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Businesses with workers in dual student-employee roles could be in for a rude legal awakening.Sex discrimination prohibitions and compliance requirements of federal education law may have a broader reach than previously thought, following a recent federal appeals court decision. Many businesses—from private teaching hospitals to companies inside and outside of the health-care industry—therefore would be wise to reassess their legal obligations to individuals in what are or may be dual student-employee roles, at least if the entity is doing business in Delaware, New Jersey, Pennsylvania or the Virgin Islands.
That’s the major implication of a case decided March 7 by the U.S. Court of Appeals for the Third Circuit, management-side lawyers told Bloomberg BNA. In Doe v. Mercy Catholic Medical Center, the federal appeals court found a private teaching hospital in Philadelphia potentially liable under Title IX to a female former medical resident who claims she was sexually harassed by the director of her radiology residency program.
If an organization receives some sort of federal financial assistance and has even a modest educational mission, it may be obligated under the holding in Doe to comply with the sex bias provisions of Title IX , even if its principle business isn’t education, Erin C. Galbally said. Private teaching hospitals and other medical industry organizations may fit more neatly under the Doe analysis, she said, but the reach of the case may not be limited to those types of entities.
The sex bias protections of Title IX exist independent of and in addition to Title VII’s anti-discrimination provisions for those workers covered by both statutes, said Galbally, a partner in Clark Hill PLC’s Philadelphia office and a certified Title IX investigator.
Unlike Title VII, Title IX doesn’t require an employee to first exhaust a sex discrimination claim administratively before suing in court, Barbara E. Hoey said. So there may be no real opportunity to resolve a dispute amicably prior to litigation when a plaintiff asserts a sex discrimination claim under Title IX, said the New York-based Hoey, chair of Kelley Drye & Warren LLP’s labor and employment practice group.
“That’s what has a lot of employers concerned,” Galbally said. Plus, businesses that fail to fulfill their Title IX obligations are at risk of having their federal funding withheld, she said.
So employers are exposed to a potential economic loss beyond the money damages available in a Title VII lawsuit when Title IX comes into play, Galbally said.
But as is true under Title VII, the best way for a business to limit or avoid liability is to always make sure that harassment allegations are investigated thoroughly and promptly and that complaints are addressed in a meaningful and effective way when substantiated, she said.
Title IX has a procedurally specific complaint process that goes beyond what Title VII requires, Galbally said.
The Education Department’s Title IX sexual harassment guidance requires the appointment of a Title IX coordinator and that an internal grievance process be made available to complainants, Hoey said. That includes the right to a hearing at which witnesses may be called, and potentially the right to appeal an adverse ruling, she said.
“That’s not part of the Title VII process,” she said.
A Title IX coordinator, generally speaking, is someone on-site who is well versed in the education law and charged with making sure an institution is compliant with the law in all respects, Kristine Grady Derewicz told Bloomberg BNA. They’re also tasked with oversight responsibilities, including reviewing a compliance program for patterns of inequity or other deficiencies, she said. The Philadelphia-based Derewicz is co-chair of Littler Mendelson P.C.’s higher education industry group.
“The Third Circuit adds a level of compliance and complexity” to the obligations of entities that meet the Doe test for Title IX coverage “that’s unnecessary,” Hoey said.
The court in Doe defined “education program"—the term used for the first requirement for Title IX coverage—“expansively,” Galbally said. It found that Congress in Title IX only hinted at a meaning by exempting certain noneducational organizations, such as the Girl Scouts, the YMCA and social fraternities, from the law’s reach, she explained.
It then concluded that an education program should be interpreted broadly because the law includes no other qualifiers on which programs can qualify as educational, Galbally said.
The Third Circuit did lay out some “particular features” (see graphic) that may be relevant in determining if a specific program or activity is educational.
In finding that Mercy plausibly met two of those criteria, the court pointed to the fact that the hospital’s radiology residency program is affiliated with Drexel University’s College of Medicine, and is accredited. The plaintiff also was required to learn and train under faculty members and physicians, attend lectures, take a physics class on Drexel’s campus and sit for annual exams.
Whether an organization receives federal funding—the second requirement for Title IX coverage—is determined by looking at the entity as a whole rather than the specific unit or program in question, the Doe court found.
That broad test for assessing Title IX coverage could potentially extend to any business, Hoey said.
In Doe, the federal funds the medical center allegedly received were Medicare payments. But some hospitals and other health-care organizations receive grants from the National Institutes of Health or other types of research funding that likely could qualify as “federal financial assistance” for Title IX purposes, she said.
“The federal government has many tentacles, and there are a lot of private businesses that work with government and receive some sort of funding,” Hoey explained.
For example, a pharmaceutical company that receives federal grant money for research and provides some sort of educational program might need to comply with Title IX’s sex bias provisions and the related guidelines established by the Education Department, she said.
There also are individuals doing post-doctoral or similar research across a wide spectrum of fields who arguably have “dual roles” as students and employees in ways similar to medical residents, Hoey said.
A nursing home is another type of health-care business that may need to re-examine its Title IX responsibilities in the wake of Doe, Galbally said.
Moreover, grants are given pretty widely, so many different industries potentially are affected, she said.
Galbally and Hoey both see federal contractors as among the group of businesses potentially swept under Title IX as interpreted by the Third Circuit.
Someone conceivably could “fashion an argument” that a federal contractor with an apprenticeship program should be covered by Title IX under Doe’s rationale, Hoey said.
It’s unclear which entities may fall under the decision’s holding, Galbally said.
“I’d imagine that there are other institutions out there that assist in training health-care professionals” that may need to be concerned with Doe’s reach, Derewicz said, agreeing in part. She cited physical therapy programs as an example.
As with other business types, it still needs to be shown that they have some level of educational mission, but “some third-party medical training partners that may not have perceived themselves as covered by Title IX” now may be under the logic of Doe, she said.
But Derewicz said her experience is that many third parties that fall under the aegis of Title IX as read by the Doe court are already aware of their obligations under the law.
So the Third Circuit’s decision “is not a massive sea change,” she said. Teaching hospitals that are part and parcel of a medical school in a direct way have long known they have Title IX obligations. It’s only private teaching hospitals that are loosely affiliated with a medical school or that have an affiliation agreement under which they accept medical school graduates for training that are definitely impacted by Doe, she said.
Moreover, because all entities with 15 or more employees are covered by Title VII, they’re already doing a lot of what Title IX requires even if the education law were to apply to them, Derewicz said.
“But Title IX is more stringent,” she said. “Look at your existing compliance structure to see if it needs to be augmented” to account for any Title IX obligations.
Galbally agreed that Doe probably isn’t “much of a game changer.” But “it’s a really important decision that demonstrates that Title IX is more broad an avenue of relief than previously thought,” she said.
Doe puts another regulatory burden on hospitals that aren’t part of a school or university, Hoey said. The primary purpose of these institutions is to care for patients, not education, and they’re not usually regulated by the Education Department.
Rather, they’re regulated by the Department of Health and Human Services and state health departments, Hoey said. That means they’re already subject to extensive regulations.
Plus, medical residents already have Title VII and state law protections against workplace harassment and bias, Hoey added. The plaintiff in Doe initially had a remedy under Title VII.
Doe may mean that dual procedures are required under Title IX and Title VII when a medical resident at a private teaching hospital or a worker at some other type of entity that falls under the case’s reasoning decides to pursue claims under both laws, she said.
If the plaintiffs’ bar starts bringing dual claims in these types of situations, that would be a real concern, she said.
“I think Doe is wrongly decided because the core relationship” between Mercy and the medical resident is employment, Hoey said. “It’s not educational at its core.”
To contact the reporter on this story: Patrick Dorrian in Washington at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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