Rethinking Ricci

On April 22, 2009, we posted here about a race discrimination case pending before the United States Supreme Court called Ricci v. DeStefano. In that case, white and Hispanic firefighters in New Haven, Connecticut sued the city, claiming they were denied promotion because of their race. For those of you who have not heard (this case has been all over the news and now plays a significant role in the Supreme Court confirmation hearings for Judge Sonia Sotomayor), the Supreme Court issued a decision on the case on June 29, 2009.

In a 5-4 decision (written by Justice Kennedy and in which Justices Roberts, Scalia, Alito, and Thomas joined), the Supreme Court decided in favor of the firefighters and held the city's action in discarding the promotion test results violated Title VII.

The city argued they discarded the test results because the results appeared to violate Title VII's disparate impact provisions. Specifically, the city argued the test results favored white and Hispanic firefighters over black firefighters. The white firefighters, however, argued the city engaged in disparate treatment discrimination against them. Justice Kennedy sought to resolve the conflict between disparate impact and disparate treatment provisions in Title VII. In doing so, he adopted the "strong-basis-in-evidence standard" to resolve any conflict between disparate treatment and disparate impact provisions.

Justice Kennedy wrote that before an employer can engage in intentional discrimination, the "employer must have a strong basis in evidence to believe it will be subject to disparate impact liability if it fails to take the race-conscious, discriminatory action." Justice Kennedy found the city had no strong basis in evidence that the promotion tests were inadequate or flawed. Justice Kennedy also held fear of litigation alone is not enough.

Moving forward, therefore, employers must remember this strong-basis-in-evidence standard when making race-based decisions in the workplace. Does the employer have a history of racial disparity? Is the employment decision-making process open and fair? What exactly forms the basis for the employer's decision to make a race-conscious decision?

The more interesting (and less discussed) portion of the Court's decision in Ricci is Justice Scalia's concurrence. Justice Scalia argues an inherent conflict between the disparate treatment and disparate impact provisions in Title VII. Justice Scalia argues any race-based decisions made to remedy potential disparate impact are in fact disparate treatment discrimination decisions. Justice Scalia seems to indicate both a willingness and desire to remove disparate impact protection. Although we do not anticipate any such move (based on the Court's current membership), this concurrence may provide support for employers in district and appellate courts as they address lawsuits which invoke the Ricci decision.

Are you ready for the new minimum wage?

On Friday, July 24, 2009, the federal minimum wage will increase to $7.25/hour. Are you ready? Take this simple quiz:

1. Do you have proper posters that detail the new minimum wage for all your work locations? The same poster for all locations may not be sufficient.

2. Are you prepared for the overtime consequences of a mid-week and/or mid-pay period change in hourly rates? Calculating overtime when the hourly rate changes during the relevant period can be difficult. The money you save by not changing the hourly rate at the beginning of the pay period may be insignificant when compared to the cost of administering payroll for that same period.

3. If you have tipped employees subject to the "Tip Credit," do you have sufficient employee notices posted to qualify for the Tip Credit? A failure to post sufficient notices regarding the Tip Credit could make an employer ineligible for the Tip Credit.

4. Are you monitoring state minimum wage increases? Nearly half of all states have a minimum wage increase scheduled for July 2009, including some states whose increase already became effective on July 1, 2009.

If you cannot answer "Yes!" to each of these questions, we suggest you get started because July 24 will be here before you know it.

Coles Corner Winning Wine: June 2009 (Archive)

June 2009: August Briggs' 2006 Charbono is an uncommon grape that is easily accessible. The wine brings the earthiness of a Malbec but delivers without overpowering. The tannins are light and the flavor is bold yet smooth with a hint of smokiness and spice.

Big Win for Employers

On June 18, 2009, the United States Supreme Court issued a decision which gave employers a big win in the employment litigation arena. In Gross v. FBL Financial Services, Inc., No. 08-441, the Supreme Court addressed mixed-motive cases of age discrimination under the Age Discrimination in Employment Act ("ADEA").

Mixed-motive employment cases are cases in which an employee alleges he suffered an adverse employment action because of both permissible and impermissible considerations. In the Gross case, the Plaintiff alleged at trial that he was reassigned and demoted at least in part on his age. The trial court instructed the jury that it must return a verdict for the Plaintiff if the Plaintiff proved that age was a motivating factor in the Defendant's decision to demote the Plaintiff. The jury then found for the Plaintiff. After the Eighth Circuit Court of Appeals reversed the decision (requiring the Plaintiff prove age was the motivating factor), the Supreme Court granted review.

The Supreme Court, in a majority opinion authored by Justice Clarence Thomas and in which Chief Justice John Roberts, Justice Antonin Scalia, Justice Samuel Alito, and Justice Anthony Kennedy joined, vacated the Court of Appeals decision and held a plaintiff bringing an ADEA disparate treatment claim must prove, by a preponderance of the evidence, that age was the "but-for" cause of the challeneged adverse employment action.

You may be asking why the Supreme Court vacated the Court of Appeals decision when it appears the two were in agreement. Why not simply affirm the Court of Appeals decision? The Court of Appeals decision held the trial court incorrectly instructed the jury under the standard established in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). In a move sharply criticized by Justice John Paul Stevens in his dissent, Justice Thomas' opinion held the Court of Appeals was in error because a Price Waterhouse jury instruction is never proper in an ADEA case.

In the majority opinion, the Supreme Court held interpretation of the ADEA is not governed by Title VII decisions such as Price Waterhouse because Title VII is materially different with respect to the relevant burden of persuasion. Specifically, Justice Thomas stated "[u]nlike Title VII, the ADEA's text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor." Justice Thomas also pointed out Congress never added such a provision to the ADEA when it amended Title VII, "even though [Congress] contemporaneously amended the ADEA in several ways..."

Moving forward, therefore, "[t]o establish a disparate-treatment claim under the plain language of the ADEA...a plaintiff must prove that age was the 'but-for' cause of the employer's adverse decision." Furthermore, "the plaintiff retains the burden of persuasion to establish that age was the 'but-for' cause of the employer's adverse action."

Whatever your belief regarding the soundness of this opinion, employers certainly benefit greatly. This decision also firmly settles the law regarding mixed-motive analysis in ADEA cases (joining the previously-settled law in Title VII cases). The unanswered areas, though, are ADA cases, as well as state discrimination claims and Section 1981 race discrimination and retaliation claims. It looks like we just may be headed to overtime...

Are You Properly Classifying Employees and Independent Contractors?

Recently our Firm has noticed a trend with the Texas Workforce Commission ("TWC") in which the TWC finds employers are improperly classifying employees as independent contractors. In Texas, an employer must pay unemployment tax for each employee. An employer, however, does not pay unemployment tax for any independent contractors associated with the employer. TWC uses a twenty factor test to determine whether a worker is an employee or independent contractor and, therefore, whether employers must pay unemployment taxes associated with the worker.

Whether in response to the economic hardships we currently face or a belief that employers are manipulating the system, TWC appears to be auditing companies and industries with a history of classifying workers as independent contractors. Despite these companies' history of classifying workers as independent contractors, TWC has reversed prior decisions and determined these independent contractors should be classified as employees. The repercussions of TWC's determinations are devastating since employers now must pay several years of unpaid taxes and fines. Looking forward, the repercussions could become more severe as the long-standing business structure of many companies loses viability because of the increased unemployment tax. The real consequence, however, is not the minimal state tax (usually 2.7% in Texas). The real consequence is employers may owe the federal government nearly 15% for the same workers. Typically this amount is split 50-50 between employees and employers; employers who fail to withhold, however, may be forced to pay the entire amount.

What does this mean for you, the employer? If you use independent contractors in your business, even if you have used independent contractors for years, check with an attorney to determine if these workers are properly classified. An audit of your workforce should not take long and can save your company legal issues down the road.

Firm Happenings

Summer has arrived at The Coles Firm, which means we here at the Firm have decided to get out of the office a little.

Food For Thought: In just over two weeks, Food for Thought takes place. Food for Thought is a celebrity chef event hosted by the Dallas Association of Young Lawyers (DAYL) and co-sponsored by The Coles Firm. As a member of DAYL's 2008 Leadership Class, Dustin is one of the organizers on the Food for Thought committee and has been instrumental in the planning and preparation for this fantastic event. The proceeds from the event go to Big Thought, a non-profit creative learning organization striving to make imagination a part of everyday learning for children using arts, culture, and education as tools and catalysts. The event includes several great Dallas chefs, including Lisa Garza of Food Network's The Next Food Network Star, Blythe Beck of Central 214, and Marco Martinez of Matt's Rancho Martinez. Shelly Slater of WFAA Channel 8 will act as the Mistress of Ceremonies for the evening and Rep. Rafael Anchia will present The Gavel of Excellence award to Blockbuster President and CEO Jim Keyes. There is still plenty of time to buy tickets. We look forward to participating in this event and supporting a great cause.

Ties That Bind: This Summer, The Coles Firm also will assist another great DAYL committee, Ties That Bind. Ties That Bind works with local schools and organizations to teach young people the importance of dressing professionally and making positive first impressions. As part of every presentation, young men and women are taught how to tie a necktie or scarf and are provided a necktie or scarf of their own as a gift for their future development. Paul is a leading co-chair on Ties That Bind and is currently preparing several great presentations in the upcoming months. We're very excited to see what Paul has in store for this committee this year.

Teen Leadership Academy: Dustin is also a co-chair for DAYL's Teen Leadership Committee and this July the committee is hosting the inaugural Teen Leadership Academy for high school students entering their senior year next fall. Every high school in Dallas (both public and private) was invited to submit a male and female of their choice to participate and the committee got a great response. Using prominent Dallas leaders, the two-and-a-half day conference will include team building exercises and presentations focusing on leadership, community service, and the future of Dallas. The conference will culminate in a community service project.

DAYL's One to Watch: The Coles Firm also wants to recognize Dustin and Paul for each being named a DAYL "One to Watch." In January, Dustin was recognized by DAYL as "One to Watch" for his active participation and support of DAYL. A few months later, Paul was recognized as the "One to Watch" in May because he personifies the bright young leaders we need in the legal community. The Coles Firm appreciates Dustin's and Paul's enthusiasm and desire to participate in DAYL and further The Coles Firm's mantra, "Committed to Our Community."

As you can see, it's shaping up to be a busy summer. Of course, we wouldn't have it any other way.

Coles Corner Winning Wine: May 2009 (Archive)

Margerum's M5: Add 50% Syrah, 27% Grenache, 9% Mourvedre, 4% Counoise, and 4% Cinsault, and that leaves 6% to creativity. M5 is an amalgamation of 5 grapes from 15 vineyards. The result is a very drinkable and flavorful red wine that satisfies newcomers and connoisseurs alike. The fruit is vibrant and complex but not overwhelming.