Age discrimination lawsuits and plaintiffs' victories continue to rise

When I started this blog six months ago, one of the first posts was on the proliferation of large jury verdicts in age discrimination cases. (See Age discrimination lawsuits continue to rise)

The front page of today's Cleveland Plain Dealer picks up this theme that more age discrimination cases are going to trial, and more are ending in big verdicts for employees. The article cites last year's $16 million dollar verdict obtained by Tommy Morgan against New York Life, in addition to other multi-million dollar verdicts handed down local courts in other age discrimination cases. A former colleague of mine, Marty Wymer, correctly points out, "Everyone on the jury is either over 40 or a close family member is over 40," and that plaintiffs benefit from these jury demographics. Tommy Morgan highlights the theme that plaintiffs use to drive many of these case to big verdicts: "They were making room for younger people."

The lessons for employers to take from these large verdicts haven't changed since I first wrote on this issue:

1. Well documented, legitimate, reasons for a termination are more important now than ever, as the stakes in these cases continue to rise. Indeed, under Ohio law, the stakes in these cases are higher than ever, as unlike its federal counterparts, Ohio's employment discrimination statute contains no caps on damages.
2. Judges and juries continue to punish companies where there exists a perception that the employee was treated unfairly, often times regardless of any discriminatory motive.
3. All legal issues aside, the golden rule is the best risk management practice -- employers should treat employees as they would want to be treated if in their shoes. Juries are comprised of many more employees than employers, and if those jurors feel that the plaintiff was treated the same way the jurors would want to be treated, the jury will be much less likely to punish the employer, and the dollars needed to resolve the case will be much lower, if needed at all.

Mmmmmmmm, arbitration clauses

Arbitration clauses and their enforceability is not the most scintillating topic in the annals of employment law. So, I took some (but not much) notice of today’s 6th Circuit decision in Seawright v. American General Financial Services, in which the Court upheld an arbitration clause contained in an employment policy over the employee’s objection that she had never assented to be bound by its terms as she never signed any acknowledgment of the policy. The majority found that Seawright’s mere continued employment after receiving the policy constituted valid assent. Because she continued working and never objected to the arbitration clause, she was bound by it.

The dissent, clearly troubled by the notion using the failure to express a lack of assent as evidence of assent, illustrates its point by quoting one of the great thinkers of the late twentieth and early twenty-first centuries, Homer Simpson:

Homer Simpson talking to God: “Here’s the deal: you freeze everything as it is, and I won’t ask for anything more. If that is OK, please give me absolutely no sign. [no response] OK, deal. In gratitude, I present you this offering of cookies and milk. If you want me to eat them for you, please give me no sign. [no response] Thy will be done.” The Simpsons: And Maggie Makes Three (Fox television broadcast, Jan. 22, 1995).

Who says cartoons rot your brain?

Remedial action must be meaningful to save employer from harassment liability

Yesterday I wrote about how to implement an effective complaint procedure to help ward off harassment claims (A Whopper of a Sex Harassment Claim). Today, Engel v. Rapid City School District will illustrate the dos and don'ts of responding to a harassment complaint after it is received.

The facts of Engel v. Rapid City School District are fairly simple. In March 2003, a school district employee complained that David Herrera, a non-supervisory co-worker, had been sexually harassing her. In response, the school district immediately suspended Herrera without pay and launched an investigation led by the school superintendent. As part of the investigation, Engel was asked if she had been harassed by Herrera, to which she answered affirmatively and provided a written complaint describing the harassment.

Upon completion of the investigation, the school district concluded that Herrera had engaged in the following harassing conduct: (1) twice requesting that a female employee look at pornographic images of male and female sex on his computer; (2) rubbing or massaging the neck of female co-workers without their prior permission; (3) stroking the hair of co-workers without their permission; (4) remarking about the physical anatomy of female co-workers and asking to feel a co-worker's butt; (5) attempting to look down the shirts of female co-workers; (6) persistently inquiring about whether or not a female co-worker was wearing thong underwear, and if so what color and did it match her bra; (7) leering at females co-workers; (8) remarking to a female co-worker that she smelled good and that he needed to find some lotion and go into the bathroom; (9) commenting about oral sex and sexual positions which could be used between a female co-worker and her husband; and (10) attempting to reach in a woman's shirt to grab her identification badge.

Given the egregiousness of Herrera's misconduct, the school district would have been justified in terminating him at that time. Instead, it opted for a less severe penalty, a written final warning, which provided: "Any future complaints of harassment by you will result in your immediate termination of employment.... If there are any additional instances of inappropriate conduct, whether it be touching, verbal or otherwise, your employment will be terminated.... Continued conduct of the type mentioned above will not be tolerated any further. As stated above, if there is an additional complaint, your employment with the District will be terminated."

Herrera, however, was undeterred. After returning to work he tried to talk to Engel in the hallway, used the school intercom to speak to her, and, according to Engel, undressed her with his eyes. She again complained, but instead of terminating Herrera, the school district merely re-suspended him. At the same time, it also softened its stance on the consequences of any future acts of harassment: "Any future complaints of conduct of harassment or violation of the aforementioned terms and conditions will result in additional administrative action, up to and including the termination of your employment." When Herrera continued to leer at Engel following his return from the second suspension, she resigned and sued the school district for sexual harassment.

Because Herrera was merely a co-worker and not a supervisor, the school district can only be liable for the harassment if it knew or should have known of the harassment and failed to take immediate and proper corrective action. The remedial action must be reasonably calculated to stop the harassment.

The appellate court found that the school district could not be liable for any of Herrera's actions that occurred before it received the initial March 2003 complaint. It had a written anti-harassment policy and formal complaint procedure, and received no complaints about Herrera before March 2003. Moreover, the court found that the school district's response following its receipt of the first complaint was prompt, comprehensive in its scope, and stern in its warnings. In the court's words: "[T]he law does not require an employer to fire a sexual harasser in the first instance to demonstrate an adequate remedial response." Had it chosen to do so, however, I highly doubt that Herrera would have had any claim, and the school district would have been insulated from claims by other employees.

The Court was less complementary of the school district's handling of the continuing complaints after Herrera returned from suspension: "That an employer responds adequately to an initial report of sexual harassment ... does not discharge the employer's responsibility to respond properly to subsequent reports of offending conduct by the harasser." In the Court's view, it was not only significant that Herrera continued to harass Engel, but that the school district's response to the subsequent harassment lessened in severity:

Significantly in our view, RCSD's decision to respond to Herrera's continued harassment by decreasing, rather than increasing, its threatened sanctions may reasonably be viewed as contributing to a negligent response. The reasonableness of an employer's response to repeated sexual harassment may well depend upon whether the employer progressively stiffens its discipline, or vainly hopes that no response, or the same response as before will be effective.... Here, RCSD had threatened to terminate Herrera if any additional substantiated complaints of harassment were made against him, but ... RCSD did not follow through on this promise. Instead, RCSD responded to Engel's additional complaints by suspending him and then advising that further inappropriate conduct could lead to administrative action, "up to and including the termination of [his] employment" – thus opening the possibility that even a third round of harassment would not cost Herrera his job. Engel reasonably contends that this backtracking may have emboldened Herrera, and thereby contributed to his continued harassment of her.... In sum, Engel has presented evidence that could support a reasonable finding that some elements of RCSD's second remedial action were insufficient to address Herrera's ongoing harassment, that the remedial action did not stop the harassment, and that the second remedial action may actually have encouraged Herrera to feel that he could safely continue certain activities.

An employer does not discharge its duty to remedy harassment merely by taking some corrective measures. Instead, the corrective measures must be reasonably designed to prevent future harassment. To attempt to minimize liability for co-worker sexual harassment, businesses should be aware of the following factors upon receipt of a harassment complaint:

1. Promptness. Upon receipt of a complaint of harassment, a business must act as quickly as reasonably possible under the circumstances to investigate, and if necessary, correct the conduct.
2. Thoroughness. Investigations must be as comprehensive as possible given the severity of the allegations. Not every complaint of offensive workplace conduct will require a grand inquisition. Egregious allegations such as those in the Engel case, however, usually require a more comprehensive investigation.
3. Consider preliminary remedial steps. While an investigation is pending, it is best to segregate the accused(s) and the complainant(s) to guard against further harassment or worse, retaliation. Unpaid suspensions can always retroactively be paid, for example, and companies are in much worse positions if they are too lax instead of too cautious.
4. Communication. The complaining employee(s) and the accused employee(s) should be made aware of the investigation process—who will be interviewed, what documents will be reviewed, how long it will take, the importance of confidentiality and discretion, and how the results will be communicated.
5. Follow-through is crucial. Rapid City School District's fatal flaw was that it did not carry out its threat to terminate Herrera's employment if the harassment did not stop. There is nothing illegal about trying remedial measures less severe than termination in all but the most egregious cases. A valued employee may be no less valued after asking a co-worker about her underwear. If the conduct continues, however, the discipline must get progressively more harsh. If you tell an employee that termination is the next step, you must be prepared to follow-through on that threat, or face the risk of being second guessed like the employer in Engel.

Hindsight is 20/20 and investigations are always subject to being second guessed. Promptness, consistency, thoroughness, and follow-through are a business's best friend in responding to harassment complaints. A failure of any one could expose a company to liability for failing to take appropriate remedial action. Complacency is also dangerous. As the Engel case illustrates, one cannot assume that remedial measures are working, and if there is reason to believe they are not (such as a second complaint), more severe measures must be taken.

A Whopper of a Sex Harassment Claim

One of the surest ways for a company to guard against harassment lawsuits is to have in place a reasonable mechanism by which a victim of harassment can complain to the company. In today's workplace, one would be hard pressed to find a company that does not have a harassment policy, either in its employee handbook or otherwise. It is not enough, however, merely to have complaint procedures in place. Those procedures much be understandable, workable, and meaningful for them to provide any protection to an employer. EEOC v. V & J Foods, out of the 7th Circuit, illustrates the important distinction between a complaint procedure that is or is not meaningful, and the consequences that can befall an employer with an unworkable system.

Samekiea Merriweather, 16 years old, worked after school and on weekends at a Burger King restaurant. It was her first paying job. Unfortunately for her, her boss and the store's general manager, Tony Wilkins, had a propensity of sleeping with his female employees. He rubbed up against her, tried to kiss her, told her he wanted a "young girl" because of "their body. You know, it's not all used up." He offered $600 to have sex with him in a hotel room," and when she refused and told him she had a boyfriend, he told her he wasn't going to do anything else for her because she was giving her body away for free instead of selling it to him. Samekiea, both on her own and through her mother, repeatedly complained of the harassment to her shift supervisors and the assistant manager, who essentially ignored her. Shortly after Samekiea turned down Wilkins's offer to pay her for sex, he became hostile towards her and fired her.
Instead of summarizing the Court, I'll merely quote from the well written opinion of Judge Posner:

[A]n employer can avoid liability under Title VII for harassment (on a ground, such as sex, that constitutes a form of discrimination that the statute forbids) of one of his employees by another by creating a reasonable mechanism by which the victim of the harassment can complain to the company and get relief but which the victim failed to activate....
The mechanism must be reasonable and what is reasonable depends on “the employment circumstances,” ... and therefore, among other things, on the capabilities of the class of employees in question. If they cannot speak English, explaining the complaint procedure to them only in English would not be reasonable. In this case the employees who needed to be able to activate the complaint procedure were teenage girls working in a small retail outlet....
An employer is not required to tailor its complaint procedures to the competence of each individual employee. But it is part of V & J’s business plan to employ teenagers, part-time workers often working for the first time. Knowing that it has many teenage employees, the company was obligated to suit its procedures to the understanding of the average teenager....
Ignoring this point, the company adopted complaint procedures likely to confuse even adult employees. The employee handbook that new employees are given has a brief section on harassment and states that complaints should be lodged with the “district manager.” Who this functionary is and how to communicate with him is not explained. The list of corporate officers and managers at the beginning of the handbook does not list a “district manager,” or for that matter a “general manager,” but instead a “restaurant manager”; and there is evidence that employees confuse “district manager” with “restaurant [or general] manager” — that is, Wilkins, the harasser. There is a phone number on the cover of the handbook, and if you call it you get a receptionist or a recorded message at V & J’s headquarters. But an employee would not know whom to ask for at headquarters because she is not told who her district manager is or the district of the restaurant at which she works.
If an employee complains to a shift supervisor or assistant manager, that person is supposed to forward the complaint to the general manager (and thus in this case to Wilkins) even if the complaint is about the general manager. After receiving the complaint the general manager is supposed to “turn himself in,” which of course Wilkins did not do. Nor did the shift supervisors or assistant manager report Merriweather’s complaints to Wilkins or to anyone else. A policy against harassment that includes no assurance that a harassing supervisor can be bypassed in the complaint process is unreasonable as a matter of law….
An unreasonably costly complaint mechanism would not be reasonable. But it would cost very little, certainly for a company of V & J’s size, to create a clear path for complaints of harassment and other forms of illegal discrimination.... All that it would have to do, we should think, would be to post in the employees’ room (thus not visible to the restaurant’s customers) a brief notice that an employee who has a complaint about sexual harassment or other misconduct can call a toll-free number specified in the notice. The number would ring in the office of a human relations employee and the receptionist would identify the office as that of the company’s human relations department....

Because of the ineffective complaint procedure, Merriweather’s lawsuit was reinstated.
There are several lessons to be learned in the drafting and enforcement of an effective harassment complaint procedure:

1. Comprehension. It must relate to and be understandable by the employees who are going to rely upon it. It cannot be written in legalese or jargon. If your workforce is multi-lingual, so should the harassment policy.
2. Confidentiality. It must not only explain to whom complaints can be made, but how to confidentially contact those people.
3. Options. It must provide optional avenues for complaints that guard against an employee being faced with the Hobson's Choice of staying silent or complaining to the harasser. In Judge Posner's cautionary words: "A policy against harassment that includes no assurance that a harassing supervisor can be bypassed in the complaint process is unreasonable as a matter of law."
4. Policing. It should mandate that supervisors or managers report to senior management and/or human resources any complaints they receive or any conduct they perceive that may be a violation of the harassment policy.
5. Publication. It must be disseminated to the employees, should be conspicuously posted in the workplace, and the workforce should receive periodic training on the policy and complaint procedures.

What else I'm reading this week #4

Wal-Mart - So Flexible They Provide a 1-800 Number to Call In Sick...., from The HR Capitalist, writing about the implications of Wal-Mart's call-in policy for sick workers.

One of the Better Headlines: Shirking Working: The War on Hooky, from Jottings By An Employer's Lawyer, discussing the on-going problem of employee hooky.

Watch for Legal Traps When You Leave a Firm to Work for a Rival, from CareerJournal.com, analyzing the practical implications of employees jumping ship to work for a competitor.

Staples Settles Overtime Claims for $38 Million, from the Manpower Employment Blawg, reporting on yet another astronomical wage and hour settlement.

Report: Female Employee Uses "Barenaked Ladies" to Harass Male Supervisor, from the Connecticut Employment Law Blog, under the rubric, "I can't make this stuff up," commenting how song lyrics by the Barenaked Ladies were used to sexually harass a co-worker.

House approves law to protect gay workers

35 Republicans joined 200 Democrats yesterday to pass the Employment Non-Discrimination Act of 2007, which falls short of the 280 total votes needed to override a likely Presidential veto.

The Act grants broad protections against discrimination in the workplace for gay men, lesbians, and bisexuals, making it illegal for employers "to fail or refuse to hire or to discharge any individual, or otherwise discriminate against any individual with respect to the compensation, terms, conditions or privileges of employment of the individual, because of such individual's actual or perceived sexual orientation." It would put sexual orientation on the same footing as race, sex, religion, national origin, ancestry, age, and disability under the federal employment discrimination laws.

The version that passed the House did not contain measures to extend similar protections on the basis of gender identify, which would have included transsexual and transgender individuals. A broad exemption for religious organizations has also been written into the latest version of the Act.

Today's New York Times is reporting that Senator Edward Kennedy said he would quickly introduce a similar bill in the Senate, and that some Senate Republicans are saying that it could pass early next year if worded properly (whatever that means). Opponents of the bill claim that it will make it impossible to operate a business without having to worry about being accused of discriminating against someone based on their perceived sexual orientation.

While this blawg definitely has a pro-employer spin, it is hard to say in 2007 that it is acceptable to condone intentional discrimination of an innate characteristic such as sexual orientation. I don't intend to get into a debate about whether sexual orientation is a matter of genetics or personal choice. I frankly have no idea, and really don't care one way or the other. The point is that sexual orientation is the one characteristic against which discrimination is still generally allowed and accepted. By the same token, I understand the impracticalities of extending the same protections to gender identity. A company should not be forced to accept a man dressed in drag if that is not the image its wants to project, or if it think such an image will harm its bottom line by driving away business or customers.

The full text of the Employment Non-Discrimination Act passed by the House is available here.

Thorough harassment investigation secures dismissal of age claim

Bennett v. Saint-Gobain Corp., decided last week by the 1st Circuit Court of Appeals, illustrates the importance of timely and thorough investigations into harassment complaints.

David Bennett was a 62-year-old, British (more on the importance of this fact below), in house patent lawyer for Saint-Gobain. In June 2001, 16 months prior to his termination, Bennett joined a group internal age discrimination grievance filed against the company's deputy general counsel, who was alleged to have said that he wanted to get rid of the older members of the law department's IP group. The company took the grievance seriously, conducted an investigation, and dismissed it as unfounded.
Beginning in the fall of 2001, and continuing through the fall of 2002, another Saint-Gobain employee, Diana Henchey, received four anonymous, sexually tinged poems at work, which she described as unwanted and discomforting. Based on the British spelling of certain words (meagre instead of meager, for example), and a few short encounters with Bennett, Henchey concluded that Bennett might be the amorous author, a fact which she reported to HR.
HR, in turn, asked the company's security department to conduct an investigation into the allegations. That investigation included the retention of an outside handwriting analyst, who determined that it was highly probable that Bennett had written the poems. A search of Bennett's office, to which he consented, revealed copies of other poems that he had written. Upon being advised of the expert's conclusion, the general counsel scheduled a meeting with Bennett for the next day. He did not include the deputy general counsel in the loop of what was happening. Bennett denied authoring the poems Henchey received, and claimed that the poems found in his office were written for his wife. When asked to spell meager, however, Bennett responded "m-e-a-g-r-e." The general counsel concluded that Bennett had written the poems received by Henchey and terminated him. Bennett then sued for age discrimination, among other claims.
The appellate court upheld the trial court's dismissal of the case. On the age claim, the court was persuaded by the company's prompt and extensive investigation into Henchey's harassment complaint. Specifically, the court found that Saint-Gobain had presented a legitimate non-discriminatory reason for the termination -- a belief that Bennett had authored the harassing poems, sent them to Henchey, and lied about them when confronted -- and that Bennett had not offered any evidence of pretext. In the court's words, "In the absence of some other proof that the decisionmaker harbored a discriminatory animus, it is not enough that his perception may have been incorrect. Rather, the plaintiff must show that the decisionmaker did not believe in the accuracy of the reason given." Thus, it was irrelevant whether Bennett actually composed or sent the poems, but only mattered whether the general counsel honestly believed that he did. That honest belief was based on the opinion of the handwriting consultant and the decidedly British spellings used in the poems.
There are valuable lessons to be learned from how Saint-Gobain handled Henchey's harassment complaint.

1. It responded promptly. It did not wait to address Henchey's feelings of discomfort. It acted quickly and decisively to investigate the complaint and make a decision as to what had happened and what corrective action to take.
2. It responded throughly. Harassment investigations almost always turn on credibility. Unless the harasser admits the misconduct (and how many times does that happen?), the company is going to have to make a judgment call based on the credibility of the complaining employee, the accused harasser, and any witnesses. Instead of relying solely on credibility, though, Saint-Gobain gathered some objective evidence to bolster its conclusion (the handwriting expert and the voluntary search of Bennett's office). The court still might have sided with Saint-Gobain in a typical "he said/she said" scenario, but was likely aided in its conclusion that the decisionmaker had an honest belief about the termination decision because of the reliance on the handwriting expert.
3. It responded appropriately. Once Saint-Gobain decided that Bennett had authored and sent the offending poems, and that he had lied about them, it took the most appropriate action it could -- it terminated his employment. It did not warn him and wait for the next complaint. It determined that a serious offense had occurred, which warranted a serious response.
4. It shielded those with potential bias. The general counsel smartly chose to exclude the deputy general counsel, whom Bennett had previously accused of age discrimination, from the investigation. Had the deputy been included in the investigation or decision making process, Bennett would have been able to claim that bias irreparably tainted the investigation, an argument that may have gotten Bennett's claim to a jury.

Many may think that the hiring of an outside expert to analyze Bennett's handwriting is overkill in an internal investigation. This case shows that internal investigations often become the central focus of subsequent litigation, and the more rock solid an investigation is, the easier a later lawsuit will be to defend.