Posts tagged ‘discrimination’

Does Your Lending Policy Discriminate Against The Disabled?  

That’s the question that Bank of America (BOA) had to grapple with in recent years as it was investigated by Federal prosecutors over allegations that its policies regarding guardianships and conservatorships had the effect of discriminating against disabled individuals in violation of federal law.  It’s one of the most unique cases I’ve seen in several years and underscores the importance of understanding the impact your credit union’s policies will have on individuals subject to guardianships and even Power of Attorneys.

Between 2010 through 2017 BOA had a nationwide policy of refusing to give first lien mortgages or home equity lines of credit to persons who were subject to conservatorships or guardianships.  Specifically, for more than half of the last decade, BOA had a written policy that prohibited making first lien mortgage loans to adults represented by legal guardians or conservators.  It also had a policy that prohibited lending to adults seeking home equity lines of credit where the property to secure the loan was owned by the guardian or conservator.  BOA defined a conservatorship as “created by a court order that appoints a person or entity (the conservator) to manage the financial affairs and/or the personal care of a mentally and/or physically incapacitated adult (the conservatee).” The policies also stated that guardians and conservators may be appointed to manage the affairs of individuals “ruled incompetent.”

Needless to say, BOA is a pretty sophisticated operation and I’m assuming that its policies were designed in part to prevent financial abuse.  The problem is of course that a policy such as this will have the effect of denying loans to otherwise qualified mentally or physically disabled individuals who are otherwise qualified applicants.  This violates section 42 U.S.C. § 3604(f)(2) of the Fair Housing Act.  It also runs afoul of New York’s Fair Lending Laws, which were not at issue in this case.

The bank changed its policy three years ago and denied any wrongdoing in its settlement agreement.

New York Primary Results Lead to an Even More Progressive State Legislature

It took more than a month to confirm, but the “AOC Effect” is having a particularly pronounced impact on the State Legislature.

In perhaps the most striking example of the ideological and generational shift which is taking place, 36 year old Emily Gallagher defeated Brooklyn Assemblyman Joseph Lentol who was part of a wave of young Democrats elected to the Assembly in 1973 as the burgeoning Watergate scandal ended Republican control of the State Assembly.  You can bet that lending policies and procedures will be under even greater scrutiny in the years to come.

July 27, 2020 at 9:53 am Leave a comment

Should Your Credit Union Take Your Member’s Temperature?  

As credit unions prepare to further reopen their facilities to their members, this has been one of the key questions that credit unions are pondering.  My unequivocal answer is absolutely not.

To be clear, I couldn’t find a law which unequivocally prohibits the practice and decisions such as these are all about context.  For instance, if I were writing a blog for the meat packing industry this morning I would give the exact opposite advice.  Furthermore, we don’t know what’s in store for the nation’s health six weeks from now let alone how quickly the virus will spread in your credit union community.  But with all those qualifications, any value your credit union perceives in taking a  member’s temperature is far outweighed by the very real legal and reputational risks to which your credit union would be exposed and the operational hurdles it would  be placing in front of your employees at a time when they already have more than enough to do.

My biggest concern has to do with fair lending laws.  As readers of this blog already know, it is illegal to adopt policies and procedures which have the purpose or effect of discriminating against someone on the basis of, among other things, race or age.  Many a financial institution has been sued over claims that anonymous testers were treated differently depending on their appearance.  These laws haven’t been suspended.  Do you really want to start implementing a program predicated on the assumption that all your members will have their temperature taken as they come in the door?  That is an awful lot of faith and responsibility to place on your employees.  I can easily dream up scenarios in which healthy looking members are given and wink and a nod while those who look like they might be more susceptible to the virus are tested.

And even if your staff implements the policy flawlessly, what steps are you taking to keep this information confidential?  These are just two examples of why the nominal benefits are not worth the legal risks.  After all, you can protect your employees and members by mandating compliance with social distancing rules, more aggressively monitoring compliance with stay at home policies and ultimately trusting your members to use common sense.

On that note, enjoy your weekend.

May 29, 2020 at 8:28 am Leave a comment

Can Your Employee Use Medical Marijuana At The Credit Union?

Since 2014 when New York legalized the use of marijuana for medical purposes, lawyers, HR professionals and employers have grappled with how best to reconcile two provisions of New York’s law which seem to be in conflict with one another. On the one hand, § 3369(2) of New York’s Public Health Law stipulates that a certified patient authorized to use marijuana shall be deemed a disability under New York’s Human Rights Law which bans discrimination against the disabled and mandates that employers provide employees reasonable accommodations to do their jobs.

Conversely, this same subdivision goes on to explain that it does “not bar the enforcement of a policy prohibiting an employee from performing his or her duties while impaired by a controlled substance” or put the employer in the position of violating Federal Law.

New Jersey also authorizes the medical use of marijuana with provisions similar to New York’s. A recent decision by its Supreme Court, while not binding in New York, could be used as persuasive authority by future employees claiming to have been discriminated against by their employers. I would certainly take a look at this case and consider whether the type of activities performed by your credit union employees justify policies that you may have regarding the use of marijuana in the workplace.

In Wild v. Carriage Funeral Holdings, Inc., a funeral director came down with cancer in 2015 and was prescribed marijuana under New Jersey’s Medical Use Law. One day he got into an accident while driving a company vehicle. He went to the emergency room and explained that he had marijuana in his system because of his cancer treatment but the doctor was unconcerned because he was clearly not impaired. Nevertheless, he was fired for violating the corporate policy against using drugs during work hours, a policy with which NCUA’s employees are all too familiar these days.

He sued claiming that he was lawfully using marijuana and he was being discriminated against because of his medical disability in violation of NJ law. The lower court disagreed because of a provision of the New Jersey Compassionate Use Act that “nothing” requires an employer to accommodate a medical user of marijuana. The case eventually found its way up to the New Jersey Supreme Court. In a brief decision, it held that it was obligated to interpret New Jersey law in a way that reconciled the two provisions. It ruled that “The Compassionate Use Act does not have an impact on the plaintiff’s existing employment rights. In a case such as this, in which plaintiff alleges that the Compassionate Use Act authorized his use of marijuana outside the workplace, the Act’s provisions may be harmonized” with New Jersey’s anti-discrimination laws.

Think about the impact that this decision has for those of you who have branches in New Jersey. Most importantly, you should make sure that your policies don’t discipline an employee simply because he or she is lawfully using marijuana. The case also raises an interesting issue that employees also need to consider. In this case, there was documented evidence that the employee was not impaired. Would the outcome have been different if the employee was impaired? And if so, how are employers going to make the distinction between an employee with marijuana in his system and an employee with marijuana in his system who is impaired? These are interesting questions that we won’t know the answer to for several years. But in the meantime, your policies have to be drafted in consideration for these questions in any state which authorizes medical marijuana use.

March 12, 2020 at 11:27 am Leave a comment

HUD to Propose Controversial Changes to Disparate Impact Regulations

HUD will shortly be proposing major revisions to a 2013 Obama administration regulation that would make it much more difficult for homebuyers to prove that mortgage lenders have discriminated against them. Don’t start changing your policies anytime soon the reality is that these changes will be hugely controversial and will be challenged in court quicker then Christina El Moussa from Flip or Flop can get divorced, find a new husband, and start another show. Trust me she’s quick.

The draft was provided to politico and has not been formally proposed in the federal register.

Title VII of the civil rights act prohibits discrimination in the sale or rental of housing on the basis of race, color, religion, sex, disability, familiar status or national origin.The Department of Housing and Urban Development has responsibility for promulgating regulations to enforce this statute. Under the statute, intentionally discriminating against someone is clearly illegal. So, for example a lending policy, under which a bank or credit union explicitly does not provide loans to African Americans who live in certain communities, would be a slam dunk case of intentional discrimination. But, what happens in the case of a lending policy or procedure which negatively impacts protected classes for  legitimate reasons. For example, if your credit union decides to raise the minimum credit scores for mortgage applicants it will by definition exclude individuals who would have otherwise qualify for a mortgage loan. It may even disproportionally impact minorities within your field of membership.

In 2013, HUD promulgated disparate impact regulations. Under the current approach the plaintiff must prove that a challenged practice caused or predictably will cause a discriminatory effect. If this burden is met the lender then has the burden of proving that the challenged practice is necessary to achieve one or more substantial and legitimate non-discriminatory purposes.

If HUD goes forward with this new proposal it will be more difficult for plaintiffs to prove discrimination based on the impact of a lenders practices. Under the proposed changes plaintiffs seeking to prove disparate impact discrimination will have to prove five elements. Plaintiffs would be obligated to prove that the challenged policy is “arbitrary artificial and unnecessary to achieve a valid interest or legitimate objective.” Only if this standard is met would a defendant have the obligation to demonstrate why the policy is legitimate. Second, the plaintiff would have to allege that there is a “robust causal link between the challenged policy or practice and the disparate impact;” thirdly plaintiffs would have to allege that the challenged policy or practice has an adverse effect on members of a protected class, presumably meaning that plaintiffs cannot prove discriminatory impact based on the experiences of a few individuals. Fourth, the plaintiffs would have to prove that the disparate impact is significant. Finally, plaintiffs would have to show that there is a direct plausible link between the alleged injury and the challenged practice.

 The bottom line is that if these regulations are implemented as proposed it will be extremely difficult for plaintiffs to bring discrimination claims on the disparate impact theory.

 

August 5, 2019 at 10:09 am 1 comment

You’re Not The Boss Of Me, Or Are You?

imagesThe Supreme Court case this term with the greatest impact on credit unions was decided a couple of days ago.  While it won’t change much of your day-to-day approach to preventing workplace harassment, it does make it more difficult for employees to successfully sue you.

Under Title 7, which bans discrimination on the basis of race, sex, religion, disability or national origin, no one disputes that employers are vicariously liable for the actions of their supervisors.  This means, for example, that where a supervisor gives consistently poor performance reviews out of prejudice against African Americans, for example, the employer can’t escape liability by arguing that it didn’t know what was happening and that such conduct is contrary to company policy.

But when the harassment involves someone who isn’t a supervisor, a different standard applies.  In this situation, an employer will be responsible for work place discrimination only to the extent that it acted negligently in not recognizing or responding to the workplace’s hostile environment.

In Vance v. Ball State University, the Supreme Court decided a case involving an African-American food service worker who did preparation work for the University’s catering service.  She complained that a woman who acted as her supervisor constantly harassed her because of her race.  For example, the putative supervisor would use racial epithets, menacingly stare at her, and occasionally block her entrance into the elevators when she was trying to deliver food.

The University was aware of these concerns, investigated them and even tried to resolve the situation with the alleged victim.  In 2006, Miss Vance started a law suit alleging discrimination under Title 7.  Two lower courts dismissed the case concluding that the alleged harasser was not a supervisor of the employee in question.  Since the University had effective procedures in place and aggressively addressed the complaints, it was not negligent in addressing this workplace situation.  And, since the harasser was not a supervisor, the employer could not be held directly responsible for the alleged misconduct.

So, the Supreme Court had to decide who exactly should be considered a supervisor.  The answer to this question is going to be easier than its application.  In a 5-4 decision, the Supreme Court held that an individual qualifies as a supervisor only if the person has the power to hire, fire, demote, transfer or discipline an employee.  If you think this is restrictive, you’re right.  It means that someone who has the authority to delegate work assignments to you and generally make your life a living hell if they want still doesn’t qualify as a supervisor, even if they manage your day-to-day work responsibilities.  The court’s holding reverses both the Equal Employment Opportunity Commission’s guidance on the issue and the majority of federal circuit court rulings including the Second Circuit, which has jurisdiction over New York.

Under the EEOC’s approach, which is the approach favored by the dissenting opinion in this case, a supervisor is not only an individual who has the authority to make tangible employment decisions, but also includes an individual who has authority to direct an employee’s daily activities.

A few quick thoughts.  The decision is a very significant one but it doesn’t mean that Mad Men can break out the Fedoras and the Scotch and start harassing their favorite secretaries.  The decision still makes employers responsible for a hostile work environment.  However, it is in everyone’s interest to clarify on those employee charts precisely who has responsibility for hiring, firing, promoting and disciplining people in the office.

The majority opinion argues that its rationale will promote clarity in an area of the law that badly needs it.  I doubt it.  There are plenty of supervisors out there whose opinions as to who should be hired, fired or disciplined carry a tremendous amount of weight, but who don’t make ultimate hiring and firing decisions. The Court’s decision will spawn litigation as to when a person exercises enough day-to-day influence to qualify as a supervisor.  These are fact sensitive inquiries and there is no way around it.

Finally, you will be hearing about this case for years to come as both Congress and probably future Presidential candidates  will use it to demonstrate their support for women or defend it as an example of a Court properly putting the brakes on regulatory activism.  No matter what side you’re on, Congress is free to amend Title VII and states such as New York are free to establish their own standards for supervisor liability under state law.  I’ll bet you right now that New York is one of the first states to respond to this decision by doing so.

June 26, 2013 at 8:27 am Leave a comment

What To Do When The Ex-Con Wants A Job

With the announcement that it is suing two companies for policies that discriminate against the hiring of felons, the Equal Employment Opportunity Commission (EEOC) is sending a message loud and clear that it is dead serious about putting teeth into its guidance released last April stressing that employers can not categorically refuse to hire someone simply because a criminal background check reveals they have been convicted of a crime.

The EEOC’s stance poses unique challenges for credit unions.  On the one hand, the EEOC is signaling that it is taking a hard line on employment policies that cast too wide a net in excluding individuals convicted of crimes from employment, at least in those cases where the job they are seeking is not impacted by their past criminal conduct.  On the other hand, 12 U.S.C. 1785 (d) prohibits credit unions from hiring any person “who has been convicted of any criminal offense involving dishonesty or breach of trust” or who has entered a “pre-trial diversion program” in connection with a prosecution of such an offense.  This categorical ban lasts for 10 years; however, credit unions may apply to the NCUA for a waiver.  It also does not apply to “deminimous” offenses.  In its guidance the EEOC concedes that employers complying with federal mandates in refusing to hire an individual or keep her employed are not violating discrimination law.  However, it is also quick to point out that policies that go beyond what is mandated by federal law could run afoul of discrimination prohibitions.  For example, your credit union could not categorically ban an applicant convicted of a crime in the last 20 years.

So what is a credit union to do?  The best way of trying to meet these employment demands is to establish policies and procedures where each individual applicant will be judged on the specific facts of his or her circumstances.  So, for example, before simply refusing to hire someone who has been convicted of a bannable crime, you should give the applicant an opportunity to explain the facts and circumstances surrounding the offense and determine whether this is someone for whom the credit union should apply for an NCUA waiver.

If this sounds complicated, it is.  So, take the time to call in your HR Director and put a call in to your attorney responsible for handling HR issues.  Now I am going to get on my soapbox for a second.  If anyone from NCUA should happen to read this blog post, it would be extremely helpful if the agency would issue an updated guidance explaining how NCUA’s interpretation of its employment prohibition can best be implemented in light of the EEOC’s policy guidance.

On that note, get to work!

June 12, 2013 at 8:06 am Leave a comment

When It Comes To Facebook, What You Know May Hurt You

imagesSuppose you have a supervisor who takes an avuncular interest in one of the up and coming employees he manages for your credit union.  He likes him so much that he tries to set him up with his daughter.  The employee politely refuses the offer, but the daughter ends up friending him on Facebook.  She tells her father that one of the organizations the employee has liked on Facebook is dedicated to advocating for same-sex marriage.

When the supervisor, who is deeply religious, turns hostile against the employee, can the credit union be sued for discrimination, particularly in a state like New York that now bans discrimination based on sexual orientation?  Yes it can be.

This hypothetical is not a hypothetical at all.   A great article in this month’s Inside Counsel magazine highlighting the legal challenges faced by social media in the workplace noted a case in which the Library of Congress is being sued by an employee who claims he was discriminated against after a supervisor surmised he was gay based on his Facebook page.

Now, for the record, I don’t get Facebook and I never will.  Why people want to post the minutia of their lives to scores of casual acquaintances I will never know, but the fact is they do.  As reckless as I think some people are with their Facebook accounts for acting as if this information is private, employers are better off using that as their working assumption as well.

Why?  The simple legal answer is by accessing someone’s Facebook page, you are put on notice regarding information that you have no right taking into consideration when dealing with an employee and the mere act of doing so may create a factual dispute in a future lawsuit.  For instance, let’s say you find out that an applicant belongs to a local mosque and an equally qualified candidate belongs to the Methodist Church.  No good can come from knowing any of this.

I talked about this with a friend of mine recently, who doesn’t ask for passwords but will see what he can find on an applicant’s Facebook page.  His argument is that good employer due diligence includes knowing everything about a potential employee’s judgment and character:  a picture of him taking a hit from a bong in his college dorm speaks volumes about both.  However, a good enough interview process should give you a means to fairly assess an applicant.  We’ve done this for hundreds of years after all, without Facebook.

There’s also a legislative component to this issue.  An increasing number of states have either passed or are considering legislation limiting employer access to employee social media.  Keeping in mind that the views I express are my own and not necessarily those of the Association, it is time for New York and maybe even the federal government to pass such legislation.  As silly as it is for employees to think that they have an expectation of privacy on Facebook, the world is changing and employers need bright line rules to delineate when they cross the line between employer due diligence and voyeurism.

May 8, 2013 at 8:21 am 1 comment

EEOC to strengthen enforcement against caregiver discrimination

I heard an interesting story recently about a talented mom who wanted to return to the practice of law now that her kids were in school.  Despite having an excellent professional pedigree, her attempts at re-entering the legal profession have so far been unsuccessful.  She now takes off her wedding ring when she interviews and she makes a conscious effort not to mention her family.

This conversation came to mind this morning as I was reading about a hearing held yesterday by the Equal Employment Opportunity Commission highlighting issues of discrimination against caregivers and pregnant women in the workplace.  It is not the type of hearing I would ignore since the EEOC seems to be signaling that it is going to be more aggressively taking legal actions in this area and employers would love more legal clarity on the issue. 

The legal issues can’t be adequately addressed in the space of a blog posting.  But the general idea based on EEOC guidance is this:  federal law does not prohibit discrimination against caregivers but it does prohibit stereotypes based on caregiving.  For example, it is ok to hold an employee responsible for not getting his or her work done, even if the reason is that they are taking care of a disabled child or a sick parent.  However, let’s say that same employee has an excellent work record, you could not deny her a promotion because she also cares for a family member.  Employment issues related to pregnancy are even trickier since federal law does explicitly prohibit discrimination based on pregnancy and the Americans with Disabilities Act could come into play.

This is an issue that is not going to go away.  As the population ages, more of your employees are going to be taking care of their elderly parents and with economic struggles continuing, even those parents who might otherwise decide to be stay at home moms or dads are going to reenter the workforce in even larger numbers.  I think we can all agree on the general principles, but their application to specific instances will always raise issues and the more aware you are of the legal parameters before they arise, the better off you will be.

February 16, 2012 at 7:09 am Leave a comment


Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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