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Archive for July, 2016

EEOC Continues to Push For Protection on the Basis of Sexual Orientation

Posted on: July 14th, 2016

By:  Amanda Hall

We’ve written on the EEOC’s push to include sexual orientation discrimination within the ambit of Title VII before (July 24, 2015).  Last summer, the EEOC determined that sexual orientation is a concept that “cannot be defined or understood without reference to sex” and that it is covered by Title VII because “it necessarily involves discrimination based on gender stereotypes,” which the Supreme Court held to be unlawful in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).  See Baldwin v. Foxx, Appeal No. 0120133080 (July 15, 2015).

Since then, the EEOC has continued to advance this position, most recently entering into a consent decree to resolve one of the first two cases it filed alleging that sexual orientation discrimination violates Title VII.  As part of the June 23, 2016, consent decree, the EEOC is requiring the employer at issue, Pallet Cos. d/b/a IFCO Systems, to institute company-wide LGBT training to its managers.  The underlying case involved the EEOC suing on behalf of a Lesbian forklift operator at IFCO’s Baltimore facility.  The allegations in the case included claims of daily harassment as a result of the employee’s sexual orientation, including comments such as “I want you to turn back into a woman,” “I want you to like men again,” and “[a]re you a girl or a man?”

At present, the federal courts (in contrast to the EEOC) that have addressed this issue have differentiated between sexual orientation discrimination (which they have found is not covered under Title VII) and discrimination based upon sex stereotyping (which is covered under Title VII).  It remains to be seen, however, whether the EEOC’s continued determination to place sexual orientation discrimination within the realm of Title VII will ultimately erase this line and eliminate this distinction.

Mixed Ruling for Penn State Insurer as New Allegations Surface in Jerry Sandusky Coverage Case

Posted on: July 13th, 2016

By:  Bill Buechner

Approximately 4 years ago, former Penn State defensive coordinator Jerry Sandusky was convicted on 45 counts of child sexual abuse arising out of the molestation of 10 boys over a period of 15 years.   Sandusky was sentenced to a minimum of 30 years.   He has appealed these convictions, and his appeal is still pending.    Several other Penn State administrators, including the former president and the former athletic director also were indicted on various charges relating to Sandusky’s misconduct, and they are awaiting trial.

The Sandusky story is one of the biggest and most shocking scandals in the history of college athletics.  The initial allegations of Sandusky’s sexual abuse of children surfaced in the fall of 2011 and led to the termination of legendary Penn State football coach Joe Paterno (who subsequently died of lung cancer in January 2012), amidst allegations that Paterno was informed of at least one incident in 2001 and failed to take appropriate corrective action.    The NCAA subsequently imposed severe sanctions on Penn State (some of which were later reduced or rescinded) as a result of the Sandusky scandal.

As one might expect, numerous victims asserted civil claims and/or filed lawsuits contending that Sandusky sexually abused them and that Penn State negligently supervised and retained him.   According to published reports, the university has paid up to almost $93 million to resolve at least 30 of these civil claims.  The university has acknowledged that at least one settlement relates to claimed sexual abuse dating back to 1971.

One aspect of the Sandusky story that had not received much public attention is Penn State’s lawsuit in a Pennsylvania state court against its insurer, Pennsylvania Manufacturers’ Association Insurance Co., to recover most or at least some of the money Penn State has paid to settle the Sandusky civil claims under policies from 1969 through 2011.  This changed dramatically when the court recently issued an order granting in part and denying in part summary judgment motions filed by the parties (see order here).  The new publicity was not due to the coverage rulings (discussed below), but rather because of new allegations that were revealed in the order.

The most explosive new allegation revealed in the court’s ruling was an allegation by one victim that Sandusky molested him in 1976, and that he informed Paterno of this shortly thereafter.  The order also summarized deposition testimony that assistant coaches witnessed inappropriate conduct by Sandusky toward children in 1987 and 1988, and that one of the 1988 incidents was reported to the athletic director at the time.   Yesterday, the court unsealed deposition transcripts that provide additional details concerning these new allegations (see here), which lawyers for Sandusky and the Paterno family have denied.  Various assistant coaches also have denied the new allegations that they knew of alleged misconduct by Sandusky.

These new allegations have created a media firestorm and raised new questions about the scope of Sandusky’s misconduct, as well as what Paterno and his assistant coaches knew about it.  However, these new allegations did not help the insurer defeat coverage for claims prior to 1992.   The court ruled that, even if assistant coaches, Paterno or even the athletic director had knowledge of Sandusky’s alleged sexual abuse of children in 1976, 1987 or 1988, coverage was not barred under the notice provisions of the policies applicable at that time because those provisions only charged Penn State with knowledge by its executive officers, trustees or its risk manager.   The court concluded that, because there was no evidence in the record that any of these individuals had knowledge of Sandusky’s alleged conduct during that time frame, Penn State did not have a duty to notify the insurer of these alleged occurrences at that time.

However, the insurer did prevail on other significant issues.  The court determined that reports of potential misconduct by Sandusky in 1998 and 2001 (including the report by Paterno to his superiors in 2001) did reach the president and the senior vice president for business and finance, whom the court concluded were executive officers.   Consequently, the court held that Penn State’s failure to report Sandusky’s misconduct at that point could be sufficient to void the policies in subsequent years with respect to “bodily injury” caused by Sandusky, and that Penn State could have expected or intended subsequent abuse of children by Sandusky.  The court also enforced a sexual abuse/molestation exclusion that was in the policies from March 1, 1992 through March 1, 1999.  In addition, the court ruled that Sandusky’s alleged abuse of a victim over the course of several years constituted a single “occurrence” under the policy.

Thus, depending on the outcome of the trial and any subsequent appeals, Penn State’s insurer could be required to indemnify Penn State for some of the settlements reached to resolve the Sandusky child sexual abuse claims, but perhaps substantially less than what Penn State has sought.

The Ferguson Effect: The Future of Law Enforcement and Crime Rates in America?

Posted on: July 12th, 2016

By:  Sara Brochstein

As tensions increase throughout the United States, the debate over the “Ferguson effect” theory remains highly visible in the foreground.  The theory suggests that increased attention and scrutiny of the police in light of the highly publicized episodes of police brutality has resulted in officers acting less proactive.  This behavior reportedly stems from a fear of making a controversial stop or, even worse, a mistake given the widespread use of cellphone videos and media coverage.  According to proponents of the Ferguson effect, the “hesitation” by police has emboldened criminals and led to an increase in crime.

Regardless of whether the theory has merit, the behavioral tendencies espoused by the Ferguson effect theory certainly raise an interesting question.  Even if it cannot be proven that the current climate is affecting police officers and their ability to perform their job duties effectively, what is the ultimate impact on retention rates and recruiting efforts within police departments?  While a national decrease in recruitment could be traced to multiple factors, it seems only logical that the problem will be further compounded by recent police shootings and the growing concern for safety.  In such an unstable time, it remains to be seen what impact these current events and issues will have on national law enforcement and the rippling effect on the overall crime rate, which could have serious implications for everyone.

Georgia Utility Update – July 2016

Posted on: July 12th, 2016

Southern Company/AGL Resources Merger Complete as of July 1 

The Southern Company acquisition of AGL Resources was completed as of July 1 making Southern Company the second largest utility in the country with a customer base of approximately 9 million and a projected rate base of approximately $50 billion.  Eleven electric and gas utility companies will serve customers in nine states.

The Georgia Public Service Commission approved the joint merger application of the companies on April 14, 2016, by adopting a Settlement Agreement between the parties.  As part of the Settlement Agreement the Commission conditioned the merger application by prohibiting the recovery of the merger transaction costs through a rate proceeding and the allocation of any transaction costs to Georgia Power or Atlanta Gas Light by either Southern Company or AGL Resources.  The merger Settlement Agreement also delayed the filing of Georgia Power’s rate case from July 1, 2016, to July 1, 2019.

 

Georgia Power Integrated Resource Plan (“IRP”) Provides for 1,600 MWs of Renewable Generation

The Public Service Commission will consider Georgia Power’s proposed IRP and Stipulation on July 28.  The proposed IRP provides for development of 1,200 MW (150 MW of distributed generation) through the Renewable Energy Development Initiative (“REDI”).  Two RFPs in 2017 and 2019 will each solicit 525 MW of renewable energy for development by 2019 and 2021.  The REDI program limits wind resources to no more than 300 MW.  The IRP also provides for 200 MW of self-build capacity by the Company and the possible development of a renewable commercial and industrial program that will be capped at 200 MW.     

The IRP contains several other significant provisions.  Five older coal and natural gas plants will be decertified and retired, and capital expenditures at five additional coal plants will be restricted pending anticipated retirement after 2019.  The Company’s High Wind Study and ash pond solar demonstration projects will be approved, and its planning reserve margin will be increased to 16.25%.

The Company’s request for $175 million for funding new nuclear development in Stewart County also will be decided by the Commission.  The PSC Staff estimated that between $131 to $153 million for financing costs through 2026 would have to be added to the $175 million.

 

$5 Billion Vogtle 3 & 4 Prudency Review Cloaked in Secrecy

Unlike the prudency review conducted in the late 1980s for Vogtle Units 1 & 2 where senior Georgia Power officers and others testified in public hearings there will be no witnesses, no public hearings, no opportunity for cross-examination and no record other than the comments filed by the Company and a few interveners regarding the Company’s request that approximately $5 billion in capital and financing costs be found prudent by the Commission.  In fact, it’s not known exactly how much Georgia Power is asking the Commission to certify as prudently spent on the Vogtle Project because no amount or cut-off date was included in the Company’s filing.  In response to an inquiry by the Commission Staff the Company indicated that they would like to have all of their expenses for the Vogtle Project up to the day of the Commission’s Order included as a prudent expense, which begs the question, how can you review an expense that is incurred the day it is approved?

The Commission’s procedural and scheduling order for the prudency review used the term “settlement” seven times which is a telling indicator what is expected from the Staff.  Should they not get the message, the Commission reserves the right “to extend the deadline if the Commission deems it appropriate to do so in order to allow further time for review or further negotiations.”  The Staff is scheduled to report to the Commission on October 19 the results of their negotiations with Georgia Power Company.

Remember Your Safety P’s and Q’s – OSHA Issues New Reporting and Anti-Retaliation Regulations

Posted on: July 11th, 2016

By:  Agne Krutules

On May 12, 2016, the Occupational Safety and Health Administration (OSHA”) issued its final rules on discrimination and injury and illness reporting.  81 Fed. Reg. 29624.  The new anti-discrimination and anti-retaliation rules go into effect on August 10, 2016.  The electronic reporting requirements become effective on January 1, 2017.

I.  Electronic Reporting Requirements

Under the new rule, certain employers will be required to electronically submit to OSHA the injury and illness data contained in their various OSHA logs. The new rule applies to two categories of employers: (1) all employers with 250 or more employees; and (2) employers with 20 to 249 employees in specific “high-risk industries.” (A list of high-risk industries can be found at https://www.osha.gov/recordkeeping/NAICScodesforelectronicsubmission.pdf).

The first category of employers is required to electronically submit OSHA 300 Logs, 301 Forms, and 300A summaries annually.  The second category of employers is required to submit OSHA 300A summaries annually.  These new requirements will be phased in, whereby employers will have to electronically submit their 300A summaries on July 1, 2017, and their 300 Logs, 301 Forms and 300A summaries on July 1, 2018.  Beginning in 2019, the information will have to be submitted by March 2 each year.

The information provided to OSHA will be available to the general public on the OSHA website.  Although OSHA allegedly will remove all the personally identifiable information from the forms, such as the employee’s name, address, and work title, OSHA’s reliance on a computer system to identify every piece of identifiable information is risky and increases the potential for a possible data breach. The public access to the injury and illnesses data also could impact the unionization process, as unions could target employees at the companies with high work related injury rate.

Previously, OSHA obtained this information from employers only during inspections or as part of its annual sampling of certain employers.  Under the new rule, the companies with high incident rates will be easily identified and could become subjects of OSHA inspections.

II.  Employee Reporting Requirements and Drug Testing

The new rules also change employer obligations for ensuring that employees report all work-related injuries and illnesses.  All employers, regardless of size, must develop employee injury and illness reporting requirements that meet certain criteria.  Specifically, the final rule requires employers to inform employees of their right to report work-related injuries without fear of retaliation.  Also, employers must ensure that the method for reporting work-related injuries is reasonable and does not deter or discourage employees from reporting.  In addition, according to OSHA, a policy must allow for reporting within a reasonable time after the employee realized that he or she had suffered a work-related injury, rather than just immediately following the injury.

In addition, the new rule prohibits mandatory post-accident drug testing because such testing discriminates against employees on the basis of their injury or illness reporting.  OSHA instructs employers to limit drug testing to situations where an employee drug use was a likely factor in the incident.  OSHA explains with examples that it “would likely not be reasonable to drug test an employee who reports a bee sting, a repetitive strain injury, or an injury caused by a lack of machine guarding or a machine or tool malfunction.”  While OSHA’s reasoning that a drug test is a form of an “adverse employment action” may not be upheld in federal courts, employers should be mindful of their policies and revise them to comply with the new regulations.

These new rules become effective on August 10, 2016, for all employers.

III.  New Retaliation Investigation Rules

OSHA now takes the position that its compliance officers can issue citations to employers who discipline workers for reporting injuries and illnesses when there is insufficient evidence that a workplace safety rule has been violated.  OSHA’s interpretation overturns the agency’s longstanding statutory framework for retaliation complaints in which specialized investigators determined whether retaliation had occurred.  It is unclear whether OSHA compliance officers will be provided formal training in employment discrimination law.  It is expected this new OSHA’s direction will result in additional unfounded retaliation citations.

This new rule becomes effective on August 10, 2016, for all employers.

IV.  Legal Challenge to the New OSHA Rules

On July 8, 2016, a coalition of companies and business groups filed a lawsuit in the District Court for the Northern District of Texas, challenging the new rules that take effect on August 10, 2016.  The case is TEXO ABC/AGC v. Labor Department, Case No. 16-01998 (N.D. Tx. July 8, 2016).  The plaintiffs seek an injunction to stop their implementation pending resolution of litigation.