In This Issue
	Who is EPC? Wachovia Agrees to Pay $5.5 Million for Wage Disparities Failure to take Prompt Corrective Action Defeats Motion for Summary Judgment Disparate Impact Actionable Under the ADEA The Department of Labor Issues Proposed Regulations

Wachovia Agrees to Pay $5.5 Million for Wage Disparities

Charlotte based Wachovia Corporation agreed to pay $5.5 million in back wages to settle allegations of wage discrimination against female employees brought by the office of Federal Contract Compliance Programs (OFCCP). The matter arose from a 2001 OFCCP review of First Union National Bank's corporate headquarters which later merged with and became a subsidiary of Wachovia. Based upon a statistical analysis conducted by the OFCCP a comparison of the salaries of men and women in various jobs revealed significant disparities. The Department of Labor called the settlement the fifth largest under Executive Order 11246 which prohibits discriminatory practices by federal contractors. The women involved will receive back pay and interest ranging from $104 to as much as $37,922. The OFCCP conducted a review of Wachovia's current compensation practices and found them to be non- discriminatory. However, as part of the conciliation agreement between the OFCCP and Wachovia, Wachovia will be required to conduct an analysis of salaries of all employees at its corporate headquarters over the next three years and take corrective action for any disparities identified. Best Practices Note : A compensation analysis should be a part of the Affirmative Action Plan development process for every federal contractor. Even a cursory analysis may raise red flags that lead an employer to dig deeper and discover issues that may exist and need to be addressed.

Failure to take Prompt Corrective Action Defeats Motion for Summary Judgment

The expectation that any company faced with claims of sexual harassment will take prompt remedial action to address such harassment and prevent it from occurring in the future has been reiterated in case after case in courts throughout the country. However, there are still some companies that have not received the message. In a recent case before the U.S. District Court for the Western District of Wisconsin, (Prindle v. TNT Logistics of North America, W.D. Wis., No. 03-C- 460-C 8/14/04) the court held that the company's four month delay in disciplining an employee accused of sexual harassment and the company's failure to take any action to prevent the harassment was sufficient grounds to let the case proceed to a jury trial. According to the court, a reasonable jury could find that the company's slow response was neither prompt nor appropriate and therefore could find the company negligent. Best Practices Note : Companies presented with harassment and discrimination claims from employees are well advised to take all claims seriously and to immediately take steps to investigate the claim and to rectify the situation. Training for managers on how to conduct investigations and how to address harassment and discrimination claims is essential for any company. Failure to do so can lead to large awards including possibly punitive damages.

Disparate Impact Actionable Under the ADEA

According to the 2nd Circuit Court of Appeals, employees over the age of forty have actionable claims under the Age Discrimination in Employment Act ("ADEA") even when a layoff plan was not intentionally implemented to discriminate against those employees. In Meacham v. Knolls Atomic Power Laboratory, (2nd Cir., No. 02-7378, 8/23/04), of the 31 employees selected for termination under the reduction-in-force plan, 30 were over the age of 40. The jury found that although Knolls' layoff plan was not intentionally discriminatory, Knolls could have implemented a plan that could have achieved its goals in a non-discriminatory manner. The jury awarded $4.2 million to 17 plaintiffs. The plaintiffs' attorney was awarded approximately $1 million in attorney's fees and costs. The Second Circuit affirmed the district courts judgment that awarded the affected employees liquidated damages, front pay, back pay and damages for mental anguish. Despite the 2nd Circuit's decision, five other circuits - 1st, 5th, 7th, 10th and 11th - have ruled that disparate impact claims are not actionable under the ADEA. The 8th and 9th Circuits agree with the 2nd Circuits position that such claims are actionable under the ADEA. The United States Supreme Court is expected to resolve this split in opinion in its next term. Best Practices Note : Companies should take extra efforts to ensure that its layoff plan can be achieved in a manner that will not disproportionately affect any protected class of employees. If there does appear to be adverse impact against a protected class, the company would be well advised to determine if alternative means exist to achieve the company's goals. As pointed out by the Appellate Court in the Knolls matter, employers should design reduction-in-force programs with safeguards against subjectivity on the part of evaluating managers.

The Department of Labor Issues Proposed Regulations

For the first time, the U.S. Department of Labor's Veterans' Employment and Training Service issued proposed regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA") on September 20, 2004. The USERRA prohibits discrimination against persons because of their service in the Armed Forces, Reserve, the National Guard or other uniformed services. It applies to employers and potential employers. The proposed regulations were developed to create "clear and consistent" guidance to employers regarding the USERRA's requirements. They seek to clarify service health insurance benefits and coverage rights as well as USERRA's protections of returning service members against discharge as an exception to the employment-at -will doctrine. According to a Department of Labor press release, the proposed regulations are "the latest in a series of proactive steps the Department has taken to ensure job security for the largest group of mobilized National Guard and Reserve service members since World War II." Best Practices : Employers should review their USERRA or leave policies and practices to ensure that they comply with current law and note the possible changes that may need to occur to be in line with the proposed regulations.   Click here to view the proposed regulations »