabis/Marijuana Regulation & Taxation Act, which legalized the use of recreational marijuana for individuals ages 21 and older. Among other things, the Act establishes a Cannabis Control Board and Office of Cannabis Management that will be responsible for regulating adult-use marijuana and creates a Chief Equity Officer position to be appointed by the Cannabis Control Board. It also allocates significant funding to social equity concerns, expands eligibility for medical marijuana patients and creates licenses for distributors, processors, and retailers of recreational cannabis.
Notably for employers, the Act makes clear that it is not intended to limit the authority of any employer to enact or enforce policies relating to cannabis in the workplace. The Act also amends section 201-d of the New York Labor Law (NYLL), which prohibits discrimination because of an individual’s lawful outside work activities, to include cannabis use in accordance with state law. However, an employer would not be in violation of the law if it takes action related to the use of cannabis based on the following:
The Act takes effect immediately upon signing, though cannabis sales will not begin until the Cannabis Control Board is formed and state officials draft regulations that will control the market (including how the Office of Cannabis Management would award licenses and assess taxes). Based on this, state lawmakers are estimating it could take up to two years for cannabis sales to begin. We will continue to report on any further developments with regard to this law.
Virginia Legalizes Adult-Use Cannabis
On April 7, 2021, Virginia legalized adult-use cannabis, allowing adults 21 and over to possess up to an ounce of cannabis beginning July 1, 2021. Individuals will also be permitted to cultivate plants for personal use beginning on July 1, 2021. Previously, the State Senate and House of Delegates reached a compromise between their two bills (S.B. 1406 and H.B. 2312, respectively) on Saturday, February 27, 2021. This compromise originally would not allow for legal sales or possession until January 1, 2024. Governor Northam initially did not sign the bill and sent the bill back to the Virginia legislature requesting that they change the date on which possession and cultivation would be legalized to July 1, 2021. The legislature adopted Governor Northam’s amendment, paving the way for legalization. Sales will not begin until January 1, 2024. The law provides for:
However, quite a lot of work has been left undone. Decisions as to how the retail marketplace will operate have not-yet been made, nor have decisions regarding criminal penalties for underage possession and unlicensed cultivation and sale been finalized. Additional action will need to be taken by the legislature to allow for licenses to be issued in time for retail sales to begin January 1, 2024. The law received no votes from Republican legislators, and ultimately required Lt. Gov. Fairfax to cast a tie-breaking vote in the Senate, leading some to fear that if Democrats lose seats in this year’s elections Virginia will be unable to pass the needed legislation next year.
Florida Supreme Court Rejects Recreational Marijuana Constitutional Ballot Amendment Initiative
On April 22, 2021, the Florida Supreme Court struck down a high-profile effort to legalize marijuana for recreational use in Florida. Justices reviewed a constitutional ballot initiative sponsored by the political committee Make It Legal Florida and, in a 5‒2 decision, ruled it to be “misleading.” In an opinion written by Chief Justice Charles Canady, a majority of justices took issue with Make It Legal Florida’s use of the word “permit” in the initiative’s ballot summary. The justices argued that the amendment did not effectively advise Floridians that, although marijuana use would be allowed under Florida law if the amendment were to pass, marijuana would still be illegal federally.
The opinion specifically sets forth, “A constitutional amendment cannot unequivocally ‘permit’ or authorize conduct that is criminalized under federal law…A ballot summary suggesting otherwise is affirmatively misleading.”
“The summary’s unqualified use of the word ‘permits’ strongly suggests that the conduct to be authorized by the amendment will be free of any criminal or civil penalty in Florida,” the majority opinion stated. “The proposed amendment, on the other hand, explains that the conduct will only be free of criminal or civil liability ‘under Florida law.’ The proposed amendment includes that language, of course, because a recreational marijuana user or distributor will remain exposed to potential prosecution under federal law ‒ no small matter,” the majority noted.
Make It Legal Florida spearheaded the drive to put the proposal on the 2022 ballot and had already gathered more than 556,000 signatures out of the 891,589 needed. As part of the judicial review process, Florida Supreme Court sign-off on the proposed ballot title and summary would be needed to place the question on the ballot next year.
The proposal would have left it up to Florida voters to permit “adults 21 years or older to possess, use, purchase, display, and transport up to 2.5 ounces of marijuana and marijuana accessories for personal use for any reason,” as well as allow existing medical marijuana dispensaries to sell it.
Similar issues have previously come before the Florida Supreme Court. When it considered whether to allow an amendment legalizing medical marijuana onto the 2016 ballot, the backers of that initiative avoided this pitfall. The measure’s sponsors noted in their ballot summary that the medical marijuana measure did not “immunize” Floridians from “violations of federal law.” Justices approved that ballot’s language unanimously, and 71 percent of the electorate voted to legalize medical marijuana in 2016.
The Florida Supreme Court’s ruling, along with two other bills likely to gain passage in the current legislative session ‒ which, respectively, would (1) limit contributions to ballot initiative campaigns to just $3,000 from individuals and corporations and (2) raise the percentage of the total vote needed for ballot amendment approval from 60 percent to 66 percent ‒ will almost guarantee that another ballot amendment initiative is going to prove a challenge over the next few years.
The apparent failure of Florida’s legislative effort to cap the level of tetrahydrocannabinol (THC) in marijuana offered to patients was celebrated this week by medical marijuana advocates. “Thank God for all of the activists that came up to Tallahassee, that signed the petitions. That’s what democracy looks like: When we get together, we hear from the people, and legislation that would have hurt them is stopped,” stated Agriculture Commissioner Nikki Fried.
In his dissent, Justice Alan Lawson echoed Fried’s sentiments, stating, “today’s decision underestimates Florida voters.”
Following successful state cannabis ballot measures in the 2020 election by Arizona, New Jersey, Montana, Mississippi, and South Dakota, the “domino effect” has continued in 2021 with recent adult-use legislation approved in New York, New Mexico, and Virginia. Adult-use legislation currently is being considered in Connecticut, Minnesota, Pennsylvania, Rhode Island, and Wisconsin.
The Florida Supreme Court’s ruling demonstrates the ongoing divide between various states in the legalization of marijuana for medical and recreational use, which still is criminalized under federal law.
New Jersey Employers May Mandate COVID-19 Vaccination For Employees
On March 19, 2021, New Jersey adopted guidance from the Equal Employment Opportunity Commission and issued its own guidance permitting employers to require employees to receive the COVID-19 vaccination before returning to work. New Jersey’s guidance carves out three exemptions for which employees may qualify if their employer mandates the vaccine: (1) a disability; (2) a doctor’s advice not to receive the vaccine while pregnant or breastfeeding; or (3) a sincerely held religious belief. Employers must reasonably accommodate employees who qualify for an exemption unless doing so would impose an undue hardship.
Under New Jersey’s guidance, employers are permitted to request medical documentation to confirm exemptions 1 and 2, which must thereafter be maintained as confidential medical records. Employers may not question the validity of an employee’s religious beliefs unless there is an objective basis for doing so, and even then, the inquiry must be limited to the facts and circumstances supporting the request.
If an employee qualifies for one of the exemptions, employers must provide the employee with a reasonable accommodation for the mandatory vaccine policy, “unless doing so would impose an undue burden on their operations.” In making the determination of whether or not to grant the accommodation request, employers should be mindful of the safety of other employees, clients, and customers in considering what is reasonable. Such safety considerations must be based on objective, scientific guidance and not on unfounded assumptions. Reasonable accommodations for a mandatory vaccine policy may include working remotely or providing the employee with personal protective equipment.
Such mandatory vaccine programs may already be permissible for employers with a unionized workforce through an existing collective bargaining agreement.
Philadelphia Enacts Key Changes To ‘Ban the Box,’ Credit Screening Ordinances
Changes to Philadelphia law will further restrict employers’ use and reliance on applicant, current employee, and independent contractor background information and affect the employee application and employee management process. Amendments to Philadelphia’s Unlawful Credit Screening Practices in Employment ordinance and Fair Criminal Record Screenings Standards ordinance (FCRSS), commonly referred to as the “Ban the Box” regulation, took effect March 21, 2021, and April 1, 2021, respectively. The regulations supplement the governing requirements of the federal Fair Credit Reporting Act (FCRA) and Pennsylvania’s Criminal History Record Information Act (CHRIA).
Changes to Unlawful Credit Screening Practices in Employment
Bill No. 200614 amends the Unlawful Credit Screening Practices in Employment ordinance to clarify that Philadelphia employers following the FCRA’s adverse action regulations are also in compliance Philadelphia requirements. The credit ban ordinance requires employers to disclose their reliance on credit information to the applicant or employee in writing, identify the particular information upon which the adverse decision was based, and “give the employee or applicant an opportunity to explain the circumstances surrounding the information at issue before taking any such adverse action.”
In addition, Bill No. 200413 eliminates previous exceptions on the use of employee or applicant credit screenings. Prior to the amendment’s implementation, employers were precluded from conducting credit screenings for employees, but-for employment with “any law enforcement agency or financial institution.” The amendment removes that blanket exception and provides that law enforcement agencies or financial institutions may conduct credit screening only under specific circumstances, such as where the credit information “must be obtained pursuant to state or federal law” or the “job requires an employee to be bonded under City, state, or federal law.”
An amendment to the FCRSS affords current employees the same employment protections as applicants relative to their criminal background histories.
Since its 2016 enactment, the FCRSS has prohibited Philadelphia employers from asking potential employees (or current employees applying for another position) about criminal backgrounds on job applications or during job interviews. Further, Philadelphia employers could run a criminal background check only after making a conditional offer of employment. If the criminal inquiry or background check reveals a conviction within seven years, the employer must consider (i) the nature of the offense and the time that has passed since it occurred, (ii) the particular duties of the job being sought, and (iii) the applicant’s job history, character references, and any evidence of rehabilitation. Employers may reject applicants based on criminal records only if the potential employee’s history suggests an unacceptable risk to the business or to others. With its emphasis on the application process, it mirrored the language of the Pennsylvania CHRIA.
Bill No. 200479 amends the FCRSS to make it applicable not only to the application or transfer process, but to the use of any current employee criminal histories. The law’s restrictions and procedural requirements now apply also to current employees, as well as applicants in Philadelphia. Moreover, independent contractors and gig workers are afforded the same protections as full-time or part-time employees or applicants.
The amendment also provides that, even where criminal background clearance is a legal requirement for a particular position, a conditional offer must precede a criminal background check or criminal inquiry. Due to language ambiguities, it is unclear as to whether a criminal inquiry even post-conditional offer is permissible if such inquiry is not mandated by law.
The new provision permits an award of “liquidated damages, equal to the payment of the maximum allowable salary for the job subject to the complaint for a period of one month,” up to a maximum of $5,000.
Illinois Employment Law Update: Greater Scrutiny Of Employer Pay Practices, Mandated Disclosure Of Diversity Statistics, And Expanded Opportunities For People With Convictions
On March 23, 2021, Governor Pritzker signed Illinois Public Act 101-0656, which will have significant impact on Illinois employers, particularly with regard to employer pay practices, disclosure of diversity data, and employment opportunities for people with convictions.
The new law requires most employers to obtain an Equal Pay Registration Certificate starting in 2024, mandates public disclosure of EEO-1 data, expands whistleblower protections for employees, and restricts employers’ use of conviction records. The new law amends the Illinois Equal Pay Act, the Business Corporation Act, and the Human Rights Act. We summarize each of these changes below.
1. Equal Pay Act Amendments:
By March 23, 2024, all private employers with more than 100 Illinois employees must obtain an Equal Pay Registration Certificate from the Illinois Department of Labor and renew that certificate every two years thereafter. An employer that fails to obtain the certificate or whose certificate is revoked or suspended is subject to a substantial penalty: 1% of the employer’s gross profits.
To procure the certificate, an employer must pay a filing fee, send its most recent EEO-1 report to IDOL for each county in which the employer has employees or facilities, and submit a statement signed by a corporate officer, legal counselor, or authorized agent, certifying the following:
Significantly, the law requires employers to submit individual employee pay data with the written statement. This data must be organized by gender and the race and ethnicity categories used in most recently filed EEO-1 report and must include “the total wages…paid to each employee during the past calendar year[.]” The individual employee pay data submitted under this new law appears to be exempt from disclosure under the Illinois Freedom of Information Act as either “private” or “personal” information. The Equal Pay Act amendment identifies this information as “private data” and IFOIA explicitly exempts “private information…including personal financial information” and “personal information contained within public records, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.”
The Director of the Department of Labor is authorized to issue, revoke, and suspend the Equal Pay Registration Certificates. Significantly, the Director of Labor can also audit employer compliance with this new requirement. As part of an audit, an employer may be required to provide additional information including “other information identified by the business or by the Director, as needed, to determine compliance with the items specified” in the employer’s certification enumerated above. This will permit the Director of Labor to audit an employer’s certification, including the statements regarding the average compensation of female and minority employees, as compared to male and non-minority employees within the EEO-1 categories.
The Equal Pay Act Amendment also provides a new private cause of action to an extremely broad range of whistleblowers. Specifically, the amendment prohibits employers from retaliating against any employee who:
2. Business Corporation Act Amendments:
The amendment to the Business Corporation Act applies to any entity who is already required to file an annual report with the secretary of state, which includes most employers other than banks, homestead associations, building and loan associations, insurers, and insurance underwriters. Starting January 1, 2023, covered employers must include with their annual report the employment data from Section D of the EEO-1 report, in a form to be developed by the Illinois Secretary of State. The amendment also provides that the secretary of state will publish employer-specific data on its website.
3. Human Rights Act Amendments:
As of March 23, 2021, Illinois employers generally cannot use as a basis for an employment decision any “conviction record,” which includes any information about felony convictions, misdemeanor convictions, probation, or imprisonment. Following numerous other states and localities, Illinois aims to lower recidivism rates by expanding opportunities for post-conviction employment for individuals with a criminal history. This supplements preexisting Illinois law barring the use of arrest records in employment decisions and limiting employers’ ability to inquire about job applicants’ criminal history.
The amendment provides two key exceptions. Employers may still rely on a conviction record where (1) there is a “substantial relationship” between the criminal offense and “the employment sought or held,” or (2) the employment decision would otherwise “involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.”
To rely on either exception, employers must engage in a multi-factor analysis and an “interactive assessment.” The multi-factor analysis mirrors the analysis required by EEOC guidance, which requires employers to consider the quantity, nature, severity, and context of the criminal conduct, along with any relevant evidence of rehabilitation.
The interactive assessment is similar to the process required under the federal Fair Credit Reporting Act (the “FCRA”), pursuant to which employers provide notice that they consider the criminal record disqualifying, an opportunity for the employee or applicant to challenge the record or provide mitigating evidence, and a subsequent notice that the employer has made a final decision to rely on the criminal record as a basis for its decision. Unlike the FCRA, however, the Illinois law applies regardless of whether employers utilize a third-party vendor and it imposes unique requirements related to the notices. For example, under the Illinois law, employers must identify in the notice the reason they consider the criminal record disqualifying and must inform the employee of their right to file a charge with IDHR.
The remedies for noncompliance are the same as for other violations of the Illinois Human Rights Act: orders to cease and desist or rehire, back pay, actual damages for injury/loss suffered, interest, costs, reasonable attorney’s fees, and any other information that “may be necessary to make the complainant whole.” In light of these new amendments, employers should revise their policies and re-assess their practices about the use of conviction records.
New Marijuana Laws In New Mexico And Virginia
2021 has brought a flurry of activity surrounding marijuana laws, particularly recreational marijuana use. The number of states approving recreational marijuana continues to grow.
On April 12, 2021, New Mexico Governor Michelle Lujan Grisham signed the state’s recreational marijuana bill. The New Mexico recreational marijuana law will take effect in late June 2021. Unlike the recent marijuana laws enacted in New York and New Jersey that provide employment protections for off-duty recreational marijuana users, the New Mexico law does not “prevent or infringe upon the rights of an employer to adopt and implement a written zero-tolerance policy regarding the use of cannabis products.” The law permits employers to take adverse employment actions for the possession or use of marijuana at work or during work hours. Additionally, the law specifically permits zero-tolerance policies that impose discipline or termination for a positive marijuana test result indicating any amount of THC. However, employers should take note that the law does not restrict rights afforded to medical marijuana users under state law.
Effective July 1, 2021, individuals over the age of 21 can lawfully possess up to an ounce of marijuana in Virginia. The new law creates a Virginia Cannabis Control Authority which will implement regulations for the adult use of marijuana market. In late March, Virginia also amended the state’s medical cannabis law to prohibit discrimination against lawful users of medical cannabis oil. The law, which becomes effective July 1, 2021, does not restrict employers from taking action based on workplace impairment due to use of cannabis oil. It also contains exceptions for employers if compliance with the law would result in a loss of a federal contract or federal funding, and for defense industrial base sector employers.
The fate of recreational marijuana is yet to be determined in South Dakota. Voters approved both recreational and medical marijuana initiatives in November 2020. However, the South Dakota recreational measure was later struck down as unconstitutional. That ruling has been appealed, and the South Dakota Supreme Court will hear arguments on the issue later this month.
New Laws And The 2021 Cannabis Effect On Employers
In the first four months of 2021, numerous states, including Virginia, New Mexico, New York, and New Jersey passed laws dismantling restrictions on recreational and medical cannabis. Employers in these states are raising questions about whether the new laws affect their policies and views toward cannabis use.
The following briefly summarizes the new bills in each state.
Effect on Employers
As state legislatures expand the rights of individuals, those rights will inevitably cause tension with some employers’ desire to maintain a drug-free workplace. Questions employers frequently ask include: Can we continue testing applicants and employees for marijuana? Are employees allowed to be impaired at work? Must we allow employees to possess marijuana at work? Can I terminate an employee who uses cannabis off duty?
States offer different approaches to some of these questions.
Interaction With Other Laws
In addition to the issues employers face controlling their workplaces, employers must be aware of how new cannabis laws interact with other state and federal laws.
Philadelphia City Council Passes Ordinance Banning Pre-Employment Testing For Marijuana
As a result of a new ordinance passed by Philadelphia City Council, employers, labor organizations, and employment agencies in Philadelphia may not require a prospective employee to submit to testing for the presence of marijuana in the person’s system as a condition of employment. The new ordinance is a reflection of the current shift in attitudes concerning marijuana and the movement towards legalization of the drug. To that end, in 2015, Philadelphia decriminalized possession of small amounts of marijuana. Additionally, Pennsylvania Governor Tom Wolf announced his desire to see Pennsylvania legalize adult use marijuana in 2021.
Under the new ordinance, testing for marijuana is still permitted for numerous exempt positions, including: police officer and other law enforcement positions; positions that require a commercial driver’s license; positions requiring the supervision or care of children, medical patients, the disabled, or other vulnerable individuals; and any position in which the employee could significantly impact the health or safety of other employees or members of the public.
Additionally, the testing prohibition will not apply to testing required pursuant to any contract between the federal government and an employer or any grant of financial assistance from the federal government to an employer that requires drug testing of perspective employees as a condition to receiving the contract or grant. Further, the testing prohibition does not apply to an application whose employer is a party to a collective bargaining agreement that addresses pre-employment drug testing of applicants.
It is expected that Philadelphia Mayor Jim Kenney will sign the ordinance and it will take effect on January 1, 2022. Philadelphia employers are urged to review their employment policies in preparation for the implementation of this new law. Employers should also train human resources personnel, recruiters, managers, and any other personnel who might be involved in the hiring process on the requirements of the ordinance.
U.S. District Court Enjoins St. Paul Tenant Screening Ordinance
On April 19, 2021, the U.S. District Court for the District of Minnesota issued a preliminary injunction preventing the City of St. Paul from enforcing any part of its new tenant screening ordinance—Chapter 193 of Ordinance 20-14—until a trial on the merits. The ordinance would have taken effect March 1, 2021. The ordinance, among other things, outlines several prohibitions which require landlords to employ certain screening criteria established by the City and constrains both their ability to sell their property and to terminate leases. Specifically, the ordinance prohibits landlords in the City of St. Paul from considering certain criminal records as part of their screening criteria, including vacated or expunged convictions; misdemeanor convictions for which the date of sentencing is more than three years old; and certain felony convictions for which the dates of sentencing are more than a certain number of years old. The ordinance also prohibits a landlord from declining to rent to a tenant solely because of that tenant’s credit history and limits the landlord’s use of the credit history to an evaluation of whether the report demonstrates a failure to pay rent or utility bills. Lastly, the ordinance also prohibits landlords from considering certain rental history and from refusing to rent to individuals with income less than two-and-a-half times the rent if the prospective tenant can demonstrate a history of successful rent payment with the same or lower ratio of income to rent. Violations of the ordinance are punishable by a fine, adverse rental-license action, and criminal prosecution. Accordingly, if a landlord terminates a lease without meeting the ordinance’s requirements, the landlord may be liable in a civil suit for “damages equal to Relocation Assistance, costs of suit or arbitration and reasonable attorney’s fees.” Lastly, tenants “may seek redress in any court of competent jurisdiction” to enforce the ordinance. The ordinance was challenged in federal court by a group of St. Paul landlords on a number of grounds, including that the ordinance resulted in a regulatory taking and was a violation of substantive due process. In granting the landlords’ request for an injunction preventing the enforcement of the ordinance, the judge made the following findings: 1. Plaintiffs demonstrated a “possible likelihood that they will prevail on the merits of their per se takings claim” because the ordinance interferes with Plaintiffs’ right to exclude unwanted tenants from their property and singles out Plaintiffs to address a societal problem. 2. Plaintiffs demonstrated a “probable likelihood of success on their regulatory takings claim” under the U.S. Supreme Court’s Penn Central decision because the ordinance “comes at a heavy cost for owners” and “forces Plaintiffs to bear society’s burden related to housing needs.” 3. Plaintiffs demonstrated “a likelihood of success on the merits regarding their substantive due process claim.” Although the ruling is not entirely clear, it appears Judge Magnuson believes that the right to exclude is a fundamental right and the court must therefore apply a “strict scrutiny” review, a standard the City did not even try to meet. In addition, Judge Magnuson HC#4819-7130-8262 found that the City was unlikely to be able to meet even the lowest standard of review, “reasonable basis” review. 4. Plaintiffs have shown irreparable harm and were justified in filing this lawsuit when they did because they were waiting for further guidance from the implementation committee. 5. The City has not shown any legal justification for a substantial bond, so Plaintiffs’ request that the bond be set at $1 is granted. Note that this victory is preliminary, and the City may seek reconsideration of the ruling or appeal it to the United States Court of Appeals for the 8th Circuit.
Rebecca E. Kuehn and Cierra Newman, Hudson Cook, LLP
DC Judge Doubts CDC’s Power To Put Halt On Evictions
The U.S. Centers for Disease Control and Prevention had a hard time convincing the D.C. federal judge tasked with overseeing a challenge to its eviction moratorium that Congress intended to give the public health agency that much power. U.S. District Judge Dabney L. Friedrich struggled to swallow the argument posed by the CDC on Thursday about the authority it had under the Public Health Service Act, first passed in 1944, to limit human behavior. The slice of federal statute most at issue during the motion hearing Thursday morning was Section 361 of the law, where the CDC garners its isolation and quarantine authority. It empowers the agency to take certain measures to keep communicable diseases from being brought into the country and from being spread between the states. That’s exactly what the CDC says it was doing when it issued a moratorium on evictions back in September, which has since been extended several times, once by Congress and twice by the CDC itself. But a group of realtors and property owners say that the agency didn’t have the power to do so, and Judge Friedrich seemed inclined to agree. “At what point is their authority constrained in any way?” Judge Friedrich asked. “Under that reading, the CDC could put a ban on all foreclosures, impose a nationwide lockdown and orders about attending church and sporting events.” The court was talking specifically about the second sentence in Section 361, which gives what the CDC argues are examples of the types of actions the agency could take to restrain the spread of disease. According to the CDC, those examples aren’t limiting. But Judge Friedrich was interested in finding the limit. “Couldn’t the CDC just shut down all travel completely to stop the spread of the disease under that interpretation?” she asked. “Could the CDC use its authority to force everyone to become vaccinated?” When pressed, counsel for the agency said yes—if the public health risk was severe enough, it could probably force vaccines. Though the CDC did take care to note that it wasn’t suggesting it had the power to step on constitutional rights in any way. What the challengers want is for the court to vacate the rule. They told Judge Friedrich that they didn’t think an injunction would do any good but asked that should she decide to vacate the rule that she do so for everyone affected by it, not just the plaintiffs in the litigation. They say they’re being buried under the financial burden, with tenants who in some cases haven’t paid rent for a year, though the CDC pointed out that Congress has appropriated some $46 billion in rent relief to help them out. In defense of its authority, the agency pointed again toward the statute, which gives the CDC the power to permanently destroy property like livestock in order to prevent the spread of disease—a stronger action than it says it took with the eviction moratorium. At the close of the hearing, Judge Friedrich thanked both parties for the “outstanding briefing” and said she would have a decision in a week or two.
The case is Alabama Association of Realtors et al. v. United States Department of Health and Human Services et al., case number 1:20-cv-03377, in the U.S. District Court for the District of Columbia.
Gig Employer Hit With Background Check Class Action
Uber Technologies, Inc. has been sued in a class action lawsuit alleging the company’s use of criminal background checks discriminates against Black and Latinx drivers. The complaint, filed in the U.S. District Court for the Southern District of New York on April 8, challenges Uber’s “unlawful use of criminal history to discriminate against its drivers in New York City as well as its brazen noncompliance with human rights and fair credit laws.”
Named plaintiff Job Golightly, a Black resident of Bronx County, New York, drove for Uber from 2014 through August 2020. Golightly claims that his criminal history consists of a single 2013 misdemeanor speeding violation from Virginia. According to the lawsuit, until 2017 Uber had relied solely on background checks conducted by the New York City Taxi and Limousine Commission (TLC). Plaintiffs allege that in mid-2017, in response to negative news coverage on assaults committed by drivers, Uber began using the credit reporting agency Checkr to conduct additional background checks on current and prospective drivers. As a result, in August 2020 Uber allegedly conducted a background check on Golightly that revealed his 2013 speeding violation. One day later, Golightly claims that Uber deactivated him from its platform, preventing him from driving for the company.
Golightly brings four claims against Uber for per se and disparate impact violations of the New York City Human Rights Law (NYCHRL) and for violations of the federal Fair Credit Reporting Act (FCRA) and New York’s “mini-FCRA.”
NYCHRL requires employers to evaluate employees’ and applicants’ criminal history on an individualized basis, to provide required documents and disclosures, and to wait for a period during which the job is kept open for the applicant or employee to respond to the employer’s concerns about any criminal history. NYCHRL was amended in November 2019 to include independent contractors as protected workers, effective January 11, 2020. The lawsuit alleges Uber failed to provide any of NYCHRL’s protections to its drivers and prospective drivers.
FCRA and its state equivalents impose requirements on employers using consumer reports for employment purposes, including providing notice to individuals before taking adverse action based on a consumer report. NY FCRA specifically requires an employer to provide a copy of Article 23-A of the New York Correction Law. The lawsuit alleges Uber failed to comply with these requirements.
According to Golightly, there are approximately 80,000 total potential class members in two classes. The “criminal history discrimination and notice class” includes all individuals who, since January 11, 2020, have been denied the opportunity to drive for Uber based on criminal history contained in consumer reports obtained by Checkr and who did not receive the required notices and documents. The “disparate impact class” includes all Black and Latinx individuals who, since January 11, 2020, have had their consumer reports used by Uber and who were then denied the opportunity to drive for Uber based on criminal history.
Plaintiffs are represented by Mobilization for Justice, a non-profit legal services organization based in New York City, and Towards Justice, a non-profit law firm that focuses on economic justice. The lawsuit is the first of its kind, seeking to enforce the NYCHRL against a “labor platform company in New York City,” according to a joint press release by the organizations.
This case will be closely watched as one of the first-class action lawsuits brought on behalf of independent contractors since the NYCHRL’s amendment became effective on January 11, 2020. Employers and gig economy companies alike should evaluate their background check policies and practices with the help of legal counsel to ensure they are compliant with current law in any jurisdictions where they operate.
The Battle Over Prior Salary History Continues: Federal Court In Virginia Holds That It Is A Legitimate “Factor Other Than Sex” Justifying Wage Disparity
Seyfarth Synopsis: On April 5, 2021, in Abe v. Virginia Department of Environmental Quality, the U.S. District Court for the Eastern District of Virginia held that Fourth Circuit precedent supports the use of prior salary by employers as an affirmative defense to an Equal Pay Act claim. In so doing, it rejected the Ninth Circuit’s holding in Rizo v. Yovino, which held that prior salary, by itself, can never justify a pay disparity because allowing that defense would only serve to perpetuate the historical sex-based pay disparity that the Equal Pay Act was meant to rectify. The ruling is a must read for all employers for purposes of compliance strategies on equal pay issues.
One of the most hotly contested issues in Equal Pay Act litigation over the past few years has been the extent to which employers can point to employees’ past salaries to justify a pay disparity among employees who perform “equal work,” as defined by the Equal Pay Act (“EPA”). The issue was framed recently by the Eastern District of Virginia in Abe v. Virginia Department of Environmental Quality, No. 3:20-CV-270 (E.D. Va. Apr. 5, 2021), this way: “Does using prior salary as a factor in setting an employee’s starting salary constitute a per se violation of the Equal Pay Act…?” Id. at 1.
The Ninth Circuit recently held in Rizo v, Yovino, 950 F.3 1217 (9th Cir. 2020), that prior salary history can never, by itself, amount to a “factor other than sex” to justify a pay disparity because the use of such salary history would only serve to perpetuate the historical sex-based pay disparity that exists between men and women. According to the Ninth Circuit, this would undermine the purpose of the EPA because that historical pay disparity is the very evil that the EPA was meant to counteract. The Seventh Circuit and other Courts of Appeals have held the opposite, that prior salary history can be a legitimate “factor other than sex” justifying a pay disparity.
In Abe, four named plaintiffs and twenty opt-in plaintiffs alleged that their employer’s “past practice of using pay history to determine new hire’s salary perpetuates the gender wage gap and violates the EPA.” Abe, No. 3:20-CV-00270, at 2. They argued that the Court should adopt the reasoning of the Ninth Circuit and hold that prior salary history can never constitute a “factor other than sex” under the EPA, either alone or in combination with other factors. Id. at 3.
The Court’s Decision
The Court in Abe declined to do so. The Court agreed with plaintiffs that the Fourth Circuit “has not delineated the precise circumstances under which an employer may rely on prior salary as an affirmative defense in an EPA case.” Id. at 4. But it nevertheless held, relying on Spencer v. Virginia State University, 919 F.3d 199, 202-03 (4th Cir. 2019), that the Fourth Circuit “has clearly indicated that it does not prohibit an employer from doing so.” Abe, at 4 (emphasis in original).
The Court in Abe noted that Spencer involved a female sociology professor who alleged that she had been discriminated against in terms of her compensation because she was paid less than two comparable male professors whose salary was set as a percentage of their previous salaries as administrators at the same university. The Fourth Circuit determined that the university’s decision to set starting salaries for those purported comparators in that way established that the alleged pay differential was due to a factor other than sex. The Court in Abe interpreted this to mean that “at minimum, the Fourth Circuit does not prohibit employers from raising prior salary as an affirmative defense in an EPA case.” Id. at 4-5.
The Court further rejected plaintiffs’ argument that the employer should at least have to prove that its use of salary history is job-related, as they argued the Fourth Circuit held in another case, EEOC v. Maryland Insurance Administration, 879 F.3d 114 (4th Cir. 2018). The Court in Abe sidestepped the issue. It opined that it need not resolve that question because it was not necessary to do so to decide the narrow issue before the Court; namely: “May [defendant] raise prior salary as an affirmative defense?” Abe, at 6. Based on the Fourth Circuit’s decision in Spencer, the Court held that it could and denied Plaintiff’s motion to strike the employer’s affirmative defense that was based on prior salary.
Implications for Employers
The use of prior salary history to justify a pay disparity continues to be a hot button issue in Equal Pay Act litigation. As noted above, the Courts of Appeals are divided over this issue. The implications for employers are difficult to overstate. First, employers often rely on prior salary to set starting salaries and, in fact, often argue that they must do so in order to attract top talent to their company. Employees do not often leave their current positions for less money. Second, if the use of prior salary was widespread within a company, that potentially presents a ready-made method to bind claims of putative collective or class action members together, making it easier for plaintiffs and their counsel to certify class or collective actions and to keep them certified through trial. A more in-depth analysis of this issue, and many other issues impacting equal pay litigation, can be found in Seyfarth’s annual publication, Developments in Equal Pay Litigation.
Judge Blocks Mexico’s Biometric Cell Phone Registry Requirement
A planned biometric registry of mobile phone users in Mexico has been partially blocked by a judge, who says it would not “positively influence” public security, according to Reuters.
The law backing a proposed biometric register was approved recently by the Senate as a way to reduce extortion, kidnapping and other crimes.
Judge Juan Pablo Gomez Fierro’s provisional suspension particularly refers to a section of a federal telecommunications law that would see customers’ lines canceled if they refused to submit their data to be included in the new biometric register. A permanent suspension may follow.
The proposal behind the new system aims to reduce crime by creating a biometric register that would allow law enforcement to trace cellular communications made during crimes back to the individual the device is registered to. The system would collect fingerprints or iris biometrics from customers, together with their name, nationality, phone number, home address, and unique Population Registration Key (CURP) number.
The data would then be transferred to the Federal Telecommunications Institute (IFT) and would be available to law enforcement.
However, the new law has been met with vocal opposition among legislators, with some of them claiming it would present severe privacy concerns. It has also been argued how the register could be used by criminals to blame their illegal actions on innocent citizens.
The proposal was officially approved on March 25th with eight votes in favor and six against, but the move from Gomez Fierro could delay the deployment of the new biometric cell phone register.
First Merits Decision Dismissing Privacy Class Action In Canada
In an ever-growing landscape of data theft and privacy breaches, the Superior Court of Québec recently dismissed a privacy class action on the merits and, in so doing, clarified the circumstances that can give rise to a damages award in such cases. In Lamoureux c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2021 QCCS 1093, the Court sets out the guiding principles for an appropriate corporate response to the loss of personal information under Québec law. This is the first privacy class action in Canada to be determined and dismissed on the merits.
The Data Incident
Following the loss by an employee of the Investment Industry Regulatory Organization of Canada (IIROC) of a laptop computer containing personal information relating to individuals collected from securities brokers, two class actions were commenced:
Identity Theft is Not Required
In line with a series of recent cases relating to the loss or theft of personal information, the Superior Court in Lamoureux held that although it is not necessary for class members to have fallen victim to identity theft, injury beyond general inconveniences must be proven. Relying on the Supreme Court’s findings in Mustapha v. Culligan, the Court reiterated that normal inconveniences that anyone living in society encounters and should be obliged to accept do not constitute compensable damages. Given the lack of any documentary or medical evidence proving the extent of the damages, the Court categorized the fears, stress and worries experienced by class members, as well as delays in obtaining additional credit, as such acceptable inconveniences.
Causality Not Proven
Uncontradicted expert evidence was tendered by IIROC showing the absence of any connection between the loss of the computer and any illicit use of Lamoureux’s personal information. The Court concluded that Lamoureux failed to prove that the personal information contained in the lost computer had been used unlawfully. Without the evidence of wrongful use of the personal information, the Court concluded a lack of connection and an absence of causality required to trigger IIROC’s civil liability.
Diligent Corporate Response Bars Punitive Damages
Based on extensive evidence, including expert evidence, the Court held that IIROC was diligent in its timely response to its employee losing his laptop, complying with standards expected in similar circumstances. There was no evidence adduced of any intentional fault by IIROC. As such, punitive damages were found to be unwarranted.
Lamoureux provides helpful direction in cases of loss or theft of personal information: actual damages must be established beyond mere inconvenience. Lamoureux also provides guidance to Québec corporations and an example of a satisfactory response to a data loss or incident. In its assessment, the Court considered, amongst numerous considerations, the following steps taken by IIROC: conducting internal investigations, promptly mandating a forensic analysis firm to identify the lost information, providing credit monitoring services free of charge, notifying privacy commissions, class members and stakeholders in a timely manner. Where a diligent response is proven following a data breach or incident, punitive damages are unwarranted.
The Lamoureux Court’s focus on the absence of compensable harm aligns with recent authority from the common law provinces in the certification context and may inform the decisions of Courts in those provinces going forward.
For example, in its recent decision in Stewart v. Demme—a case centred on allegations that a nurse improperly accessed individual health records of a hospital’s patients in order to steal prescription drugs—the Ontario Superior Court declined to certify the plaintiff’s claim in negligence. The Court held that, unlike a claim in intrusion upon seclusion (a privacy tort recognized in Ontario since the decision in Jones v. Tsige) which allows for “symbolic” damages, a claim in negligence requires that “actual harm be manifest and caused by the wrong”. The Court relied on Mustapha v. Culligan in finding that the alleged invasion of privacy itself was not the type of harm compensable under the law of negligence.
In Setoguchi v. Uber B.V., the Alberta Court of Queen’s Bench adopted the reasoning from Stewart in refusing to certify a negligence claim in a proposed class action relating to an alleged data breach involving information collected by Uber. The Court not only refused to certify the claim in negligence but denied certification of the entire action because it found there to be no evidence of any actual harm or loss to members of the proposed class. In reaching its decision, the Court took consideration of various Québec authorities, including citing the Superior Court of Québec’s decision in Bourbonnière v. Yahoo! Inc. for the proposition that there is a clear distinction between minor, transient upset and compensable injury.
What Can(’t) Companies Do With The EU Vaccine Certificates?
To fight the COVID-19 pandemic, the EU Commission is setting up a vaccine passport system (“Digital Green Certificate”) to allow European citizens to travel easily and safely within the EU this summer. But could this certificate also be used by companies for other purposes, such as to authorize or prohibit access to (private) places depending on citizens’ vaccination status?
First, what exactly is this certificate?
The EU Commission has published a proposed Regulation detailing the usage and working of these certificates. In essence, three types of certificate will exist: (i) one for vaccinated citizens (the vaccination certificate); (ii) one for the healed citizens as they have antibodies to COVID-19 (the test certificate); and (iii) one for citizens who have recently tested negative (the certificate of recovery).
Such certificates will contain various personal data, which will vary slightly according to the type of certificate, e.g. the vaccine certificate will indicate the identification of the data subject, which vaccine was given, when, in which EU country, etc.
The certificates’ goal is to organize a unified system in which all EU countries accept the same documents. This will enable EU citizens to travel under the same requirements to all EU countries, on the condition that they have such a certificate. To avoid any misunderstanding: the proposed Regulation is not intended to oblige every EU traveler to be vaccinated. It is more a question of minimum harmonization: EU Member States must accept into their territory anyone in possession of such a (valid) certificate. The Member States can of course still accept travelers (or nationals returning from travel) into their territory by imposing other (additional) measures, such as a quarantine period.
The certificates include a Quick Response code (QR-code) containing the citizen’s personal data. The data itself is processed by the competent authorities of the State of destination, or by the cross-border passenger transport services operators required to implement certain public health measures in the fight against COVID-19. This processing is strictly limited to verifying the holder’s status. The personal data is not to be retained.
What about non-passenger transport services, can other providers request data subjects to provide such a certificate to enter their premises or activities?
A short answer to this question is: not currently. And here is why.
The proposed Regulation only regulates the use of the certificates for cross-border travel within the EU. It is not forbidden for a Member State to use the certificates for other purposes, but such other usage should then be regulated by national law. This has also been emphasized by the EU data protection authorities in a recent opinion.
This opinion confirms the Belgian Data Protection Authority’s (DPA) existing position. The DPA has already issued various opinions and advice regarding the processing of health data in the fight against the COVID-19 pandemic. In all its advice, the DPA has interpreted strictly the GDPR requirement for the processing of personal data and has reaffirmed the general prohibition of the processing of health data. Only if free consent is given or when permitted by law can such data be legally processed.
So in the example of a festival organizer requiring proof of vaccination before entry to the festival, such a practice does not seem to be allowed by the current state of legislation, as:
So, what does this mean?
As from the third day after publication of the proposed Regulation, the vaccine certificate can be used for cross-border passenger transport. For all other purposes, we must wait for the action of the Belgian legislator.
Hospitality Industry In 2021: Bringing Employees Back To Work During COVID-19 Pandemic
With COVID-19 vaccinations rolling out across the country, loosening restrictions on operations, increased demand, and other signs of recovery in the industry, hospitality employers are poised to expand their workforces. This article explores potential legal risks that may arise as hospitality employers that laid off or terminated staff during the pandemic hire staff.
Must an employer rehire its former employees before considering new applicants?
No, so long as there is no contractual obligation that would require the former employee to be reinstated. A contractual obligation can arise pursuant to a collective bargaining agreement with a union or by virtue of an employment agreement with the former employee. It is also possible, depending on the circumstances, that an employer can create a legally enforceable promise to rehire staff based on the communications to staff when they were terminated or even after termination.
As the pandemic struck in 2020, hotels and restaurants laid off staff, and employers were free (assuming the employer was not subject to collective bargaining restrictions) to terminate staff due to the reduction in operations. Employers had no obligation to promise staff they would be given priority when businesses reopened.
Whether an employer has created a legally enforceable obligation to rehire former staff depends on what was communicated at the time of the layoff or termination. In order to evaluate whether former employees have rehire rights (that employees would be the first to be offered positions upon reopening, for example), the employer should seek legal counsel to ascertain whether the employer’s communications created legal rights that would require certain employees be reinstated when positions become available.
Can an employer legally hire an applicant and reject a former employee who was laid off?
Yes. If there is no other legal obligation to reinstate a former employee, employers are free to hire the most qualified applicant for the position.
However, employers’ recruiting strategies should be carefully evaluated. This is especially true for hospitality employers reopening venues that were shuttered or operating at a limited capacity during the pandemic and need to hire significant numbers of staff. Consistent with regular hiring practices, employers should institute recruiting procedures that are unbiased and will enable the business to identify the most qualified candidates.
A former employee who is not rehired may challenge the hiring decision, arguing the company was discriminatory or retaliatory because the employer had more information about former employees than about prospective hires. For instance, an employer likely will know an employee’s age, national origin, or history of absences or accommodations related to a serious health condition or disability. The former employee may be part of a protected class and argue that because they were qualified in the past to work at the hotel or restaurant they should not have been passed over for this opportunity, particularly where they had no documented performance or conduct issues.
To defend against a failure-to-hire claim, the employer must articulate a legitimate non-discriminatory reason for the decision. Because hotels and restaurants often are hiring multiple employees at the same time as business increases, they should use clearly defined, objective criteria that is associated with the needs of the business when making hiring decisions. If a new hire is favored over a former employee, the employer should be able to establish why the new hire was more qualified than the former employee.
What are some of best practices when evaluating applicants?
The most important step an employer can take to ensure its hiring decisions are fair and lawful is to train interviewers and decision makers. Training is a critical step toward unbiased hiring. Training can reinforce the importance of fairness in evaluating applicants and the techniques to best enable employers to assess applicants’ skills and experience.
Training should reinforce:
DOL Releases Cybersecurity Guidance
On April 14, 2021, the Department of Labor (“DOL”) issued several pieces of guidance on cyber security best practices, including: (1) a press release, (2) Online Security Tips for retirement plan participants, (3) a Tips for Hiring a Service Provider with Strong Cybersecurity Practices, and (4) Cybersecurity Program Best Practices. This set of cybersecurity guidance emphasizes how critical it is for fiduciaries to focus on cybersecurity issues in selecting, contracting with, and monitoring the performance of recordkeepers and other plan service providers to protect plan participants. Fiduciaries should focus on cybersecurity in performing service provider due diligence, in negotiating service provider contracts, and in ongoing monitoring of a service provider’s compliance with policies and procedures and to ensure that any breaches are promptly reported, investigated, and addressed.
Cybersecurity and Fiduciary Duties
The ERISA fiduciary standards require that a plan be administered in accordance with a standard of care for a prudent person who is familiar with such matters. Accordingly, ERISA fiduciaries must ensure that a plan’s administration is in accordance with industry standards for cybersecurity in the financial services industry. Fiduciaries have a responsibility to safeguard plan assets, and so they must ensure that controls are in place to avoid financial losses to plans that may result from a cybersecurity breach.
Breaches of participant data due to cybersecurity incidents could also implicate fiduciary duties to the extent that participant data are considered “plan assets,” as has been challenged in some recent litigation. These cases involve claims that participant data has been improperly used for purposes other than plan administration, such as for marketing of other services. The limited number of courts that have ruled on the issue applied ordinary principles of property law to conclude that participant data is not a plan asset. Divane v. Northwestern University, 2018 WL 2388118 (N.D. Ill. 2018), aff’d, 953 F.3d 980 (7th Cir. 2020); Harmon v. Shell Oil Co., 2021 WL 1232694 (S.D. Tex. March 30, 2021). However, the issue remains an open question in most jurisdictions.
Cybersecurity Considerations for Fiduciaries
The DOL’s cybersecurity guidance affirms the importance of taking cybersecurity into consideration when fiduciaries are selecting, contracting with, and monitoring recordkeepers or other plan service providers. In particular, the “Tips for Hiring a Service Provider with Strong Cybersecurity Practices” encourages fiduciaries to address cybersecurity as follows:
The DOL’s “Cybersecurity Best Program Practices” describe what the DOL believes to be best practices and procedures for service providers. Plan fiduciaries can use this as a reference in evaluating the cybersecurity practices and procedures of potential service providers.
Fiduciaries may also want to ensure that the “Online Security Tips” are shared with individual participants or similar information is provided by the plan’s recordkeeper or other service provider.