A. The Civil Rights Act of 1991

The Civil Rights Act of l991 implemented a series of sweeping changes to federal anti-discrimination laws. The legislation expands procedural options and remedies available to employees and overruled a series of important U.S. Supreme Court decisions that limited employees' legal recourse. In doing so, Congress amended six differ- ent statutes that together prohibit discrimination based on race, color, religion, sex, national origin, disability and age. Those statutes are Title VII of the Civil Rights Act of l964, the Americans with Disabilities Act of l990, the Vocational Rehabilitation Act of l973, the Age Discrimination in Employment Act of l967, the Civil Rights Act of 1866 and the Civil Rights Attorney's Fees Awards Act of l976. Virtually all employers are touched by the legislation.

The act prohibits racial discrimination in all aspects of the contractual process, including demotions, transfers, promotions, wages and working conditions, as well as hiring and discharges. Retal- iation and on-the-job harassment are also protected. Now, both the act and the Civil Rights Act of l866, commonly called Section 1981, which prohibits racial discrimination with respect to the management and enforcement of employment contracts, obligate all private employers, regardless of size, to act legally.

In the Supreme Court's l989 Patterson v. McLean Credit Union decision, the Court ruled that Section l981 did not extend to conduct occurring after the establishment of a contract, so claims of racial harassment on the job, denials of promotions, demotions and discharge decisions could not be brought. Until this decision was handed down, Section l981 had been an attractive remedy for race and national origin claimants because it allowed for jury trials and unlimited compensatory and punitive damages. The act reverses this Supreme Court case and Section l981 once again applies to race and national origin claims alleging harassment and other "postformation conduct" such as discipline, demotions, transfers, all promotions and discharges.

Prior to the act, claimants typically could only receive their jobs back, together with retroactive job pay and restoration of seniority benefits. Now, in cases where intentional race, color, sex (including pregnancy), national origin, religion or handicap discrimination can be proved by one or more complainants, the act authorizes jury trials, reasonable witness and attorney fees paid to the individual harmed, together with compensatory and punitive damages depending upon the size of the employer.

TIP: Compensatory and punitive damages are available only for intentional discrimination and unlawful harassment, and do not apply where a job practice is not intended to be discriminatory but nonetheless has an unlawful disparate impact on persons within a protected class.

Employers with more than 14 but less than 101 employees are liable for compensatory and punitive damages totaling no more than $50,000 per claimant; between 100 and fewer than 201 employees their exposure is $100,000; for employers with more than 200 but fewer than 501 employees, the cap is $200,000 and for larger employers, claimants may receive up to $300,000. Compensatory damages are defined as money for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life and other non-pecuniary losses. Punitive damages are damages paid if the employer acted with malice or reckless indifference to the federally protected rights of an aggrieved individual.

Counsel Comment #104: These damages are not the only exposure your company can face. Job reinstatement, back pay, interest and restoration of lost seniority benefits may also be awarded in addition to the above mentioned caps. Thus, it now becomes critical to avoid committing intentional discrimination because your company may be exposed to huge potential damages.

Burdens Of Proof. The law changes the burdens of proof required for a complainant to prevail in any discrimination litigation and demonstrates the significance of the distinction between disparate treatment cases and disparate impact cases under the act. Disparate treatment claims, for which the above damages flow, require proof of intentional discrimination. Disparate impact cases involve employ- ment practices such as hiring and promotion tests, educational requirements, and height or weight standards that are essentially neutral but allegedly discriminate against minorities or women in actual practice.

The act substantially shifts the burden of proof to employers in cases alleging disparate impact by now requiring employers to demonstrate that any particular practice is job related for the position in question and consistent with business necessity. In mixed motive cases, where the evidence shows that both permissible and impermissible factors were present in the challenged practice (for example, where a female is denied advancement both on account of her gender and also because of job performance problems and her inability to get along with co-workers), it may be sufficient for the employee to show that the subject consideration was a motivating factor.

TIP: Even though an employment practice with a disparate impact is job related and supported by business necessity, the employment practice may nonetheless be unlawful if the complaining party proves that a different employment practice with less disparate impact exists and the employer failed to adopt the alternative employment practice.

The act also expands employees' rights to challenge allegedly discriminatory seniority systems by allowing people to attack such systems at a later date without worrying that the statute of limitations has run out. It also affects all U.S. citizens employed overseas by American companies and bans test norming the procedure by which the scores of tests administered for employment or promotion are adjusted on the basis of race, sex, or other characteristics of the person taking the test.

Strategies To Reduce Problems. Since the law facilitates access to the courts and juries and exposes your company to significantly greater damages, it is important to be mindful of the technical aspects of this law and act properly.

According to Eric J. Wallach, an employment lawyer and partner in the New York City law firm of Rosenman & Colin, the following rules must be followed:

1. All employers must review hiring, promotion and compensation criteria to ascertain whether they are validly job-related and consistent with business necessity. This requires an analysis not only of these standards themselves and whether they are specific to the relevant personnel objectives but also of the consequences that result from these standards. For example, are there statistical imbalances in the workforce that are directly or indirectly traceable to such standards?
2. Proper documentation including employment forms, job descriptions and performance evaluations must be prepared to adequately support any personnel decisions regarding hiring, promotions, and compensation.
3. Appropriate procedures must be consistently applied in every case and such decisions must never be made on the basis of sex, race or religion.
4. Employers with overseas operations must be attentive to whether their managers abroad are enforcing the anti-discrim- ination laws to all employees who are U.S. nationals.
5. All employment strategies must take into account the demo- graphics of the workplace. Companies must avoid statistical personnel imbalances with regard to women and minorities.

Although no employer is likely to avoid the expected increase in employment-related litigation, Attorney Wallach recommends that management should consult with counsel and human resource experts in regard to these complex issues to minimize the likelihood of such problems and your legal liability in the event of lawsuits.

There are many other concerns that companies can follow to reduce potential problems. These include the following:

6. Ban the practice of "race norming" and other practices used to alter or adjust in any way the scores of job applicants or employment-related tests on the basis of race, color, religion, sex or national origin.
7. Review all current and considered affirmative action policies. For example, under the act, the law restricts the ability of government personnel directors to hire anyone but top-ranking applicants from civil service tests. If the law is deemed retroactive, hiring and promotion based on factors other than strict rankings might be subject to legal challenge, particularly by non-minorities arguing reverse discrimination.

Counsel Comment #105: Speak to counsel about the legality of continuing programs that favor women and minority members in hiring and promotion because there is confusion regarding whether the law impacts court-ordered remedies, affirmative action, and conciliation agreements.

8. Instruct management to train all employees to avoid any on-the-job behavior that could be interpreted as sexually harassing or racially discriminatory.
9. Consider hiring additional qualified minorities such as females or non-whites to avoid charges of discrimination.
10. Analyze the law of the foreign country where you are operating. An important exception to the act is that U.S. employers doing business abroad are exempted from following the act where compliance would violate the law of the country in which the employer's foreign workplace is located. Also, while foreign corporations controlled by U.S. employers must obey the rules of the act, the law does not apply to foreign businesses not controlled by a U.S. employer (analyzed under facts such as common ownership and financial control).
11. Prepare and include in your company's handbook a definitive equal employment opportunity policy.

TIP: Since most discrimination laws state that a company is liable for the acts of its supervisors and employees unless it can prove it took immediate and appropriate corrective action, preparing and distributing to all employees an equal employ- ment opportunity policy is an important first step.

12. Review the law in your own state. Each state has its own particular anti-discrimination laws, which are often stronger than federal law. All policies aimed at curbing and eliminating potential on-the-job discrimination must be thoroughly ana- lyzed with counsel before implementation to create safeguards in this area.
13. Review all employment contracts and consider drafting broad arbitration clauses for additional protection since your company may be in the enviable position of litigating a discrimination case in arbitration as opposed to regular court.