Recent Developments – Pending EEOC Litigation under the Pregnant Workers Fairness Act and the NLRB’s Current Position on “Stay or Pay” Agreements

By: Roman Arce, Attorney, Marshall & Melhorn, LLC

The EEOC is filing lawsuits under the PWFA.

EEOC v. Wabash National Corp. – EEOC filed lawsuit (9/10/2024) with the following alleged violations of the PWFA by the employer:

• Failed to accommodate assembly line worker’s known pregnancy-related restrictions, despite its purported offer of comparable accommodations to non-pregnant workers with similar limitations.
• Denied pregnant worker’s request to transfer to a role that did not require lying on her stomach.
• Failed to engage in the interactive process to identify a potential alternative accommodation for employee’s pregnancy-related condition.
• Required pregnant employee either take unpaid leave or return to her position without modification, and
• Unlawfully required medical documentation from the employee, leading to the employee resigning from employment after employer’s failure to provide requested accommodate.

EEOC v. ABC Pest Control, Inc. – After finding probable cause, the EEOC announced a Conciliation Agreement (9/11/2024) resolving a PWFA charge alleging that employer terminated pregnant employee after she requested approval to attend monthly, pregnancy-related medical appointments. Employer agreed to do the following:

• Pay $47,480.00 in damages to former employee and appoint an EEO coordinator,
• Revise employment policies to include reasonable accommodations under the PWFA,
• Provide PWFA compliance training to employees, and
• Provide quarterly reports to the EEOC on requests for accommodation and complaints of discrimination submitted to the employer.

EEOC v. Polaris Industries, Inc.; EEOC v. Urologic Specialists of Oklahoma, Inc. -- EEOC filed two lawsuits on the same day (9/26/2024), both under the PWFA and the ADA. In EEOC v. Polaris Industries, the EEOC claims the employer violated the PWFA and the ADA as follows:

• Refused to excuse pregnant employee’s absences for pregnancy-related conditions and medical appointments, including requiring her to work mandatory overtime, despite employee’s healthcare provider’s restriction limited her to working no more than forty hours per week,
• Charged “attendance points” against pregnant employee,
• Warned pregnant employee she would be terminated if she received another attendance point, and
• Employee resigned, i.e., constructive discharge, because of employer’s actions.

In EEOC v. Urologic Specialists of Oklahoma, Inc., the EEOC claims the employer violated the PWFA and the ADA as follows:

• Refused to allow pregnant medical assistant to take breaks as needed and to either (1) sit during shifts or (2) work on a part-time basis, even though employee’s physician said these accommodations were necessary to protect employee’s health during final trimester of high-risk pregnancy,  
• After denying requested accommodations, required pregnant employee to take unpaid leave, and
• Terminated pregnant employee after she notified employer she would not return to work unless employer provided guaranteed breaks for her to express breastmilk.

In EEOC v. Kurt Bluemel (filed 10/01/2024), the EEOC claims the employer violated the PWFA as follows -- After pregnant worker requested maternity leave with the expectation that she would return to work after giving birth and attempted to return to work after giving birth, employer told her no work was available, even though the employer hired new, non-pregnant employees both before and after pregnant employee attempted to return.

NLRB General Counsel Memo. 25-01 (issued 10/07/2024)

NLRB General Counsel Memoranda establish the official legal position to be followed by all NLRB Regional offices; that is, unless the full NLRB issues a decision disagreeing with the General Counsel’s position.  According to GC Memo. 25-01, “stay-or-pay” provisions include “any contract under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain timeframe.”  Note, however, that the NLRB does not have jurisdiction over employees who meet the

NLRA definition of “supervisor,” so the NLRB’s position matters only when such agreements are binding on non-supervisors.

According to GC Memo. 25-01, “stay-or-pay” provisions can take a variety of forms, including training repayment agreements, educational repayment contracts, quit fees, damage clauses, sign-on bonuses or other types of cash payments tied to a mandatory stay period, or other agreements requiring employees to pay their employer if they voluntarily or involuntarily separate from employment.  The following passage is quoted directly from GC Memo. 25-01:

For example, employers sometimes require employees to undergo specific training as a condition of employment, but contractually obligate employees to pay the employer back for that training, or to pay some prorated amount, in the event that they separate from employment within a given period of time. The repayment amounts may be higher than the actual cost of the training provided to the employee, and the repayment obligation often applies even if the employer terminates the employee without cause.20 Other times, an employer may provide an up-front monetary payment, such as a sign-on bonus or relocation stipend, but it is not offered free-and-clear to the employee. Rather, employees are required to pay the employer back if they separate from employment within a given period.21 In other cases, stay-or-pay provisions are not linked to any ostensible benefit bestowed on an employee. In its harshest form, a stay-or-pay arrangement may simply impose a penalty for separation (sometimes referred to as a “quit fee” or “breach fee”) or pass to the employee certain business costs or losses (e.g., costs of hiring and training a replacement, lost profits caused by the employment vacancy) by means of a liquidated or unspecified damages clause if the employee resigns within a given period of time.

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I will therefore urge the Board to find that any provision under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain timeframe is presumptively unlawful. The employer may rebut that presumption by proving that the stay-or-pay provision advances a legitimate business interest and is narrowly tailored to minimize any infringement on Section 7 rights, that is, the provision:

1. is voluntarily entered into in exchange for a benefit;
2. has a reasonable and specific repayment amount;
3. has a reasonable “stay” period; and
4. does not require repayment if the employee is terminated without cause.

The above position now taken by the NLRB General Counsel and NLRB Regional offices is sure to result in NLRB unfair labor practice proceedings against employers, both union and non-union, who attempt to enforce so-called “stay-or-pay” agreements.  Unions are also likely to file ULP charges with the NLRB when employers enforce such agreements against current or former union-represented employees. You should consult with labor and employment law counsel with any further questions.