Monday, December 8, 2008

Court allows a “do-over” to defeat discrimination claim

I vividly remember playing baseball in the street in front of my house as a child. Every once in a while something would interfere with the game (a stray dog, a car) and the effected team would call for a do-over. A do-over would wipe the play as if it never happened. In Jackson v. UPS (8th Cir. 12/4/08), the 8th Circuit inserts the rule of do-overs into employment discrimination law.

Jackson worked at UPS as an hourly employee. In May 2006 she received a promotion. On her first day in the new position she caused an accident, after which UPS demoted her back to her prior position with the corresponding reduction in pay. Jackson immediately challenged the demotion through both a union grievance and an EEOC charge. Within three months, UPS decided that it had erred in demoting Jackson. It settled the grievance with the union and reinstated Jackson to the higher paying position with full back pay.

In the ensuing discrimination case, UPS argued that Jackson did not suffer an adverse employment action because it reversed its decision and reinstated her with full back pay and no loss of seniority or any other employment benefit. Jackson argued that UPS’s initial decision constituted an actionable adverse employment action.

In affirming the district court’s summary dismissal of Jackson’s discrimination claim, the 8th Circuit held that “a demotion or denial of a promotion, even when accompanied by a loss in pay, is not an adverse employment action when it is corrected in a timely manner”:

In the present case, UPS recognized its mistake, took corrective action, and reinstated Jackson with full back pay and no loss of seniority or any other employment benefit. During her three-month period of disqualification, Jackson performed her prior work as a shuttle driver and was compensated accordingly. The only damages that might remain are interest on Jackson’s back pay and stress that Jackson alleges accompanied her disqualification. This court has consistently held that “[an] adverse employment action must be one that produces a material employment disadvantage.” … The small amount of interest Jackson might recover does not constitute a material disadvantage.

It’s unclear whether this rule is good law in the 6th Circuit or Ohio, but the lesson to take from this case is a good one. If you’ve been sued and you’re reasonably confident that your company messed up, don’t be afraid to at least consider an offer to bring the person back to work, to the same or equal position, and with full back pay and restoration of other lost benefits. It’s called an “unconditional offer of reinstatement.” It may not bar liability like the Jackson case, but if done correctly it will cut-off economic damages such as back pay and front pay (while making it very hard for a plaintiff to prove a right to punitive damages), and go a long way to convincing a judge and a jury that your company might just not be the evil malicious discriminator the plaintiff is trying to paint you as. Come back tomorrow for a quick lesson on the mechanics of an unconditional offer of reinstatement.