Proposed Legislative Employment Law Reform

Posted: April 8, 2008

Paul J. Siegel

As the national election scene heats up, workplace law issues are attracting greater attention in Washington. Below is a brief summary of proposed legislation pending before Congress.

Civil Rights Act of 2008

In late January 2008, Senator Edward Kennedy, along with Senators Hillary Clinton and Barack Obama, introduced the Civil Rights Act of 2008. This proposed legislation would change existing federal laws in the following respects:

Amend the Equal Pay Act to stiffen penalties for violations and to make it more difficult for employers to use the "bona fide factor other than sex" defense by limiting its availability to instances where the employer can show that the differential is truly caused by a consideration other than sex and is related to job performance -- such as differences in education, training, or experience;
Add compensatory and punitive damages to the remedies available to employees under the Fair Labor Standards Act, in addition to back pay (which is doubled if an underpayment is not in "good faith");
Amend the Federal Arbitration Act to prohibit clauses requiring arbitration of federal constitutional or statutory claims unless an employee knowingly and voluntarily consents to this clause aftera dispute has arisen or it is part of a collective bargaining agreement;
Make it easier for employees who prevail, in part, to recover expenses (e.g., expert witness fees) in non-Title VII cases (expert witness fees are recoverable already under Title VII);
Give the National Labor Relations Board authority to award backpay to undocumented workers;
Provide individuals (as opposed to only the federal government) standing to bring action under Title VI and Title IX of the Civil Rights Acts, the Rehabilitation Act of 1973, and the Americans with Disabilities Act to challenge the policies of recipients of federal funding that have an unjustified discriminatory effect based on race, color, national origin, disability, age or gender;
Require disparate impact claims under the Age Discrimination in Employment Act to be analyzed in the same way as Title VII claims, by making the standard of proof in cases alleging an unjustified discriminatory effect based on age the same as in cases alleging an unjustified discriminatory effect based on race, gender, national origin, or religion; and
Condition states' receipts of federal funds on their waiver of sovereign immunity against individual claims for monetary damages under the ADEA, the FLSA, and the Uniformed Services Employment and Reemployment Rights Act. This would reverse U.S. Supreme Court decisions that have barred these lawsuits against state governments.

Major Changes to Title VII

Congress' first step might be elimination of the caps that Congress imposed upon punitive and compensatory awards under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. Senator Edward Kennedy (D-MA) has introduced legislation that would eliminate the caps on the amount of damages recoverable under the Civil Rights Act of 1991. Kennedy introduced the bill–the Equal Remedies Act of 2007 (S. 1928)–on August 1, 2007. Kennedy claimed his bill would end "the glaring inequality in the current federal antidiscrimination laws."

CRA 1991 permitted plaintiffs suing under Title VII of the Civil Rights Act of 1964 and the ADA to recover compensatory and punitive damages for intentional employment discrimination. However, it imposed a four-tier program of limited caps. (The maximum limit for compensatory and punitive damages combined is $300,000 for the largest employers–more than 500 employees.) In contrast, plaintiffs suing under 42 U.S.C. § 1981, which covers discrimination on the basis of race or color, can recover unlimited damages. According to Senator Kennedy, in addition to creating equality among all federal anti-discrimination laws, reform is needed because when an employer is aware that damages are "capped", they do not serve as a significant deterrent.

Senators Obama and Clinton both are sponsors of the Equal Remedies Act of 2007 ("the Act"). Senator Obama asserts that caps on compensatory and punitive damages under Title VII "presently impede the ability of victims of racial and gender discrimination to fully recover for the wrongs they have suffered." He promises to sign the Act into law if elected President. Although Senator Clinton has not directly addressed her support for the Act in her campaign, it is likely she too would sign the Act into law if elected. Both Obama's and Clinton's support for the Act provides insight into the labor and employment platform of the next Democratic candidate for President, whoever is nominated.

Senator McCain, on the other hand, has not taken a public position for or against the proposed legislation. Senator McCain voted in favor of the Civil Rights Act of 1991 (i.e., the Act that imposed the damages caps). On another issue, with employment law implications, he voted against the points-based immigration system that would have admitted workers into the United States based on a government-created formula.

Major Changes to Americans with Disabilities Act

A major expansion of employee protections under the Americans with Disabilities Act could be in the offing. With over 240 co-sponsors in the House, the ADA Restoration Act, H.R.3195 and S.1881, has been the subject of hearings before the House Education and Labor Committee, House Judiciary Committee and the Senate Health, Education, Labor and Pension Committee.

As currently proposed, the ADA Restoration Act would redefine "disability" to include simply "a physical or mental impairment" or "a record of a physical or mental impairment" or the state of "being regarded as having a physical or mental impairment." The bill effectively overrules several U.S. Supreme Court decisions that narrowed the scope of the ADA's protections. Individuals no longer would need to prove that impairments "substantially limit" one or more "major life activities." Courts and employers also would be prohibited from considering the effects of mitigating measures (such as medication or devices) when determining whether individuals are disabled. The bill appears to shift the burden of proving qualification to perform a job from employee-plaintiff, who must show that he or she is qualified, to employers, who must show the employee is not qualified.

In a letter presented to the House Education and Labor Committee during its January 29, 2008, hearing, the U.S. Justice Department opposed the ADA Restoration Act as written, stating the bill "would dramatically increase unnecessary litigation, create uncertainty in the workplace, and upset the balance struck by Congress in adopting the ADA."

As the debate over the ADA Restoration Act heats up, businesses would be well advised to educate Congress on the potential "unintended" consequences of the Act's passage. Employers should share with their Representatives and Senators real-life examples (without names of employees or applicants, of course) of challenges they have faced with ill or injured employees that would be protected as "disabled" and entitled to "reasonable accommodations" under the Restoration Act. Jackson Lewis is attempting to capture such experiences and intends to submit anecdotal information it receives to Congress. If you would like to share your experience(s) and the impact you expect the ADA Restoration Act will have on your business, please use our Proposed ADA Restoration Act Response Form.

For the past several years, the employment law landscape has been stable enough to enable employers to develop preventive programs and for employment practices liability insurance carriers to evaluate potential exposure. The broad changes and uncapped liabilities proposed in these bills would create uncertainty and greatly increase exposure to costly litigation.