July 1998, Vol. 121, No. 7
The law at work
Health care coverage
Charles J. Muhl, Office of Publications and Special Studies, Bureau of Labor Statistics
In 1986, in Meritor Savings Bank v. Vinson,1 the U.S. Supreme Court held for the first time that unwelcome sexual advances at work create a hostile work environment which constitutes gender discrimination under Title VII of the 1964 Civil Rights Act. Before 1998, that landmark ruling was followed by only one other Supreme Court decision on the issueHarris v. Forklift Systems,2 in which the Court declared that the psychological well-being of a plaintiff need not be seriously affected in order for the plaintiff to demonstrate that an injury has been suffered in violation of Title VII.
In 1998, the Supreme Court revisited the definition of sexual harassment in four separate cases, answering the questions of (1) whether a claim of same-sex sexual harassment may be brought, (2) what legal standard should be applied to determine whether employers are liable for sexual harassment committed by workers with supervisory power, and (3) whether a claim of quid pro quo ("this for that") sexual harassment may proceed without showing that the employee submitted to sexual advances or was harmed for refusing such advances.
In Oncale v. Sundowner Offshore Services, Inc.,3 the High Court ruled that Title VII prohibits sexual harassment between members of the same sex. The legal standards governing same-sex claims, the Court held, are identical to those used to evaluate a claim of sexual harassment by a member of the opposite sex. Justice Anton Scalia reiterated the standards for evaluating such claims: "The objective severity of harassment should be judged from the perspective of a reasonable person in the plaintiffs position, considering all the circumstances."4 The Oncale opinion reasserts that this determination must account for the social context in which a particular behavior occurs and is experienced by the individual who is the target of the alleged harassment. Courts must distinguish between simple teasing and roughhousing among members of the same sex, which is not sexual harassment, and "conduct which a reasonable person in the plaintiffs position would find severely hostile or abusive."5 Title VII, said the Court, forbids only behavior that is "so objectively offensive as to alter the conditions of the victims employment."6
The plaintiff, Joseph Oncale, worked as a roustabout on an oil rig in the Gulf of Mexico. He claimed that male coworkers forcibly subjected him to sex-related, humiliating actions by two supervisors in front of other crew members. He further alleged that, despite reporting these incidents to Sundowner management, the company did not take any corrective action.
The Courts decision in Oncale reversed an earlier holding by the fifth circuit, which ruled that Title VII provided no remedy to a plaintiff claiming same-sex harassment. Other State and Federal courts had taken a variety of stances on this legal question, which provided the impetus for the Court to grant certiorari and clarify the question.
In Faragher v. City of Boca Raton,7 the Court held that employers are subject to vicariousor strictliability for sexual harassment caused by a supervisor. Such liability can be found where a hostile work environment is created through sexual abuse and threats by a supervisor with immediate or successively higher authority over an employee or where a supervisor takes a "tangible employment" action (for example, termination, demotion, or loss of pay) against an employee after a sexual advance is refused. If no such action is taken, an employer may raise a defense to strict liability by showing that it exercised reasonable care to prevent and promptly correct any sexually harassing behavior and that the employee failed to take advantage of any preventive or corrective opportunities provided by the employer to otherwise avoid harm. The Faragher case was brought under Title VII of the Civil Rights Act of 1964.
Faragher worked as a part-time lifeguard for Boca Raton from 1985 to 1990. She claimed, and a Federal judge agreed, that she was harassed during that time after being subjected to repeated touching and improper sexual comments by her supervisors. Boca Raton had a policy against sexual harassment, but the supervisors were not aware of it because the policy was not disseminated to their workplace. Faragher subsequently complained about her supervisors conduct to a training captain at the lifeguard station. Later, another female lifeguard informed the director of personnel for the city about the supervisors behavior.
Under the strict-liability standard accepted by the Court in Faragher, employers are held liable for supervisors sexual harassment, irrespective of whether the employers were informed that the harassment took place. In contrast, a negligence standardwhich several circuit courts had adopted, but which ultimately was rejected by the High Courtwould have required plaintiffs to show only that employers knew or should have known that their supervisors were engaging in sexual harassment before liability could be established.
In Meritor, the Supreme Court had indicated that questions of employer liability for sexual harassment should be evaluated under traditional principles of agency law. Under agency theory, employers can be held liable for actions of employees if the actions fall within the scope of a supervisors job duties. The Court clarified this analysis in the Faragher opinion, saying that, in a sense, supervisors would always be assisted in sexual misconduct by the supervisory relationship. The Faragher Court noted, however, that employers should not automatically be held liable whenever a supervisor commits harassment.
Under the Courts enunciated sexual harassment standard in Faragher, Boca Raton was held liable for sexual harassment by city supervisors of the two female lifeguards. The Court found that the supervisors behavior created a hostile work environment and that the supervisors had almost limitless authority over their employees. Furthermore, the city could not raise an affirmative defense to the liability, because it failed to disseminate its sexual harassment policy among beach employees and no attempt was made to watch over the conduct of supervisors. Thus, the city did not exercise reasonable care to prevent the supervisors harassing conduct.
The Courts holding in Faragher overruled the eleventh circuit U.S. Court of Appeals, which held in a 75 decision that the city was not liable because it was unaware that the sexual harassment had taken place. The eleventh circuit argued that the supervisors were not aided by their agency relationship in accomplishing their harassment.
The Faragher standard also was applied by the High Court in Burlington Industries, Inc. v. Ellerth8 to determine whether employees who neither submit to a supervisors sexual demands nor suffer any tangible adverse job consequences may still sue for quid pro quo sexual harassment under Title VII. Although an exact definition of "quid pro quo" is difficult to enunciate, in the sexual harassment context the locution refers to a situation in which a supervisor makes a sexual advance and offers improvements in working conditions if it is accepted.
Ellerth was promoted about 1 year into the job. Burlington had a policy against sexual harassment at work, and Ellerth knew the policy, but she did not complain about her supervisors alleged harassment. In a 65 decision, the seventh circuit ruled that Ellerth could proceed with her claim.
The Supreme Court held in Ellerth that an employee may recover damages from an employer for sexual harassment even if a supervisors sexual demands go empty or unfulfilled or if no demotion, loss of pay, or termination results from failure to submit to sexual advances. Because the strict-liability standard of Faragher applies here as well, the employee is not required to show that the employer was negligent or otherwise at fault for the supervisors harassment. However, employers may defend against such a claim by demonstrating a reasonable response to the harassment accusation or showing that the employee did not make use of procedures in place to address such complaints (the procedure outlined in Faragher). The Court also said that the distinction many Federal courts had used between quid pro quo and hostile work environment sexual harassment cases to determine whether employers were strictly liable was of limited utility.
Finally, in Gebser v. Lago Vista Independent School District,9 the Court ruled that a plaintiff may not recover damages for teacher-student sexual harassment, unless a school district official who has the authority to institute corrective measures on the districts behalf has actual notice of, and is deliberately indifferent to, the teachers misconduct. The ruling applies to private actions brought under Title IX of the Education Amendments of 1972.
Gebser was a high school student in the Lago Vista Independent School District. She had an affair with one of her teachers, who was arrested and subsequently fired from his job when the two were found together having sex. Later, the student sued the school district, seeking damages for the teachers misconduct.
Health care coverage
The Supreme Court has ruled that an employer cannot cancel a former employees medical coverage under the Comprehensive Omnibus Budget Reconciliation Act (COBRA), even if the former worker is covered under a spouses health plan when separated from employment. As a result of the holding, a former employee may choose to continue health care coverage provided by his or her previous employer if coverage under the spouses health plan was in effect before the decision to continue health care coverage under COBRA is made.
COBRA requires employers to provide a "qualified beneficiary" (for example, an employee who was fired) with continuation of health care coverage as good as the coverage the employee received while employed. The continuation of coverage can last up to 18 months; the former employee pays the health care insurance premiums.
In Geissal v. Moore Medical Corp.,10 the plaintiff, James Geissal, was covered by both his employers self-funded health insurance plan and his wifes group health plan at the time he was fired. Geissal preferred to be covered by his former employers plan, provided by the Moore Medical Group, rather than his wifes plan. Six months following his election of the Moore Group plan, the group terminated his coverage because he was covered by his wifes plan.
The statutory language of COBRA11 clearly indicates that a former employee ceases to be eligible for coverage under the Act if the employee becomes covered under a different plan after the election of COBRA benefits. Section 1162(2)(D)(i) states that an employees COBRA insurance may be canceled on "the date on which the qualified beneficiary first becomes, after the date of the election12 [to continue coverage from a former employer], covered under any other group health plan which does not contain any exclusion or limitation with respect to any pre-existing conditions of such beneficiary. . . ." However, the language does not directly address whether a former employee who was covered by another plan before electing to continue coverage from the former employer (that is, while the former employee was still employed) is ineligible for COBRA benefits.
The Court interpreted the statute according to its plain meaning, accepting Geissals position, supported by attorneys for the Federal Government in oral argument, that the date of election of coverage was critical. Thus, COBRA benefits cease only when a former employee first becomes covered after the date of election, not when the employee becomes covered by a spouses plan before the date of election. The Court noted that, because COBRA beneficiaries must pay the premiums if they elect to continue coverage, its decision does not provide them with a "windfall." Furthermore, the Court agreed with Government attorneys who argued that Congress intended to give employees the choice of which coverage to continue.
The Court rejected the "significant gap test" adopted by some circuit courts. Under that test, a former employee was able to continue coverage under COBRA when he or she was covered by another group plan only if a "significant gap" in coverage existed between the two plans. A health plan administrator or court, rather than the employee, determined whether such a gap in coverage existed. In rejecting this approach, the High Court cited the lack of statutory support for it, as well as the impermissible level of judicial intrusion into a decision that Congress intended to be left to the former employee.
Previously, circuit courts had split on the issue of coverage. The eighth circuit in Geissal13 ruled that the plaintiff could not continue to receive COBRA benefits if he or she was covered by another group plan prior to electing coverage under COBRA, subject to the "significant gap test." The eighth circuits decision mirrored that of the eleventh circuit in National Companies Health Benefits Plan v. St. Josephs Hospital, Inc.,14 which had introduced the "significant gap test." Unlike the Supreme Court, the eleventh circuit interpreted congressional motives regarding the passage of COBRA as wanting to ensure that employees could receive group health insurance at reasonable cost when they left a job. In contrast to the eighth and eleventh circuits, the tenth15 and seventh16 circuits ruled that Congress intended to permit employees to preserve their health insurance as is under COBRA, meaning that the choice of which plan to use should be left to the employee. The Supreme Courts decision resolves the conflict between the various circuit courts.
What kind of medical tests may employers legally perform on blood and urine samples submitted by their employees? The U.S. Court of Appeals for the ninth circuit recently ruled that the University of California violated employees rights by testing workers for genetic disorders, venereal disease, and pregnancy without their consent. In Norman-Bloodsaw v. Lawrence Berkeley Laboratory,17 the Court held that employees could go forward with a lawsuit filed against the national research laboratory run by the university, alleging a violation of Title VII of the 1964 Civil Rights Act.
The Courts holding, which focused on the fact that the employees did not give their consent to the university laboratory, indicated that employers do not have unlimited power to conduct any tests they wish. The Court reasoned that a simple submission of a blood or urine sample does not put employees on notice that an employer will perform any and all tests, irrespective of their invasiveness, especially when the employer provides no concrete justification for conducting the tests. Even though employees were asked questions on a medical form about venereal disease, sickle-cell anemia, and menstrual disorders, the employees did not have reason to expect further intrusive tests. The Court distinguished between answering questions about ones health and consenting to an investigation into the most intimate aspects of a persons life.
Employers located in the Ninth Circuit (Arizona, California, Idaho, Montana, Nevada, Oregon, and Washington) who wish to conduct medical tests should provide explicit notice of the tests and seek informed consent from the employees they wish to test. Furthermore, the tests should have a reasonable medical or public health justification.
1 477 U.S. 57 (1986).
2 510 U.S. 17 (1993).
3 118 S.Ct. 998 (1998).
7 118 S.Ct. 438 (1998). See also 76 F.3d 1155 (1996).
8 118 S.Ct. 876 (1998). See also 123 F.3d 490 (1997).
9 118 S.Ct. 595 (1998). See also 106 F.3d 1223 (1997).
10 1998 WL 292075. For overruled Eighth Circuits opinion, see 114 F.3d 1458 (1997).
11 29 U.S.C. 1162 (1998) (Continuation Coverage and Additional Standards for Group Health Plans). See Section (2)(D)(i).
12 My italics.
13 114 F.3d 1458 (8th Cir. 1997).
14 929 F.2d 1558 (11th Cir. 1991).
15 Oakley v. City of Longmont, 890 F.2d 1128 (10th Cir. 1989).
16 Lutheran Hospital of Indiana, Inc. v. Business Mens Assurance Co. of America, 51 F.3d 1308 (7th Cir. 1995).
17 135 F.3d 1260 (1998).
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