On April, 24, 2017, the New York State Department of Labor (“NYSDOL”) has filed an appeal to the February 16, 2017 decision by the New York State Industrial Board of Appeals (“Board”). The Board’s ruling held that the NYSDOL’s regulations regarding employer payments via payroll debit cards and direct deposit were invalid, thereby revoking the regulations, which were set to become effective on March 7, 2017. While the regulations remain ineffective, we will continue to provide updates on New York’s payroll debit card and direct deposit rules.
In the latest HR headline from the start-up world, the offending executive doesn’t fit the typical mold, but the lesson remains the same: don’t ignore human resources.
Miki Agrawal, the self-proclaimed “SHE-eo” of THINX, and her “boundary pushing” workplace demeanor are the focus of a New York City Commission on Human Rights complaint by the former head of public relations, Chelsea Leibow. Leibow alleges that Agrawal created a hostile work environment through her constant discussion of sex, nudity around employees, and inappropriate touching of employees’ breasts.
THINX, the “period underwear” company that seeks to disrupt the menstrual products world, intentionally pushes boundaries with its marketing strategies. In her role, Leibow was responsible for PR emails, which were the subject of media attention highlighting the emails’ casual, “millennial-speak.” According to Leibow in an interview with New York Magazine, the company also pushed internal boundaries of professionalism. Leibow alleges that, just a few months after she joined THINX Agrawal, “helped herself” to Leibow’s breasts and engaged in a variety of other sexualized conduct. Leibow asserts that Agrawal drove a casual culture, and that many employees engaged in more casual (and often sexually-inappropriate) conversations out of fear of losing their jobs.
Leibow alleges that she made multiple internal complaints, including to the CFO and CCO, about Agrawal’s behavior, but those complaints were ignored. Rather than establish a formal HR function, Agrawal introduced “Culture Queens” to manage internal disputes. Neither of these individuals had HR experience, and the reporting line brought all complaints back to Agrawal – even those complaints about her. In fact, Leibow alleged that it was ingrained into the culture that the employees and the executive team “operated on different planes.”
In response to Leibow’s complaint and subsequent publicity, Agrawal published a blog acknowledging that THINX failed to appropriately establish a human resources function early enough in the formation of the company. Like many start-ups, when THINX had only 15 employees, Agrawal did not make hiring an HR professional a priority. She acknowledges that the failure to address human resources was a “problem area,” but “to sit down and get an HR person and think about [health insurance, vacation days, benefits, and maternity leave] were left to the bottom of the pile of things to get done.” THINX has commissioned an employment law firm to investigate these claims, along with several other allegations being anonymously reported to various news outlets.
Following the complaint, Agrawal has stepped down as CEO, and THINX is hiring a new CEO and a HR manager. Our attorneys have seen a continuing pattern of successful start-up companies ignoring human resources functions in favor other responsibilities to launch the business. But as this example teaches, start-ups and other small businesses should not leave HR-planning to the end. Although managing the HR function early on seems less important than getting the business off the ground, failing to establish basic workplace rules, including a harassment complaint procedure, can lead to major problems.
Throughout 2016, the Equal Employment Opportunity Commission (“EEOC” or “Commission”) has been examining initiatives to identify and attempt to rectify a perceived lack of diversity in the workplace. The EEOC has, in particular, identified the technology industry as an area where significant strides can be made to create a more diverse workforce.
Following a May 18, 2016, public meeting on diversity in the technology industry, the EEOC issued a “Diversity in High Tech” report (“Report”) summarizing research on the lack of diversity in the “high-tech sector,” defined as industries that employ a high concentration of employees in the STEM (science, technology, engineering, and mathematics) occupations and the production of goods and services advancing the use of electronic and computer-based production methods. The Report highlighted several demographic trends within the industry, generally showing that the high-tech sector is still predominantly white, male, and under 40 years old. Citing the high-tech sector as “a major source of economic growth fueling the U.S. economy,” the Report also identified demographic differences among the types of positions within the industry, noting that African Americans and Hispanics were disproportionately underrepresented in leadership positions in technology jobs.
According to the Report, the lack of diversity in the labor force within the high-tech sector can be attributed to the demographics of graduates with STEM degrees. Nearly 70 percent of graduates in engineering, mathematics, and computer science are men. While the Obama administration has included STEM education as a priority, the current graduates in STEM fields are significantly less diverse than in the general labor market.
Further, more than half of the women working at STEM companies in the high-tech sector eventually leave or do not advance within the STEM industry. The Report attributed women’s exit from the high-tech sector to an “inhospitable” work culture, isolation, work styles incompatible with the “firefighting” style generally rewarded, long hours and travel, and a glass-ceiling effect.
While the high-tech sector originated in Silicon Valley, the scope of this industry has grown across the United States. To see whether the diversity statistics differed at the epicenter of high tech, the Report further analyzed the labor force within Silicon Valley. The labor force generally in Silicon Valley is split evenly between men and women; however, within the tech industry, it becomes a 70-30 split in favor of men. While Asian Americans fared better within Silicon Valley than across the national survey for professional jobs, white men “dominated” leadership positions across the nation and even more significantly in Silicon Valley.
While the Report is valuable in highlighting changes that are necessary to create a more diverse workforce within the technology industry, the EEOC’s public meeting made clear that the Commission expects technology companies to address what it perceives to be the implicit and unconscious biases leading to the current demographics. In many technology start-ups, hiring practices and human resources policies are generally among the last concerns in growing companies; thus, companies recruit via word of mouth or weed out certain categories of candidates, such as older workers, leading to a more homogenous workforce. The findings stated in the Report and at the public meeting should encourage emerging companies to consider employee issues at the forefront, rather than as a secondary concern.
In Silicon Valley, where the lack of diversity is amplified within the high-tech sector, changes in California law may encourage employers to recruit from a more diverse pool of candidates. At the end of June, the California Legislature passed an amendment to the Equal Pay Act that, if signed by the governor, would provide a cause of action for a differential in pay on the basis of race or ethnicity unless the employer can show that the difference is based on a bona fide factor other than race or ethnicity. (The California Equal Pay Act was also recently amended to protect women more strongly against pay differentials.)
In addition to the Report, recently proposed EEOC guidance on national origin discrimination and the EEOC’s updated proposed rule to include salary bands on the annual EEO-1 report demonstrate the Commission’s commitment to encouraging a more diverse and inclusive workforce. The EEOC’s in-depth look at the high-tech sector should induce technology employers to review hiring practices and audit the diversity within their workforce, as the EEOC’s enforcement of systemic discrimination has increased significantly over the past 10 years.
A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”
Technology employers should note that the Department of Labor’s Wage and Hour Division (“DOL”) has just released a new Family Medical Leave Act (“FMLA”) poster and The Employer’s Guide to The Family and Medical Leave Act (“Guide”).
New FMLA Poster
The FMLA requires covered employers to display a copy of the General FMLA Notice prominently in a conspicuous place. The new poster is more reader-friendly and better organized than the previous one. The font is larger and the poster contains a QR code that will connect the reader directly to the DOL homepage. According to the DOL, however, the February 2013 version of the FMLA poster can continue to be used to fulfill the FMLA’s posting requirement.
The Employer’s Guide to The Family and Medical Leave Act
According to the DOL, the Guide is intended to provide employers with “essential information about the FMLA, including information about employers’ obligations under the law and the options available to employers in administering leave under the FMLA.” The Guide reviews issues in chronological order, beginning with a discussion of whether an employer is covered under the FMLA, all the way through an employee’s return to work after taking FMLA leave. The Guide includes helpful “Did You Know?” sections that shed light on some of the lesser-known provisions of the FMLA. The Guide also includes hyperlinks to the DOL website and visual aids to improve the reader’s experience. Overall the Guide helps navigating the complex FMLA process; however, it does not provide any guidance beyond the existing regulations.
Our colleagues Peter M. Panken, Nancy L. Gunzenhauser, and Marc-Joseph Gansah have a post on the Retail Labor and Employment Blog that will be of interest to many of our readers in the technology industry: “Employers Should Care About This: New York City’s Amendment on Caregiver Discrimination.”
Following is an excerpt:
The New York City’s Human Rights law (“NYCHRL”) prohibits employment discrimination against specified protected classes of employees and applicants including:
race, color, creed, age, national origin, alienage or citizenship status, gender, sexual orientation, disability, marital status, partnership status, any lawful source of income, status as a victim of domestic violence or status as a victim of sex offenses or stalking, whether children are, may be or would be residing with a person or conviction or arrest record.
If this list wasn’t long enough, on May 4, 2016, NYCHRL will add “caregivers” to the protected classes including, anyone who provides ongoing medical or “daily living” care for a minor, any disabled relative or disabled non-relative who lives in the caregiver’s household. …
On March 3, 2016, the EEOC issued a one-page fact sheet aimed at assisting start-ups and small businesses understand their responsibilities under the various federal employment laws. The fact sheet, which is available in over 30 languages, reminds employers that:
- employment decisions cannot be made on the basis of protected categories
- employers should establish policies that do not disparately impact employees on the basis of protected categories
- men and women must be provided equal pay
- employers should prevent harassment, but if a complaint is raised, employers should promptly address claims of harassment or discrimination
- employers should provide reasonable accommodations for medical and religious purposes
- employers must display required posters
- employment records must be kept, including applications and personnel files
The EEOC’s fact sheet provides some helpful points for small businesses, who may not always be considering employment issues. Small employers must have at least 15 employees for the federal anti-discrimination laws to apply. Even without 15 employees, several laws (including New York City’s Human Rights Law) can still apply to these start-ups. Make sure to reference EBG’s TMT Start-Up Employment Law Reference as your business grows! As your new and emerging business continues to grow, make sure to consider how various employment laws may be implicated.
Our colleague Nancy L. Gunzenhauser, an Associate at Epstein Becker Green, has a post on the Retail Labor and Employment Blog that will be of interest to many of our readers in the technology industry: “Reminder: All Philadelphia Employers Must Post New Ban-the-Box Poster.”
Following is an excerpt:
One of the requirements of the amended Philadelphia ban-the-box law has gone into effect. As of March 14, 2016, Philadelphia employers are required to post a new poster provided by the Philadelphia Commission on Human Relations in a conspicuous place on both the employer’s website and on premises, where applicants and employees will be most likely to notice and read it. …
Following on the tails of recent updates in New York and California’s equal pay laws, New Jersey, Massachusetts, and California all have bills pending in their state legislatures that would seek to eliminate pay differentials on the basis of sex and other protected categories.
The NJ Amendment
NJ employers may be curious why this amendment is necessary, as the state’s Equal Pay Law already prohibits discrimination in the rate or method of payment of wages to an employee because of his or her sex. The NJ Amendment, which has passed in the Senate and must now move through the House before being delivered to the Governor, would amend the Law Against Discrimination to prohibit differentials among employees of different sexes who perform “substantially similar” work. The NJ Amendment would, like the federal Lilly Ledbetter Fair Pay Act, allow a plaintiff to bring a claim based on “continuing violations” of the law, thereby expanding the statute of limitations on pay differentials.
The law mimics the New York and California laws, in that employees may bring claims based on a disparate impact – i.e., a neutral factor produces a wage differential based upon sex, and the employer did not adopt an alternative business practice that would serve the same purposes without the wage differential.
The NJ Amendment provides that comparisons of wages are based on rates “in all of an employer’s operations or facilities.” This broad definition is troublesome for employers, as it does not clearly state the reach of the law. In contrast, the New York law limits geographic comparisons based upon regions no larger than a county. The California law does not have any type of geographic limitation on wage comparisons.
The MA Amendment
The MA Amendment goes significantly further than the NJ Amendment, and follows more closely with the recent changes in the New York laws, as part of the NY Governor Cuomo’s Women’s Equality Agenda. In addition to prohibiting pay differentials on the basis of gender without a justifiable factor other than sex, the MA Amendment (1) provides that an employees’ seniority for pay purposes may not be reduced due to time spent on protected family, medical, and parental leave (including pregnancy-related leave), (2) establishes pay transparency provisions, and (3) creates an affirmative defense for employers who perform self-evaluations of pay practices.
The MA Amendment, which also has passed in the Senate and must now move through the House before being delivered to the Governor, amends the current Massachusetts Equal Pay Act to define “comparable work” to mean “work that is substantially similar in content and requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.”
Unlike all other recent equal pay laws, the MA Amendment permits employers to base pay differentials based upon geographic location if one location has a lower cost of living based upon the Consumer Price Index.
Interestingly, the MA Amendment would also prohibit employers from obtaining an applicant’s salary history on an application or during interviews. Earlier this year, the California legislature passed a bill that would prohibit employers from seeking past pay information from applicants; however, that bill was vetoed by Governor Brown.
The CA Amendment
The CA legislature has recently introduced a new amendment to the fair pay law, which was just amended earlier this year. The Wage Equality Act of 2016 would expand the law’s protections to race- and ethnicity-based pay differentials.
While states are leading the charge with updates to equal pay laws, the EEOC is also stepping up equal pay enforcement with their proposal to modify the EEO-1 forms to include pay information. This push to gather more information regarding pay among various categories may lead to an increase in pay-related claims over the next few years. To help avoid such claims, employers should consider auditing job titles and compensation methods to ensure compliance with each jurisdiction’s equal pay laws.
On Monday, June 29, 2015, Mayor Bill de Blasio signed into law the bill passed by the New York City Council “banning-the-box.” The law goes into effect on Tuesday, October 27, 2015. As discussed in our earlier advisory, the ban-the-box movement removes from an employment application the “box” that requests criminal conviction history. New York City’s law also imposes additional requirements upon the employer when making an adverse employment decision on the basis of criminal conviction history.
My colleague Nancy L. Gunzenhauser at Epstein Becker Green has a Management Memo blog post that will be of interest to many of our readers: “NLRB Dramatically Educates Private School on Meaning of Concerted Protected Activity. ”
Following is an excerpt:
While we have been reminding readers of the fact that the National Labor Relations Act (the “Act”) protects employees regardless of whether they are represented by a union and the Act applies to non-unionized workforces, too, recently a National Labor Relations Board (the “NLRB”) Administrative Law Judge issued a decision following an unfair labor practice (“ULP”) hearing based on a charge filed by a teacher at New York City’s prestigious Dalton School that should serve as an object lesson for employers in all non-union businesses.
Read the full original post here.