Appeals court allows ex-employee's retaliation caim to proceed based on the filing of a lawsuit against an employer

Retaliation cases continue to be one of the hot button employment law issues. This term, the Supreme Court has agreed to hear three separate retaliation cases. (See Retaliation Cases Hit High Court En Masse). Not to be outdone, the Ohio Supreme Court has handed down several important retaliation decisions in the past few months, including one which held that an employer's lawsuit against an employee who has engaged in protected activity is not retaliation if the employer has an objective basis for filing the lawsuit. On the issue of brining a lawsuit against an employee, I have cautioned, "The decision of whether to file a claim against an employee or ex-employee is not an easy one, and should not be undertaken without careful thought, a clear strategy of the goals to be achieved, and consideration of whether those goals are worth the risk of defending against a likely retaliation claim or the perception in court that the counter-suit is merely retaliatory." These words ring more true than ever after last week's decision by the 4th Circuit in Darveau v. Detecon, Inc., which permitted an employee's retaliation claim based on a lawsuit filed by the employer.

Larry Darveau filed a complaint against his former employer employer, Detecon, seeking compensation for unpaid overtime under the Fair Labor Standards Act. Two weeks later, Detecon filed an action against Darveau, alleging fraud arising out of a sales contract whose termination Darveau allegedly hid to meet his goal for an annual bonus. In response, Darveau amended his own complaint to include a retaliation claim, contending that Detecon's lawsuit constituted retaliation under the FLSA in violation of 29 U.S.C. § 215(a)(3). That section makes it unlawful "to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter." Because Darveau's complaint alleged that Detecon filed its lawsuit with a retaliatory motive and without any reasonable basis in fact or law, he stated a proper reclaim and the district court improperly dismissed the retaliation claim.

Detecon argued that it could not retaliate against Darveau because he was no longer its employee when it filed its lawsuit against him. The 4th Circuit roundly rejected that position:

Somewhat surprisingly, Detecon contends that looking to the Supreme Court's Title VII jurisprudence in this FLSA case will generate the "anomalous result" of extending protection from retaliation to former employees who no longer enjoy the substantive protections of the FLSA. Yet in Burlington Northern, the [Supreme] Court rejected this very argument in the Title VII context, observing that Title VII's anti-retaliation provision serves a different purpose than its substantive provisions and that such "differences in ... purpose ... remove any perceived 'anomaly.'" The more unfortunate anomaly would be if an employee’s underlying FLSA claim could be brought after he quit, but the employee's protection from retaliation ended when the employee stepped beyond the employer's doorstep. ... There is nothing in the language or history of [the FLSA] to indicate that Congress intended to penalize dissatisfied employees who voluntarily leave an employer by thereafter denying them the protections of [the Act]. There is every reason to conclude precisely the contrary.

This case reminds us that retaliation does not end when employment ends, because an employee can be chilled from exercising protected rights long after he or she leaves one's employ. It also underscores the myriad legal problems that companies potentially face when choosing to pursue a claim, meritorious or not, against a current or former employee.

The importance of confidential settlement agreements

Kathleen Peratis at the Jewish Daily Forward is proposing the passage of legislation to prohibit settlement agreements in employment discrimination cases from containing confidentiality clauses, and requiring their filing with a court so that they are publicly available. Her rationale is that because most of the enforcement of our civil rights laws is done by private lawsuits, the confidential settlement of those lawsuits chills public knowledge about discriminatory misconduct and the enforcement of the laws against it. In Ms. Peratis's own words:

Lately, however, a new and alarming flaw has emerged, a flaw that urgently warrants response: Although the number of employment discrimination cases filed has nearly tripled in the last 10 years, the amount of public information about them has dwindled to practically nothing. About 70% of employment discrimination lawsuits are settled — less than 4% actually go to trial — and nearly all settlement agreements require strict "confidentiality," meaning no one can reveal the terms of the settlement, including the amount paid to the plaintiff.

Thus, an important aspect of civil rights enforcement has become invisible. A weak system has become a secret system, and the public interest is suffering. None of this was supposed to happen.

"Employment discrimination statutes were not envisioned to promote secret settlement," says Minna Kotkin, a law professor at Brooklyn Law School who has studied the issue. "The whole thrust of the legislation was that, by facilitating employee suits, discrimination would be brought to public attention and the litigation process would serve to deter other employers from similar conduct." ...

With secret settlements, the penalties for job discrimination become invisible. Deterrence value is squandered. After expenditure of judicial resources and perhaps a blaze of media coverage, the silenced victim appears to say, "Oh, never mind." The general public comes to believe, as some surveys suggest, that employment discrimination is a thing of the past, attitudes of jury pools are skewed, and the chances of success for the next victim are diminished....

The problem has an easy fix: Prohibit the parties from withdrawing or dismissing any employment discrimination lawsuit unless the settlement agreement is filed as a public document with the court. Of course, as with all rules, there could be exceptions for good cause shown, but the default position would favor openness.

Ms. Peratis correctly points out that most employers will not settle an employment claim without confidentiality, perceiving that public knowledge of a settlement will only encourage others to bring claims. Her argument, however, has several key flaws, each of which underscores why I oppose her proposal.

First, it rests on the faulty premise that all settled claims have merit. Nothing could be further from the truth. Confidentiality is a necessary component of settlements to deter the disgruntled employee from filing a questionable lawsuit to make a quick dollar. Confidentiality has no effect on whether those who are being discriminated against, or perceive they are being discriminated against, will file a lawsuit. That class of employees will still seek lawyers, and those claims will still be filed.

Secondly, information about lawsuits is already publicly available. All court dockets are open and available to anyone who wants to go to the courthouse or, in most cases, to anyone who can access the Internet. The mere fact that a lawsuit has been filed serves Ms. Peratis's purpose of keeping the public informed about workplace discrimination claims.

Finally, while according to Ms. Peratis only 4% of employment cases proceed to trial, the jury verdicts for those that are successful are routinely large and frequently reported in the press. You tell me which of the following will have a greater impact on the likelihood of an employee filing a lawsuit - a tiny docket entry noting a $10,000 nuisance value settlement that no one will ever find unless they are specifically looking for it, or a front page article about a $16 million discrimination verdict? Indeed, if what Ms. Peratis says is correct, and the number of employment discrimination cases filed in the last 10 years has tripled, how can this alleged secrecy be a problem?

[Hat tip: Professor Paul Secunda at the Workplace Prof Blog]

Bullying boss justifies unemployment award

It has long been accepted that our discriminations laws do not set forth "a general civility code for the American workplace." (Oncale v. Sundowner Offshore Services). Certain fringe groups hope to change this by passing anti-bullying legislation (see Sticks and stones may break my bones...). Nevertheless, as it stands now, employees cannot sue their employers for bullying or being abusive unless the harassment is because of sex or some other protected class.

This week the Summit County Court of Appeals, in Ro-Mai Industries, Inc. v. Weinberg, awarded unemployment compensation to an employee who quit his job because he could not deal with his admittedly abusive boss.

According to the opinion:

Weinberg accepted a position at Ro-Mai after interviewing with Maier. Weinberg, who had extensive experience in sales, was told that his position at Ro-Mai would involve sales work and would require him to be at the office from approximately 8:00 a.m. to 5:00 p.m. After a few days of work, however, it became clear that Weinberg's actual duties differed from the job description that he received. He was not given any sales work and he often worked well over the nine hour shift that he was promised. Moreover, Weinberg discovered that Maier had a habit of yelling at the employees. Although Weinberg told Maier that he did not appreciate being treated in such a manner, Maier continued to yell.

On November 3, 2005, Weinberg informed Ro-Mai's head of human resources that he intended to quit. However, before Weinberg left the office Maier sought him out, promised to stop yelling at him, and convinced him to stay. Weinberg returned to work the next day, and Maier resumed his habit of yelling at him. Accordingly, Weinberg quit the following day….

Maier admitted that he often yelled at his employees. During the hearing, he stated: "When I hired [Weinberg], I told him I'm probably the worst employer to ever work for[.] I'm difficult. I expect a lot. And I warned him in advance that I'm very difficult…. [W]hen it comes to the business, I – I can yell. I did yell." Weinberg testified that when he complained to human resources about Maier’s yelling, he was told: "[O]h, it[] gets worse. That’s the way he is."

Maier’s yelling was not a single, isolated incident…. It was a repetitive problem that Weinberg unsuccessfully tried to address with Ro-Mai’s human resources department prior to quitting. Weinberg even agreed to resume work the first time that he intended to quit because Maier asked him to stay and promised to stop yelling. He did not abandon his employment without warning, or leave with utter disregard for the good of the business.

Thus, the Court concluded that Weinberg was justified in quitting his job because of his abusive boss and upheld his award of unemployment.

I've always subscribed to the law and economics model on the issue of bad bosses. Bad bosses beget transitory workforces and ultimately cannot succeed as bosses because of their revolving door. Good bosses create loyalty, retain good employees, and succeed accordingly. Imposing liability (even for unemployment comp) merely for being subjected to a bad boss sets a dangerous precedent that has the real potential to eliminate the "at will" from all such employment relationships.

What else I'm reading this week #16

Last week, I gave everyone my thoughts on IBM's reaction to its $65 million wage and hour settlement (An expectational argument for overtime pay). HR World has been kind enough to compile some other thoughts from around the blogosphere on this topic, and let's just say I'm decidedly in the minority.

The HR Capitalist comments on the pitfalls of political banter in the workplace.

John Phillips' Word on Employment Law has a timely post on how e-mails and instant messages can come back to haunt those who use their work computers for evil.

Tracy Coenen's Fraud Files comments on the extension of unemployment benefits under President Bush's economic stimulus package, and opines that it will actually hurt the economy by de-incentivizes people from working.

Suits in the Workplace discusses a 2nd Circuit case in which a doctor was found to be an employee and not an independent contract, and therefore covered by Title VII.

Finally, Workplace Privacy Counsel reports on the California Supreme Court's proclamation that an employee's legal use of medical marijuana does not insulate that employee from being terminated for failing a drug test.

6th Circuit holds that temporal proximity alone is sufficient to show a causal nexus in retaliation cases

It has been generally understood that in retaliation cases, temporal proximity alone does not establish the required causal connection between the protected activity and the adverse employment action. In Mickey v. Zeidler Tool & Die Co., decided today, the 6th Circuit has held that where an adverse employment action occurs very close in time after an employer learns of a protected activity, such temporal proximity between events is significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case of retaliation.

Charles Mickey, age 67, was a 33-year employee of Zeidler Tool & Die. After the company's owner, Harold DeForge, cut his responsibilities and pay following Mickey's refusal to retire, Mickey filed an age discrimination charge with the EEOC. DeForge first learned of Mickey's EEOC charge when he arrived at the company on the morning of October 19, 2004. When Mickey arrived at 7:30 that same morning, DeForge followed him into his office and immediately fired him. The district court dismissed Mickey's retaliation claim on summary judgment, relying on the proposition that temporal proximity, without more, is insufficient for a reasonable juror to concluded that DeForge would not have terminated Mickey but for the EEOC charge.

The 6th Circuit reversed that dismissal, ruling that where an adverse employment action occurs very close in time after an employer learns of a protected activity, such temporal proximity, in and of itself, is significant to constitute evidence of a causal nexus. Contrarily, where some time elapses between when the employer learns of the protected activity and the adverse action, the employee must present other evidence of retaliatory conduct to establish the required causality. The Court explained its rationale for this distinction:

[If] an employer immediately retaliates against an employee upon learning of his protected activity, the employee would be unable to couple temporal proximity with any such other evidence of retaliation because the two actions happened consecutively, and little other than the protected activity could motivate the retaliation. Thus, employers who retaliate swiftly and immediately upon learning of protected activity would ironically have a stronger defense than those who delay in taking adverse retaliatory action....

In those limited number of cases–like the one at bar–where an employer fires an employee immediately after learning of a protected activity, we can infer a causal connection between the two actions, even if Mickey had not presented other evidence of retaliation.

Hedging its bets, the Court continued, and further reasoned that even if the nearly instantaneous temporal proximity was insufficient to establish the nexus, Mickey's alleged disparate treatment before DeForge learned of the EEOC charge also was sufficient evidence of a retaliatory motive.

A strong concurring opinion took the majority to task for its fall-back position:

"Retaliate," according to Merriam-Webster's Online Dictionary, available at http://www.merriam-webster.com/dictionary/retaliate (last visited January 24, 2008), is either a transitive verb meaning "to repay (as an injury) in kind," or an intransitive verb meaning "to return like for like; especially: to get revenge." One cannot repay or act in response to or get revenge for something that has not yet happened. No reasonable juror could conclude that DeForge intended to retaliate against Mickey for his filing the EEOC charge before he was aware that Mickey had done so, let alone before Mickey had undertaken the protected activity in the first place, and therefore, DeForge's actions prior to Mickey's filing of the EEOC charge cannot be evidence of retaliation for that protected activity. This evidence is immaterial to Mickey's retaliation claim and cannot be used to support it.

The impact of this decision will be fought over the meaning of the phrase "very close in time." The majority is vague in its understanding of that phrase. Employers will push very hard for Judge Batchelder's concurring interpretation: "[I]n a case in which the employer's learning of the protected activity is so closely followed by the employer's taking of an adverse action that the two are virtually contemporaneous — exactly the circumstances in this case — the temporal proximity between the two is alone sufficient to establish the causal connection necessary for the fourth prong of a prima facie case of retaliation." Employees, meanwhile, will push in the opposite direction and attempt to have courts stretch out the timeline.

We will have to wait and see where courts draw the line — minutes, as was the case in Mickey, days, weeks, or longer. It's hard to argue that Mickey presents a unique case, because the termination was a knee-jerk reaction to learning of the EEOC charge. The longer an employer allows an employee to stay on the job, however, the less likely a retaliatory motive exists, unless there is some other evidence of that motive. We will simply to have wait and see how long is too long.

Taking a look at bereavement leave policies

According to a 2007 Bureau of Labor Statistics report, 69% of private workers receive paid funeral leave. Yet, MSNBC.com is questioning whether companies are doing enough for grieving employees. The article suggests that businesses provide longer leaves (anywhere from 5 days up to as long as the employee needs) and including part-time employees. As support, it cites a study by the Grief Recovery Institute, which estimates that U.S. businesses lose more than $100 billion annually because of absenteeism, mistakes, and low productivity from workplace grief.

There is no law that requires a business to provide for bereavement leave. It is a benefit, and entirely up to the employer whether to provide for such leave at all, and if so, for how long, whether it is paid or unpaid, how wide to cast the family net, and whether to require an employee to provide proof of the death. How you choose from this menu of options will all impact employee morale, retention, and maybe productivity (although I question the agenda of the Grief Recovery Institute). As always, when you apply a bereavement leave policy, make sure it applied fairly and equally across the board to avoid any appearance of disparate treatment and a potential discrimination claim.

ADA Restoration Act unnecessarily seeks to broaden the definition of "disability"

An editorial in this morning's New York Times calls for Congress to pass legislation to undo recent Supreme Court precedent limiting the reach of the employment discrimination laws. By way of example, the editorial points to the Fair Pay Restoration Act and the Civil Rights Act of 2008, both of which are currently pending in Congress.

The Americans with Disabilities Restoration Act of 2007 is another currently pending bill in the same vein. It would amend the ADA to:

1. redefine "disability" as a physical or mental impairment, a record of a such impairment, or being regarded as having a such impairment, eliminating the requirement that it substantially limit a major life activity;
2. in determining whether an individual has an impairment, prohibit any consideration of the impact of any mitigating measures the individual may be using or whether any impairment manifestations are episodic, in remission, or latent;
3. consider actions taken because of an individual's use of a mitigating measure to be actions taken on the basis of a disability; and
4. shift the burden of proving that one is a "qualified individual with a disability" from the employee to the employer, as an affirmative defense.

This bill would radically alter the order of proof in ADA cases, and overturn a more than a decade of Supreme Court precedent on the definition of "disability."

George Lenard, at his Employment Blawg, asks the question, Does the ADA Need "Restoration"? George's opinion:

There have been some cases in which the definition of "disability" has been construed too narrowly, preventing individuals with quite substantial impairments from having their day in court. But the definition as it now stands is a sound one, and the Supreme Court cases were correctly decided under this definition.… But vastly more people would be within the "protected class" of individuals with disabilities, so increased litigation would be a given, including not only accommodation cases, but also ordinary disability discrimination claims (e.g., discharges allegedly due to trivial impairments). Even if employers would fare relatively well, litigation costs would rise. This is a legitimate concern.

George is spot on with his take on this bill and its likely effects. Let me add one more thought, that largely the current law takes care any concerns over the perceived narrowness of the definition of "disability." Remember, the ADA does not just protect those who meet the definition of having a disability, but also those who are "regarded as" disabled by their employers. As recently pointed out by the 6th Circuit in Gruener v. The Ohio Casualty Ins. Co.:

The ADA’s regarded-as-disabled definition of disability … protects employees who are "perfectly able" to perform a job, but are "rejected … because of the myths, fears and stereotypes associated with disabilities." Accordingly, it applies when "(1) [an employer] mistakenly believes that [an employee] has a physical impairment that substantially limits one or more major life activities, or (2) [an employer] mistakenly believes that an actual, nonlimiting impairment substantially limits one or more [of an employee's] major life activities." Either application requires that the employer "entertain misperceptions about the [employee]." (quoting (quoting Sutton v. United Air Lines, 527 U.S. 471, 489–90 (1999)).

Indeed, just last week the conservative 4th Circuit decided Wilson v. Phoenix Speciality, upholding a $200,000 verdict in favor of an employee who was regarded as disabled because of his medically controlled Parkinson's disease. The ADA already protects those who need to be protected. Expanding the coverage of those who qualify as truly "disabled" as envisioned by the ADA Restoration Act will only serve to undermine the original spirit of the law, the elimination of the misconceptions and stereotypes about the ability of the disabled to fairly compete for jobs.