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Laid off U.S. workers whose jobs are outsourced to contractors that employ individuals with temporary work visas may face a battle if they try to sue their former employers for discrimination under Title VII of the 1964 Civil Rights Act.
Such claims were brought last month in a lawsuit against Walt Disney Parks and Resorts U.S. Inc. Thirty information technology employees alleged they were unlawfully replaced because of their race or national origin by workers with temporary H-1B work visas.
The Justice Department has taken the position that workers replaced by visa holders potentially could have viable citizenship status discrimination claims under the Immigration and Nationality Act. But whether those employees also could have bias claims under Title VII remains to be seen.
“It’s not something we commonly see in our practice,” said Michael Eastman, senior counsel and vice president for public policy at the Equal Employment Advisory Council, a nonprofit employer association in Washington.
It would be difficult for employees to prove either intentional or unintentional discrimination under Title VII, Eastman and other legal observers told Bloomberg BNA. They spoke only on the issue generally and not specifically about the Disney case.
The workers also would have to overcome joint employment issues, they said.
“The bottom line is: these are going to be difficult theories to show,” Eastman said.
That sounds like good news for employers. But Eastman said he would still advise employers to remain cautious and mindful of their obligations under Title VII and other employment laws.
They should “always consider disparate impact and possible discrimination claims as they make important business decisions,” he said.
One potential hurdle looms if the outsourced workers try to couch their Title VII bias claims as citizenship discrimination.
Discrimination on the basis of citizenship doesn’t necessarily constitute bias based on national origin, Professor Samuel Estreicher, director of the Center for Labor and Employment Law at the New York University School of Law, told Bloomberg BNA. Estreicher pointed to the Supreme Court’s ruling in a 1973 case, Espinoza v. Farah Manufacturing Co.
The 8-1 court majority wrote that the phrase “national origin” in Title VII didn’t “embrace citizenship,” but focused on “where a person was born, or, more broadly, the country from which his or her ancestors came.”
It added, however, that Title VII may prohibit citizenship discrimination where “it has the purpose or effect of discriminating on the basis of national origin.”
The EEOC’s recent enforcement guidance on national origin discrimination, released in November, adopts that language from Espinoza.
To prevail on a Title VII disparate treatment claim employees must present direct or indirect evidence of discrimination.
In an outsourcing scenario, direct evidence could be company officials expressly admitting that they intend to terminate U.S.-born employees in favor of foreign-born workers.
That type of evidence is uncommon, however, and employees thus would have to turn to an indirect method to prove bias.
The Supreme Court laid out the requirements for an indirect showing of discrimination in the 1973 case of McDonnell Douglas Corp. v. Green. Employees must show that they are in a class protected by Title VII; performed their jobs satisfactorily; were terminated; and were replaced by someone outside their protected class.
Outsourced workers “would have a hard time demonstrating” that they were replaced by individuals outside their protected class “if the employer contracted out their work,” an Equal Employment Opportunity Commission spokeswoman told Bloomberg BNA. The EEOC enforces Title VII, which protects employees.
A contractor’s workers generally wouldn’t be considered employees of the outsourcing company.
Outsourced employees would have to show that their former employer is a joint employer of the contractor’s workers on temporary visas.
Proving the existence of a joint employment relationship under Title VII can be challenging, as courts consider a dozen or so factors to determine if a company is a joint employer.
“It’s a tough claim,” Eastman said. “Joint employment questions would need to be answered.”
Even if outsourced employees are able to establish joint employment and satisfy their initial evidentiary burden of proving discrimination, employers can defend themselves presenting evidence that they had legitimate, non-discriminatory business reasons for laying off their workforce and contracting with an outside company.
For example, contracting out work often provides cost advantages for businesses, the EEOC spokeswoman said.
“Assuming the employer articulates this as the reason, the plaintiffs would have to develop and adduce evidence that this was not the real reason,” or that their race or national origin “was a motivating factor in the decision,” she said.
As a general matter, the EEOC “takes a strong stand against employers contracting out discrimination,” the spokeswoman said.
“However, this usually arises in the context of an employer making a discriminatory request of a staffing company that supplies it with workers, not an employer outsourcing a class of jobs,” she said.
The outsourced employees likely wouldn’t have better luck by bringing an unintentional discrimination claim under Title VII.
Those claims arise where an employer has a facially neutral policy or practice that doesn’t explicitly discriminate based on race, sex, color, national origin or religion, but nonetheless has a statistical, disparate impact on those protected classes.
Workers would have to show the statistical disparity, Eastman said. If they do so, the employer could still avoid liability by showing that its outsourcing decision was job-related and consistent with business necessity, he said.
At that point, the workers must establish that less discriminatory alternatives were available, Eastman said.
If outsourced employees are unable to bring viable Title VII discrimination claims, they could file intentional bias claims based on citizenship status under the Immigration and Nationality Act. The INA doesn’t allow disparate impact claims.
The Justice Department in December 2015 issued a technical assistance letter stating that, in certain circumstances, employers could violate the INA by terminating U.S. workers and replacing them with temporary work visa holders.
In theory, if a company fires American citizens because it has a preference for non-citizens from other countries, that would be citizenship discrimination, Estreicher said.
But that’s “very hard to prove,” he said.
To contact the reporter on this story: Jay-Anne B. Casuga in Washington at email@example.com
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