Perspectives

It is no secret that the construction industry has been facing significant issues completing its project backlog that have caused stress on business.  Since construction is one of the largest sectors of the U.S. economy, most can appreciate these concerns, as they in turn impact many other sectors of business.  The two main problems most of the industry is navigating are: supply chain issues and shortage of workers.  First, current supply chain issues are pushing delivery dates to double or triple their typical timelines, which make planning projects difficult and deadlines tough to uphold.  Further, even when materials or equipment are available, US Inflation at a current rate of 8.52% is driving costs to unprecedented highs.  Second, the effects of the pandemic have left a significant shortage of skilled workers in the US labor market.  It is difficult to retain quality employees and challenging to hire new or replacement workers.  This labor shortage puts pressure on any project to complete the work on time and within budget.  In some instances, construction firms have taken a laxer approach to compliance, often with dire consequences.

However, these pressures on construction firms should not cause HR departments to “throw out the baby with the bathwater.”  In May, during hearings, the EEOC cited the construction industry’s culture of racism and sexism and commented that, with much of the $1.2 trillion Infrastructure Investment and Jobs Act being earmarked for construction firms, the Act should not fund an environment of hate.  It is safe to say that construction firms are squarely in the EEOC’s enforcement crosshairs, which is never a good place to be.

Consider a case that a Washington HVAC contractor recently settled with the EEOC.  The case involved allegations against the HVAC contractor’s owner who was accused of sexually harassing female employees, including telling women they did not belong in the building trades, engaging in nonconsensual touching, leaving condoms and lubricant out in public areas of the building, and asking women to wear more revealing clothing.  Ultimately, the contractor reached a settlement with the EEOC agreeing to be subject to federal oversight for five years and pay out a total of $361,000 to seven women who were subjected to the owner’s harassing conduct

Against this backdrop, it has never been more important for construction firms to recommit to compliance: starting with its anti-discrimination and anti-harassment policies.

Review: HR representatives should review existing policies and ensure they are up to date.  If any changes are needed, or an audit reveals some employees have not received the policy, HR should undertake to ensure all employees receive and acknowledge receipt of the policies.

Train: All employees and managers should receive anti-discrimination and anti-harassment training, ideally on an annual basis.  Companies should ensure that they comply with any specific state or local laws requiring employee and manager training.

Enforce: Compliant policies are no good if they are not properly enforced.  HR must take all allegations of discrimination and harassment seriously, regardless of the position of power the alleged perpetrator may occupy.  Companies should conduct thorough investigations.  Employees should be subject to appropriate remedial action, including termination of employment if the circumstances warrant.

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Magic Burgers, a Florida burger restaurant, employed Plaintiff, Ashley Merard, as a cashier in the restaurant’s front counter and drive-through.  Merard had previously been involved in a car accident leaving her with a tracheostomy tube, which was visible on Merard’s neck.  About one month after beginning employment, Merard was fired by her supervisor, Sonia Rivera.  When Merard asked Rivera why her employment was being terminated, Rivera pointed at Merard’s tracheostomy tube and said, “because of that.”  Merard filed a charge of discrimination with the EEOC alleging discrimination in violation of the Americans with Disabilities Act (“ADA”) and the Florida Civil Rights Act.  The EEOC issued a right-to-sue letter, and subsequently Merard filed suit.

During the jury trial, Rivera testified that after Merard’s termination, the Regional District Manager, Jim Burris, came to the restaurant to ensure that the “nasty girl with . . . the tube in her throat” had been terminated.   The jury awarded Merard $15,000 in compensatory damages, $30,000 in emotional pain and suffering damages, and tried to award $2 million in punitive damages.  Luckily for Magic Burgers, the ADA places a statutory $300,000 cap on punitive damages.  In total, the district court entered judgment awarding Plaintiff $345,519.60.

Plaintiffs asserting federal employment discrimination claims can recover punitive damages when “the employer has engaged in intentional discrimination and has done so ‘with malice or with reckless indifference to the federally protected rights of an aggrieved individual.’” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 529-30 (1999) (citing 42 U.S.C. § 1981a(b)(1)).  Employers can attempt to avoid an award of punitive damages by asserting a good-faith defense, as Magic Burgers attempted to do here.  Employers using this defense argue that a management-level employee’s decision is “contrary to the employer’s good faith efforts to comply” with employment laws.  Id. at 545-46.

Magic Burgers argued that its establishment of an anti-discrimination policy was sufficient to mount a good-faith defense to Burris’ actions.  However, the simple existence of an anti-discrimination policy is not sufficient to establish the good-faith defense.  Testimony at trial revealed that the company had failed to communicate and train their managers on the policy and that Rivera failed to report Burris’ discriminatory actions for fear she would be deemed insubordinate.  These facts rendered Magic Burgers’ anti-discrimination policy ineffective, thus the restaurant was not entitled to the good-faith defense.

Employers must remember that it is not enough for a company to just implement an anti-discrimination policy.  Companies must also ensure that all employees receive a copy of the policy and are given training, ideally on an annual basis.  Any state laws governing employee training must also be considered.  Employee training should, at a minimum, define the different forms of discrimination, discuss how employees can prevent workplace discrimination, and provide a variety of methods for reporting discrimination.  Managers at all levels should receive additional anti-discrimination training that more fully explains their duties to promote a discrimination-free workplace, understand the relevant anti-discrimination laws, how to recognize requests for reasonable accommodations, how to respond to discrimination complaints, and how to avoid retaliation.   Had the leaders from Magic Burgers followed their own, presumedly well-intentioned policies, that $345K would still be tucked away in their magic hat.

Does your anti-discrimination policy need an update? Or maybe you need help creating a training process for your employees to avoid making the same mistakes as Magic Burger. No matter your need, the Employment Law team at Wagner, Falconer & Judd is here to help!

Minnesota employers, be prepared.  A broad new wage theft and employee recordkeeping law goes into effect on August 1, 2019.  This leaves employers with less than two months to prepare to comply. …