Court Decisions

Recent court decisions underscore the importance of regular training in legal compliance issues for all employees. HR Classroom can help:

EEOC Obtains $450,000 Settlement in Title VII Case in Arizona

$450,000 Settlement

Training Required: The EEOC Phoenix District Office filed a Title VII case alleging that defendant, a radiology benefits management service with headquarters in Houston, terminated three charging parties from the Quality Assurance Department in Phoenix for opposing discriminatory practices. Defendant set up a new Quality Assurance (QA) Department in Phoenix, headed by a Vice President for Quality Assessment and Provider Education (VP-QA) hired in October 2000, and staffed by two managers hired in January 2001. Before the VP-QA started her job, defendant sent her a letter stating that if defendant found it necessary to move the QA Department to Houston, it would pay her relocation expenses. In May 2001, defendant's Executive Director of Corporate Development directed the two QA managers not to hire "blacks or Jews" for an Oregon client. They relayed the directive to the VP-QA, who in turn told the HR Director/VP that neither she nor her staff would participate in discriminatory practices. Defendant terminated all three employees the following month, telling them their jobs were being eliminated. Defendant then started a new QA Department in Houston, but did not offer to relocate the VP-QA to Houston. Under the 24-month consent decree resolving this case, the three CPs will share $450,000 in monetary relief. Defendant is enjoined for the duration of the decree from retaliating against any employee in violation of Title VII. EEOC v. Health Help, Inc. (D. Ariz. April 7, 2006)

Sterling Jewelers Agrees to Pay $1.29 Million in Back Wages to 16,820 Workers in 41 States

$1.29 Million Settlement

Training Required: Sterling Jewelers Inc., of Akron, Ohio, has agreed to pay $1,291,077 in back wages to resolve violations of the Fair Labor Standard Act (FLSA) overtime requirements, the Labor Department announced today. Sterling agreed to pay the back wages to 16,820 current and former employees of its retail stores operating at 1,200 locations in 41 states. The company does business under 14 retail names around the country. "This administration is committed to ensuring that employers honor their obligation to pay their workers all the wages they have earned," said U.S. Secretary of Labor Elaine L. Chao. "In this case, we are recovering nearly $1.3 million dollars for almost 17,000 workers and making certain that they are properly compensated in the future." A complaint and consent judgment were filed Monday, June 12, with the U.S. District Court for the Northern District of Ohio. The consent judgment also enjoins the company from future violations of the overtime pay provisions of the FLSA. Sterling voluntarily disclosed the violations to the department, and worked cooperatively with the department to ensure that the violations were fully and satisfactorily resolved. The company failed to include incentive pay in the calculation of overtime and it failed to pay employees for all hours worked, which the employees had entered using the firm's electronic timekeeping system. Each of those violations contributed to workers being paid less than time and one-half their regular pay for hours worked over 40 in a single workweek as required by the FLSA. The back wage payments cover the period from Nov. 2, 2003 to Feb. 25, 2006.

Smith Barney Agrees to Pay $98 Million to Settle Overtime Pay Claims

$98 Million Settlement

Training Required: The Smith Barney brokerage unit has agreed to pay $98 million to settle claims on behalf of thousands of current and former brokers that they are allegedly owed overtime pay and other reimbursements. The proposed settlement is the latest and largest by securities firms that claim brokers are exempt from state and federal overtime laws because they are salaried, administrative employees. The argument in these cases is that brokers are not salaried but receive incentive-based compensation, such as commissions, that are tied to sales. They also countered the brokerage firms' claims that the Fair Labor Standards Act exempts salespeople from overtime because the exemption applies only to store sales, not trades of securities.

Class of Women to Receive $48.9 Million in Pregnancy Bias Settlement

$48.9 Million Settlement

Training Required: The U.S. Equal Employment Opportunity Commission (EEOC) announced that, pursuant to a court-filed consent decree, telecommunications giant Verizon Communications, Inc. will pay approximately $48.9 million to 12,326 current and former female employees in 13 states and the District of Columbia as part of a 2002 settlement of a landmark class action lawsuit alleging pregnancy discrimination against Verizon predecessor telephone companies NYNEX and Bell Atlantic. EEOC and New York-based Verizon jointly submitted a final report today to U.S. District Court Judge Denny Chin informing him that the claims process was completed in December 2004 and the total compensation paid to date under the settlement is more than $25.3 million. EEOC submitted a separate letter informing the court that it projected that an additional $23.6 million would be paid in future pension benefits. The size of the class and estimated value of monetary benefits make this the largest EEOC settlement of its kind involving pregnancy-related service credit adjustments. EEOC litigated the cases along with two unions representing the non-managerial employees, the Communications Workers of America and the International Brotherhood of Electrical Workers. The consent decree resolved employment discrimination lawsuits filed by the EEOC's New York District Office in 1997 and 1999 against Bell Atlantic and NYNEX (now Verizon), and their predecessor companies and related subsidiaries. The suits alleged that the companies violated Title VII of the 1964 Civil Rights Act, the Pregnancy Discrimination Act of 1978, the Equal Pay Act of 1963, and the Civil Rights Act of 1991, by denying female employees service credit related to pregnancy and maternity leaves of absence taken between July 2, 1965 and April 28, 1979, and care for newborn children leaves of absence taken between July 2, 1965 and December 31, 1983. "As retirement benefits become increasingly important to today's workers, it is critical to fight back when discrimination occurs," said EEOC's New York District Director Spencer H. Lewis, Jr. "Employers should be aware that pregnancy discrimination in regard to benefits is just not acceptable - to workers and to the EEOC." CWA Vice President Christopher M. Shelton noted, "CWA has been involved for many years in efforts to eliminate pregnancy discrimination in the workplace. This case represents an important victory for working women who should not have had to sacrifice their pension benefits because they had children." CWA represents nearly 70,000 clerical, sales, service and technical workers at Verizon, many of whom are located in the states covered by the lawsuit. The consent decree covers all women employed at any time since January 8, 1994, by any former Bell Atlantic or NYNEX (now Verizon) company located in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, D.C., and/or West Virginia, and who took a pregnancy or maternity-related leave of absence between July 2, 1965 and April 28, 1979, and/or a leave of absence for the care of a newborn child (CNC) between July 2, 1965 and December 31, 1983. EEOC Regional Attorney Elizabeth Grossman, who oversaw the litigation effort, said, "We are pleased that so many women were able to come forward and participate in this settlement. Many of them will be seeing its results in their pension checks each month for years to come." Under the Pregnancy Discrimination Act, which amended Title VII of the Civil Rights Act of 1964, employment discrimination on the basis of pregnancy, childbirth, or related medical conditions constitutes unlawful sex discrimination. In addition to prohibiting sex-based discrimination, Title VII prohibits discrimination based on race, color, religion, or national origin.

Nine West and Jones Apparel Group to Pay $600,000 to Settle National Origin and Sex Bias Suit

$600,000 Settlement

Training Required: Nine West and Jones Apparel Group will pay $600,000 to victims of sexual harassment, national origin harassment and retaliation, and take substantial steps to prevent future workplace bias as part of a major litigation settlement announced by the U.S. Equal Employment Opportunity Commission (EEOC). EEOC's lawsuit (Civil Action No. CV-04-7514), in U.S. District Court for the Southern District of New York, alleged that two high-level managers at Nine West's headquarters in White Plains, New York, subjected female employees to sexually harassing conduct, including solicitation for sex, unwelcome sexual advances, sexually explicit jokes and comments, and groping of women's bodies. Further, the EEOC charged, managers taunted the women with insulting remarks about their Hispanic origin. Despite the women's repeated opposition to the behavior, the EEOC said, Nine West made no efforts to prevent or eradicate the continuing behavior. Instead, the EEOC alleged, Nine West allowed conditions to become so intolerable that some women were forced to quit their jobs. Such conduct violates Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex (including sexual harassment or pregnancy) or national origin and protects employees who complain about such offenses from retaliation. The EEOC filed suit after the agency first attempted to reach a voluntary settlement. White Plains-based Nine West is a major retailer of women's shoes and other apparel. The Jones Apparel Group, headquartered in Bristol, Pennsylvania, owns and operates numerous retail stores in the footwear and apparel industry, including Nine West. The consent decree resolving the case, besides the monetary damages to the harassment victims, also prohibits the companies from engaging in further sexual harassment and requires them to amend and reissue their non-discrimination policy; train employees and managers in equal employment law; and provide periodic reports to the EEOC concerning any new discrimination complaints.