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If you think that denying accommodations to pregnant or disabled employees will save your organization money, you may want to think again. The U.S. Equal Employment Opportunity Commission (EEOC) recently settled two systemic pregnancy and disability cases for over seven figures each – sums that are sure to catch the eye of any CFO or Controller.

Retailer Agrees to $3.5 Million Settlement

Headquartered in North Carolina, The Cato Corporation operates approximately 1,300 women’s fashion stores with over 10,000 employees in 30-plus states. After conducting a nationwide investigation of the retailer’s reasonable accommodation policies, the EEOC found that the company denied accommodations to certain pregnant or disabled employees, required some employees to take unpaid leaves of absence, and terminated employees due to their pregnancy or disability.

Without having to file a lawsuit against the company, the EEOC recently secured a voluntary settlement from The Cato Corporation for a whopping $3.5 million. The proceeds will be distributed to Cato employees who were terminated as a result of their pregnancies or disabilities. According to the EEOC’s press release on the settlement, The Cato Corporation also agreed to train all of its employees and to revise its policies to more fully consider whether medical restrictions of its pregnant or disabled employees may be reasonably accommodated. In addition, the company must provide a report to the EEOC for three years on its handling of reasonable-accommodation requests by pregnant employees or those with disabilities.

Rigid Leave Policy Costs Employer $1.75 Million Settlement

In December 2018, the EEOC settled another systemic pregnancy and disability discrimination case when a federal district court in California entered a consent decree requiring Family HealthCare Network to pay $1.75 million to end a class-action lawsuit. In that case, the EEOC alleged that the health care company which operates over 20 health care facilities in California discriminated against employees based on pregnancy, childbirth, and related medical conditions in violation of Title VII, as amended by the Pregnancy Discrimination Act (PDA), and the Americans with Disabilities Act (ADA). Specifically, the EEOC asserted that Family HealthCare network failed to engage in the interactive process in good faith, failed to provide reasonable accommodations including additional leave, and fired employees when they were unable to return to work at the end of their scheduled leave. The EEOC further alleged that in some cases, the company fired employees even before they had exhausted their approved leaves.

The $1.75M settlement will be allocated to a potential class of more than 250 claimants. In addition, Family HealthCare Network must:

  • Hire a third-party EEO monitor to review and revise the company’s policies
  • Develop a centralized tracking system for employee requests for accommodations and discrimination complaints
  • Train owners, human resources, supervisors, and staff on preventing discrimination and harassment based on disability and pregnancy, and
  • Submit regular reports to the EEOC to document compliance with the consent decree.

Lessons in Handling Pregnancy Accommodations

The EEOC remains committed to addressing inflexible leave policies and other employment practices that result in denied accommodations to pregnant workers or those with disabilities. In fact, one of the agency’s six national priorities focuses on issues involving the ADA and pregnancy-related limitations. That means that pregnancy accommodations and how employers handle them will continue to receive EEOC scrutiny. Moreover, the EEOC is likely to invest its litigation resources to bring cases involving systemic pregnancy discrimination to court.

Employers may help avoid investigations into their pregnancy and disability-related policies by complying with some overarching principles. First, employers should treat women affected by pregnancy, childbirth, or related medical conditions the same as other employees who are similar in their ability (or inability) to work.  In other words, do not deny benefits to, or place additional restrictions on pregnant employees that are not denied to or placed on similarly restricted non-pregnant employees.

Second, do not implement a rigid leave or 100-percent healed return-to-work policy. Some employers think they are being safety conscious by requiring pregnant employees to go out on leave when they reach their eighth or ninth month of pregnancy. Other employers automatically terminate employees who are unable to return to work without restrictions following a leave. These policies (and many variations of them) are the type that attract the EEOC’s attention as they often result in a failure to accommodate pregnancy-related conditions or disabilities.

Third, engage in the interactive process in good faith with the aim of reasonably accommodating pregnancy-related impairments. As noted above, failing to accommodate pregnant employees can cost employers millions once the EEOC gets involved.

Finally, don’t forget about obligations that may apply to your workers under other state and federal laws, such as the Family and Medical Leave Act (FMLA), state paid family or disability leaves, etc. Pregnancy-related conditions may trigger coverage under a variety of laws so know what is applicable to your workforce in each location and plan to comply accordingly.

Sue Woods

Sue Woods

Sue Woods, Esq. is Senior Compliance Counsel at ReedGroup where she focuses on product and operational compliance in leave and absence management solutions. Sue brings years of experience practicing labor and employment law, including advising employers on the intricacies of the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), Title VII, and state and local leave laws. By writing timely articles and speaking at seminars and events, Sue strives to break down tricky leave compliance issues into actionable, practical employment solutions.