The “when” of counting employees for damage caps in federal discrimination cases

Counting is wonderful,
Counting is marvelous,
Counting’s the best thing to do.
Counting is happiness,
Counting is ecstasy,
I love to count, don’t you?
– Counting Is Wonderful, Sesame Street

Under the Civil Rights of 1991, the sum of the non-economic damages (future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, other non-pecuniary losses, and punitive damages) in Title VII, ADA, and GINA cases is capped between $50,000 to $300,000, depending on how many employees a defendant “has … in each of 20 or more calendar weeks in the current or preceding calendar year.” According to Hernandez-Miranda v. Empresas Díaz Massó, Inc. (1st Cir. 6/29/11), when you count employees for purposes of determining the number of employees depends on how you define “current.”

In that case, a jury awarded the plaintiff $300,000 in damages in her sexual harassment lawsuit, in which she proved that during her employment as a construction worker, she was forced to perform oral sex on a supervisor multiple times and was also subjected to extreme, continuing sexual abuse by coworkers and supervisors, all of which her employer ignored. The district court reduced the jury award to $50,000, using the year of the verdict to measure the number of employees.

The 1st Circuit, falling in line with other cases from the 4th, 5th, and 7th Circuits, concluded that the “current” year is the year the discrimination occurred, not the year of the verdict. In doing so, the court examined the policies behind the statute’s caps on damages:

It is clear that Congress did intend to protect …smaller employers … from ruinously large awards…. Congress, we believe, intended such protection for those who were small employers at the time of the discrimination, and not those who by happenstance or design became smaller employers between the time of discrimination and the time of the verdict.

This construction best serves Title VII’s purpose of encouraging resolution of disputes before litigation commences. This purpose … is best advanced by providing clarity and certainty as to the size of potential damage awards from the outset of a dispute. [Non-economic damages] are inherently more difficult to value precisely than the back pay damages traditionally available under Title VII, rendering this type of clarity and certainty all the more important in allowing litigants to make informed decisions about settlement.

Clarity and certainty of potential liability also allows for both sides to set realistic litigation budgets and evaluate whether cases are worth bringing and defending. Such clarity and certainty allows businesses to set adequate reserves, disclose those reserves in annual reports as necessary, and make assessments about whether and how much to insure against the risk of litigation.

Therefore, a court must count the number of people employed when the discrimination took place. The number of employees at the time of the verdict is irrelevant.

The court also concluded that because an employer must affirmatively move to apply the damage caps, it is the employer’s burden to prove the number of employees during the relevant time period.

This case has three important takeaways for businesses:

1. Depending on a business’s size, these caps can have sizeable implications. For example, the ruling in Hernandez-Miranda increased the recovery from $50,000 to $200,000. If you are a small employer (500 or fewer employees) defending a Title VII, ADA, or GINA lawsuit, you omit evidence of the number of employees at your peril.
2. If it makes a difference, introduce evidence of the number of employees both during the year of the discrimination and during the year of the trial. Until the Supreme Court weighs in on this issue, the law is in flux. There is no guarantee that this court will have the final say on this issue, and a different circuit can reach a different result.
3. Ohio’s tort reform statute, which also provides caps for punitive damages, but which lacks the same language as its federal counterpart, is likely unaffected by Hernandez-Miranda. Ohio small employers defending state-law claims should not necessarily look to the Hernandez-Miranda ruling for relief.

Time after time, time alone is not enough to prove retaliation

More than three years ago, I discussed that an employee needs to prove something more than the mere closeness in time between protected activity and adverse action to prove retaliation. Last week, in Meyers v. Goodrich Corp., the Cuyahoga County Court of Appeals decided a case which further illustrates this point, and clarifies that as more time passes, the more additional evidence of retaliation an employee needs.

In Meyers, an entire year lapsed between when the company’s vice-president of HR interviewed the plaintiff in a harassment investigation and his termination. The Court concluded that the lapse in time, coupled with the lack of any additional evidence of a retaliatory motive, doomed Meyers’s claim:

In this case, no inference of causation can be deduced from “temporal proximity.” Goodrich did not terminate Meyers until a year after he participated in the internal discrimination investigation. Thus, to survive summary judgment, Meyers was required to submit additional evidence of retaliatory conduct—or discriminatory intent—between the time he took part in the protected activity and the time he was fired.

There is evidence that sometime before October 2006, Goodrich managers met to discuss how to improve the overall performance of its employees, including supervisors…. The managers ranked Meyers the 24th lowest-performing production supervisor out of 26 supervisors…. Meyers's manager at that time, sent Meyers a letter on October 26, 2006, notifying him that he had 30 days to improve and maintain his performance in certain areas, which were outlined in the letter. But notably, this occurred three months before Meyers took park in the internal investigation.

Even according to Meyers, after January 2007 when the protected activity occurred, the evidence indicates that Goodrich's conduct—if anything—was favorable to him, not retaliatory. He received a 3.5 percent merit raise in April 2007, where he asserts he “was in line with the raises of several of his fellow supervisors.” …

As Meyers concluded in his appellate brief, “[t]he record is simply devoid of any evidence" that Goodrich treated him badly in 2007…, i.e., “[n]o write-ups, no disciplinary actions, no poor reviews.”

Retaliation continues to be the most dangerous EEO claim employers face. The Meyers case shows that employers can win these cases, provided they engage in the proper handling of employee performance issues, coupled with the passage of time, following protected activity.

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

Apparently it’s a short trip from Wal-Mart to breast feeding

Last Friday, Labor Secretary Hilda Solis released the following statement about the Dukes v. Wal-Mart decision on the DOL’s Work in Progress blog:

The Court’s decision in the Walmart lawsuit made no ruling on whether America’s largest employer engaged in unlawful pay discrimination…. As Labor Secretary, I believe it is my responsibility to use my authority to close the pay gap so women can earn their fair share and provide the income support their families rely upon….
We also need to create more flexible workplaces so women don’t have to choose between motherhood and a fulfilling career. To that end, my Wage & Hour division has begun enforcing a new provision in the Affordable Care Act that guarantees break time for nursing mothers.

Let me get this straight. The Supreme Court simply decided that 1.5 million women, managed by thousands, if not tens of thousands, of different supervisors, lacked enough in common to bring their claims in one unified class action. From this holding, Secretary Solis makes the jump to conclude that breastfeeding working moms need more workplace flexibility. Am I missing something?
Secretary Solis concluded her comments by stating, “We’re living in the year 2011—not 1911.”

Madam Secretary, let me repeat what I said a few weeks ago, since apparently not everyone had the chance to read it:

So let’s not overreact to the Wal-Mart decision by arguing that its impact will take women back to the stone age, or, worse, the 1950s [or 1911]. Such knee-jerk overreactions unnecessarily polarize us into positions that do nothing to further the debate over the real issue—eliminating workplace discrimination.

WIRTW #183 (the “to catch an (alleged) adulterer” edition)

Chris Hansen’s Dateline NBC series To Catch a Predator was one of my guilty pleasures. It was eye-opening to watch a bunch of creeps try to explain why they needed a bag full of condoms and a six-pack of beer for their play date with a 13-year-old girl. After three years of nabbing these (alleged) pedos, you’d think that Chris would have learned the power of the hidden camera. Think again. From the Baltimore Sun:

The NBC anchor was secretly filmed while on a date with someone who was most definitely not his wife.

According to the Daily Mail, Hansen has been carrying on a secret affair with a local TV reporter from Florida, and he was busted taking her to dinner at the Ritz-Carlton before returning to her apartment for the evening.

I hope they at least served Chris cookies and lemonade before they broke the news to him that he’d been busted.

Here’s the rest of what I read this week:

Discrimination

• 15 Things You Need to Know About Disability Discrimination – from Screw You Guys, I’m Going Home
• Octogenarian Manager Strikes Blow Against Age Bias – from Workplace Fairness
• Age discrimination: Assumptions that lead to trouble – from HR Cafe
• EEOC Charges Abercrobmie & Fitch Violated Muslim Employee’s Rights – from Joe’s HR and Benefits Blog
• Getting Used to Sexual Harassment: “Boiling Frog” Syndrome – from Employment Lawyer Blog
• Is My Boss Racist, or Just Being a Good Manager? – from Evil HR Lady
• When are Employee Pregnancy Policies Considered Unequal Treatment? – from Virginia Employment Law Journal
• Guide to Dress Codes and Nondiscrimination Laws – from HireCentrix

Social Media & Workplace Technology

• Will Google+ Kill Facebook? – from Manpower Employment Blawg
• Facebook hits 750 million users milestone – from Boy Genius Report
• Don’t Let These Facebook Follies Happen To You – from Kashmir Hill’s The Not-So Private Parts
• Will Facebook Destroy Your Job Search? – from Forbes
• Facebook Post Not a “Serious” FLSA Compaint – from Philip Miles’s Lawffice Space
• Social Media and Discovery: Accessing Password Protected Material – from LE Blog
• LinkedIn Lessons for Employers: Part 6 – from Molly DiBianca’s Delaware Employment Law Blog
• Revenge Is Best Served On A 64 Inch TV Screen – from Workplace Diva

HR & Employee Relations

• Ohio a hotbed of biotech job growth – from Dayton Business Journal
• A Test to See If Anyone Actually Reads Your Employee Handbook... – from The HR Capitalist, Kris Dunn
• Stealing the Competition’s Employees – from Rob Radcliff’s Smooth Transitions
• Employee Perks Return Amid Fears of Poaching – from In Charge
• When Does Preparing to Compete Become Unlawful Competition? – from Texas Employment Law Update
• Screwing up at your new gig – from CareerDiva, Eve Tahmincioglu
• The Ethics of Sleep – from LaborRelated
• SHRM Las Vegas Day 3: How Zappos Tony Hsieh Wowed the HR Pros – from TLNT
• Things You Can’t Do on a Plane: Vol. 2 – from Inside Opinions: Legal Blogs
• Drug and Alcohol Testing of Employees in the Workplace – from Minnesota Labor & Employment Law Blog

Wage & Hour

• Could the Beastie Boys collect overtime pay in Pennsylvania? – from Eric Meyer’s The Employer Handbook Blog
• “Girls Gone Wild” Film Editor Seeks Unpaid Overtime Pay – from Wage & Hour - Development & Highlights
• Pizza Chain Fined For Violating Overtime Pay Laws And Retaliation – from Overtime Lawyer Blog
• Can You Terminate Someone the Day They Return From FMLA? – from Michael Haberman’s Omega HR Solutions
• Third Circuit Sustains Employee’s Removal for Lying About Reason for Absences – from The FMLA Blog

Labor

• Push to Repeal Ohio Law on Public Workers Gains Ground – from New York Times
• More About the NLRB’s Proposed Rules on So-Called “Quickie Elections” – from Dan Schwartz’s Connecticut Employment Law Blog
• NLRB to Hold Public Meeting on Proposed Representation Election Rule – from Labor Relations Counsel
• Major Changes to NLRB Rules Announced Today – from National Review Online
• NLRB Rule Would Burden Employers with Fast-Track Union Elections – from National Legal and Policy Center

More on Wal-Mart v. Dukes

• Too Big to Nail – from The Colbert Report
• Do We Need The Equal Rights Amendment In Light Of Wal-Mart? – from The Proactive Employer Blog
• The Supreme Court and Wal-Mart: Does diversity (of the Justices, that is) matter? – from David Yamada’s Minding the Workplace
• Justices “split largely along gender lines” – from Walter Olson’s Overlawyered
• Copland on Wal-Mart v. Dukes – from Ted Frank’s PointOfLaw Forum
• Wal-Mart v. Dukes: 7 Employment Takeaways from the Recent Supreme Court Ruling – from CPEhr
• More Thoughts on the Wal-Mart Decision – from Maryland Employment Law Developments

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

“You’re pregnant. We can’t hire you.”

There are some things you just shouldn't say to a pregnant job applicant—such as, “You’re pregnant. We can’t hire you.” But, that's exactly what a Phoenix, Arizona, Subway manager told Belinda Murillo when she inquired about the status of her job application. What’s even more amazing than the fact that he made the statement is that he admitted to it during her subsequent pregnancy discrimination lawsuit. The bonus points one typically receives in litigation for candor and honesty don’t apply when you’re copping to discrimination. Thus, it is not all that surprising that based on these facts, in EEOC v. High Speed Enterprise, Inc., the court granted summary judgment in favor of the employee.

The lesson from this case is to be reasonable when evaluating risk in defending a lawsuit. Faced with these facts, this case screamed for a settlement. Instead, this employer found itself ensnared in three years of litigation with the EEOC (including 17 depositions, numerous discovery disputes, and a vibrant motion practice), with a jury trial on damages still on the horizon. At the hourly wage of $6.50 Murillo would have earned as a Subway Sandwich Artist, this case should not have been that difficult to settle. Even in the face of these egregious facts, $15,000 should been more than enough to have resolved this case. The fact that it did not resolve reveals a breakdown in the plaintiff’s evaluation of value, the defendant’s evaluation of risk or value, or both.

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

“Despicable” does not always equal “severe or pervasive” in a racial harassment claim

In Williams v. CSX Transp. Co. (6/28/11) [pdf], the 6th Circuit upheld the dismissal of a racial harassment claim, confirming the long-standing principle that the anti-discrimination laws are not codes of workplace civility.

The harassment allegations in the lawsuit focused on a two-day period:

According to Williams, Jeff Wingo and Tim Magargle, two supervisors, were watching the Republican National Convention on television … when Williams entered and indicated she did not want to watch. Wingo allegedly told Williams that she was a Democrat only because she was a black woman; that unmarried women cannot “have the love of God in their heart[s]”; and that this country should “get rid of” Jesse Jackson and Al Sharpton because without those two “monkeys” the country “would be a whole lot better.” The following day, Williams alleges that Wingo told her that if she returned to school, she would not have to pay for her education because she was a single black mother.”

Williams also claimed that six months prior, Wingo also asked her why black people cannot name their children “stuff that people can pronounce, like John or Sue,” and told her that black people should “go back to where [they] came from.”

In upholding the trial court’s dismissal of the harassment claim, the Court distinguished between comments that are despicable and comments that are so severe or pervasive that they change the terms and conditions of one’s employment:

The statements were isolated, not pervasive: all but two occurred over a two-day period. Nor were they sufficiently “severe” for Williams to be able to prevail on a racially hostile work environment claim. Those statements—for example, calling Jesse Jackson and Al Sharpton “monkeys” and saying that black people should “go back to where [they] came from”—are certainly insensitive, ignorant, and bigoted. But they more closely resemble a “mere offensive utterance” than conduct that is “physically threatening or humiliating.”

Just because isolated statements might not subject an employer to liability does not mean they should be ignored. To the contrary, the fact that the employer in Williams ignored an anonymous call into its ethics hotline likely caused the lawsuit to be filed. Seven years and hundreds of thousands of dollars later, the employer prevailed on the racial harassment claim. I’ll let you decide which is the better course of action.

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

Public policy is in the eye of the beholder

Consider the following two wrongful discharge cases, both recently decided by different Ohio appellate courts, and think about which you believe presents a bigger risk for the employer:

1. In Morris v. Dobbins Nursing Home (6/20/11), a nursing home aide claimed that she was illegally terminated because she reported certain unlawful activities at the home to a state investigator during a health department audit. 

2. In Alexander v. Cleveland Clinic Foundation (6/16/11), a police officer claimed that the Cleveland Clinic wrongfully fired him after reports of several outbursts while working traffic control. In one incident, he struck a car that failed to yield at an intersection, and in another he yelled at bus driver to “learn how to f****** drive.”

The appellate courts decided both cases on the legal issue of whether the plaintiff presented a sufficiently clear public policy—manifested in a state or federal constitution, statute or administrative regulation, or in the common law—to support their respective wrongful discharge claims. Morris relied upon federal regulations that detail the safe operation of nursing homes; Alexander relied upon the requirement that police officers enforce state laws.

Public policy wrongful discharge claims often hinge on the combination of two influences: the creativity of the employee’s attorney to pigeonhole the circumstances surrounding the discharge into a state or federal constitution, statute or administrative regulation, or in the common law; and the court’s opinion of that particular public policy. The unpredictability of these claims underscores the need for employers to treat every termination like a potentially litigious event.

Unpredictable, you say? How many of you thought that the abusive police officer had the better case? Scary, right?

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.