Legal Report February 2005
U.S. JUDICIAL DECISIONS
Religious discrimination. A federal appeals court has ruled that, despite the religious convictions of an employee, a company may prohibit facial piercing. To accommodate such actions would constitute an undue hardship on the company, ruled the court.
Kimberly Cloutier was hired as a front-end assistant by Costco Wholesale Corporation, in July 1997. Before she started work, Cloutier was presented with a copy of the company’s dress code. At the time she was hired, Cloutier had several piercings in her ears and numerous tattoos.
In September 1997, Cloutier was transferred to the store’s deli department. In 1998, Costco revised its dress code to prohibit food handlers from wearing any jewelry. Cloutier’s supervisor informed her that she would have to remove her earrings when at work. Cloutier refused and requested a transfer back to her previous position where she would be free to wear her jewelry. At the time Cloutier made no indication that her jewelry was in any way relevant to her religion.
Costco approved the transfer and Cloutier again served as a front-end assistant. She was promoted to cashier after a few months. Over the next few years, Cloutier continued her body modification practices, acquiring cuttings and an eyebrow piercing.
In March 2001, Costco again revised its dress code to prohibit all facial jewelry, except for earrings. Cloutier did not challenge this dress code; she simply ignored it and continued to wear her piercings.
In June 2001, Costco began enforcing the dress code. Cloutier’s supervisor informed her that she would have to remove her eyebrow piercing. Cloutier ignored the directive. The next day, Cloutier’s supervisor again requested that the piercing be removed. At this time, Cloutier informed her supervisor that she was a member of the Church of Body Modification (CBM) and that her piercing was part of her religion.
Cloutier provided the company with information about CBM, a religion established in 1999 with about 1,000 members. Among the tenets of CBM is the charge to be “confident role models in learning, teaching, and displaying body modifications.”
After reviewing the CBM information, Cloutier’s supervisor again instructed her to remove her piercing. She refused and filed a religious-discrimination lawsuit with the Equal Employment Opportunity Commission (EEOC).
Cloutier met with the store manager about the issue. Cloutier suggested that she be allowed to cover the piercing with flesh-colored Band-Aids. The manager refused and told Cloutier to remove her piercing or go home. Cloutier left. On July 14, 2001, Cloutier received written notice that she had been terminated for unexcused absences resulting from her noncompliance with the company dress code.
During the mediation process with the EEOC, Costco offered to let Cloutier return to work either wearing plastic retainers in the piercing or covering it with Band-Aids (the same accommodation Cloutier had originally suggested). Cloutier refused, saying that neither option would allow her to comply with her religious beliefs.
Cloutier insisted that the only possible accommodation would be for Costco to exempt her from the company dress code. Costco managers refused, saying that the accommodation would cause the company undue hardship because it would be unable to require employees to maintain a professional work appearance.
Cloutier filed a discrimination lawsuit with support of the EEOC in August 2002. Costco requested summary judgment—a hearing based on the facts of a case without a trial. The U.S. District Court for the District of Massachusetts granted the summary judgment, ruling that even if CBM is a valid religion, Costco had met its responsibility in offering Cloutier a reasonable accommodation. Cloutier appealed the decision.
The U.S. Court of Appeals for the First Circuit upheld the summary judgment, ruling in favor of Costco. In its discussion of the case, the court wrote, “We are faced with a situation of an employee who will accept no accommodation short of an outright exemption from a neutral dress code. Granting such an exemption would be an undue hardship because it would adversely affect the employer’s public image.” (Kimberly M. Cloutier v. Costco Wholesale Corporation, U.S. Court of Appeals for the First Circuit, No. 04-1475, 2004)
U.S. REGULATORY ISSUES
Flight schools. A provision in a law approved by Congress in the months after September 11 requires that flight schools take steps to increase security awareness and report suspicious behavior to the government. A recent final rule issued by the Transportation Security Administration (TSA) clarifies these requirements.
Under the rule, flight schools may not provide training to aliens without the prior approval of the TSA. To obtain approval, the school must submit information about the candidate, along with the candidate’s fingerprints and a processing fee. The school must then wait 30 days after the TSA has received the information before the training may begin.
Cargo security. After reviewing comments made to its interim rule, the Transportation Security Administration (TSA) has issued an interim final rule regarding security threat assessments of commercial truck drivers who transport hazardous material. The rule will take effect May 31, 2005.
Among the changes is more flexibility in who holds information on the drivers. Under the interim rule, the TSA would have held all application and fingerprint information. Under the interim final rule, states may opt to hold such information. States need not forward all driver applications to the TSA, as was required under the prior rule, but the state must retain the applications for review for at least one year.
The new rule also changes eligibility requirements. For example, TSA is removing the felony offense of simple drug possession as a disqualifying factor and adding the unlawful purchase, receipt, transfer, shipping, transporting, and storage of a firearm or explosives as a disqualifying factor.
The TSA has also simplified the rules that allow drivers to travel through states without obtaining a separate background check to receive a license in each new state.
Port security. In a recent report, the Government Accountability Office (GAO) reviewed the Coast Guard’s progress in conducting threat assessments on the nation’s most valuable ports. The GAO found that the assessment efforts already conducted were often duplicated by the ports themselves when applying for homeland security grants. Also, many assessments proved more expensive and less useful than anticipated.
To help address these problems, notes the report, the Coast Guard implemented a geographic information system (GIS), a computer mapping system that has many information layers so that information can be easily updated and retrieved. However, though the system holds promise, the GAO voiced concern that not enough planning has been done to ensure that the system works consistently and at a reasonable cost.
The Coast Guard responded positively to the report and agreed to take the recommended steps to define the functional requirements of the GIS system and to develop a plan for long-term implementation.
Aviation security. A new rule proposed by the Transportation Security Administration (TSA) would impose additional requirements on companies that ship cargo via aircraft. The rule would require that companies conduct background checks on workers who handle air cargo but do not operate within a secure area. Currently, only those employees in secure areas of operation are screened. Checks will also be required for all people traveling on an all-cargo aircraft regardless of their job.
Money laundering. The Office of the Comptroller of the Currency (OCC) has issued guidance to financial institutions about when OCC will cite banks for violations or take other enforcement actions against them to prevent money laundering. The guidance notes that a financial institution can be cited if its security program is lacking; for example, if internal controls, independent testing, or personnel training is absent or inadequate. Also a possible compliance violation, according to the guidance, is a program that has shortcomings coupled with highly suspicious activity, such as evasion of reporting requirements along with repeat failures to file suspicious activity reports.
The guidance also sets out examples of when financial institutions should file suspicious activity reports. If a bank is unsure whether an issue should be reported, it should examine whether it has a reasonable explanation for an unusual transaction after evaluating the facts. If not, the transaction should be considered suspicious and should be reported.
In its guidance, the OCC also reminded banks that federal law provides protection against liability when a bank discloses customer financial records to law enforcement in compliance with money laundering regulations.
U.S. STATE LEGISLATION
Public records. A new Maryland law (formerly S.B. 377) will prohibit the release of public records that identify or contain information about individuals or companies that maintain alarms or security systems. In an emergency situation, the records could be released to authorized personnel.
Background checks. Under a new law (formerly S.B. 550), companies that provide nursing services must meet certain state requirements. Before a nursing-referral agency can obtain a license in the state, its owners must undergo a background check from the Maryland Department of Health and Mental Hygiene. It must also submit proof that it has a viable complaint-investigation process.
Bioterrorism. A new Maryland law (formerly H.B. 666) will require the state to issue regulations governing the release of the location and specified nature of biological agents. This information will be made available to specific law enforcement jurisdictions that are located near the agents. However, such information will be kept confidential from the general public and unauthorized persons.
Physical security. A new Florida law (formerly S.B. 124) requires that the state’s chief of domestic security initiatives work with state agencies, universities, and community colleges to conduct security assessments for all of the buildings, facilities, and structures operated by these groups. With the assistance of employees within these groups, the chief will compile the assessments and present them to the governor and to lawmakers.
The governor and lawmakers must also be informed if any state agency, university, or community college fails to cooperate with the assessment process. The law allows the chief to conduct follow-up assessments to ensure that the security assessments remain current.
Under the law, the chief is also mandated to work with local governments and private industry to develop security assessments. The assessments are mandatory for state-funded agencies and organizations; however, private industry and local municipalities have the option of conducting assessments with the chief’s help. The costs must be borne by the local government or the private company involved.
This column should not be construed as legal or legislative advice.