Delaware Employment Law Blog

Many employers continued to face financial challenges in 2011. But business is booming for at least one group. The EEOC received a record number of complaints last year--almost 100,000 in all.

Almost half (40%) of the complaints alleged unlawful retaliation, making it the most "popular" type of claim. Race- and sex-discrimination claims ranked second and third highest.

The newest law on the EEOC's enforcement task list is GINA, the Genetic Nondiscrimination Act. As expected, there were few GINA complaints filed--only 245 in 2011.

There could be any number of reasons for the increasing amount of discrimination complaints filed with the EEOC. Unfortunately, though, it doesn't seem that this trend is likely to slow any time soon.

In an all too rare unanimous ruling (save for Justice Kagan, who recused herself), the U.S. Supreme Court has held that the anti-retaliation provision of Title VII extends to employees who are in the “zone of interest” with an employee who has filed a charge of discrimination. The facts and findings follow.

A female employee filed a charge of sex discrimination against her employer. A few weeks later, the employer fired the complainant's fiancee, who had also been a company employee. The fiance then filed a retaliation charge with the EEOC and a subsequent lawsuit. 

Justice Scalia, writing for the Court, held that a reprisal against a third party such as the fiancee was covered retaliation under Title VII.  The Supreme Court further held that the fiancee was an “aggrieved person,” who had standing to sue under Title VII.  Justice Scalia pointed out that the text of the anti-retaliation provision is broader than the substantive provision and that any person who comes within the “zone of interest” that the statute seeks to protect can file suit. The Court leaves it to future cases to determine how far this “zone of interest” extends. The case is Thompson v. North American Stainless, No. 09-291.

The U.S. Supreme Court will hear oral arguments on several important employment-law cases this term. Last week, we posted about the upcoming Kasten v. Saint-Gobain Performance Plastics Corp., in which the Court will address the requirements for an employee who claims retaliation based on the FLSA. And, on Monday, we posted about Staub v. Proctor Hospital, in which the Court will address the cat's-paw theory in the USERRA context. 

The third and final post in this series discusses Thompson v. North American Stainless, LP. In a 10-to-6 decision, the Sixth Circuit held that Title VII does not create a cause of action for third-party retaliation for persons who did not themselves engage in protected activity. In its decision, the Sixth Circuit joined the Third, Fifth, and Eighth Circuit Courts of Appeal in holding that the authorized class of claimants is limited to persons who have personally engaged in a protected activity.

Thompson argued that he was fired because is fiancée, who worked for the same employer, filed an EEOC charge of discrimination. His employer argued that Thompson was discharged for performance-based reasons. Thompson filed his own charge of discrimination with the EEOC, and the administrative agency found reasonable cause that North American Stainless violated Title VII. The EEOC issued Thompson a right to sue notice, and Thompson filed a cause of action against his employer.

North American Stainless eventually moved for summary judgment on the ground that Thompson’s claim – that he was terminated as retaliation for his fiancée’s charge of discrimination – was insufficient as a matter of law under Title VII. The district court granted the employer’s motion, holding that Thompson failed to state a claim for which relief could be granted. Thompson appealed to the Sixth Circuit Court of Appeals. The appellate court affirmed the district court’s opinion.

Thus, on December 7, 2010, the Court will hear argument on whether Title VII creates a cause of action for third-party retaliation for persons who did not themselves engage in protected activity.

The U.S. Supreme Court will hear oral arguments on several important employment-law cases this term. Last week, we posted about the upcoming argument in Kasten v. Saint-Gobain Performance Plastics Corp., in which the Court will address the requirements for an employee who claims retaliation based on the FLSA.

In this, the second part of this series, we look to an equally anticipated case, Staub v. Proctor Hospital.  Staub, like Kasten, is on appeal from the Seventh Circuit.  In Staub, the Supreme Court will examine   under what circumstances may an employer be held liable based on the unlawful intent of officials who caused or influenced, but did not make, the ultimate employment decision.

Staub sued his employer, alleging that he was discharged in violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). Staub prevailed after a jury trial. His employer appealed, and the Seventh Circuit reversed the trial decision.

At trial, Staub proceeded under the “cat’s paw” theory. That theory, derived from the 17th century French fable “The Monkey and the Cat,” is understood today to mean "when one is used by another to accomplish his purposes." The cat’s paw theory is a way of proving discrimination when the actual decisionmaker is unbiased, but the discriminatory animus of a non-decisionmaker is imputed upon the decisionmaker, typically where the non-decisionmaker has singular influence on the decisionmaker.

Staub, an Army reservist, alleged that the reasons given for his discharge where mere pretext for discrimination based on his association with the military. USERRA prohibits adverse action based upon a prohibited criterion, in this case military status. Like other discrimination law, a plaintiff alleging a USERRA claim must show that the decisionmaker harbored animus toward him and relied upon that animus in choosing to take action against the plaintiff.

Staub won at trial, and his employer appealed. On appeal, the hospital argued, inter alia, that the trial court mishandled the cat’s paw theory. The Seventh Circuit agreed, finding that to succeed on a cat’s paw theory, a plaintiff must demonstrate that the decisionmaker blindly relied upon the non-decisionmaker’s influence. The appellate court also held that prior to admitting evidence of a non-decisionmaker’s animus, a trial court should determine whether a reasonable jury could find the presence of a singular influence over the decisionmaker.

This case is scheduled for oral argument on November 2, 2010. The Court will examine the circumstances which must be present for an employer to be held liable for the unlawful intent of officials who caused or influence, but did not make, the ultimate employment decision.

The U.S. Supreme Court opened its new term earlier this week.  For the first time, three of the justices are women, creating an historic moment for the Court.  Employers anticipate several important decisions coming from the cases being heard this term, as well.  In this first part in a series, we'll post about three of the most interesting employment-law cases scheduled for oral argument this Fall.

Next week, the Court is scheduled to hear argument in Kasten v. Saint-Gobain Performance Plastics Corp. Kasten sued his employer, alleging a retaliation claim under the Fair Labor Standards Act (FLSA). Kasten’s employer had issued Kasten several disciplinary warnings because of his failure to properly clock-in and out of the company’s timekeeping system. Kasten claimed he made verbal complaints to his supervisors about the legality of the location of the timekeeping clock. Kasten claimed that the clock’s location prevented employees from being paid for donning and doffing their required protective gear. Kasten was eventually terminated for failing to follow the company’s policy with respect to clocking in and out. Kasten sued his employer for retaliation under the FLSA, alleging that he was terminated in retaliation for his verbal complaints.

The trial court granted summary judgment in favor of the employer, finding that intra-company complaints are protected activities under the FLSA, but unwritten complaints, like Kasten’s verbal complaints to his supervisors, are not included in the act as a protected activity.

Although there is a split among the circuits on this issue, the Seventh Circuit affirmed the trial court’s decision. The Seventh Circuit held that while the FLSA’s anti-retaliation provision includes internal complaints as a protected activity, “to file” such a complaint means to file written complaint, not to merely submit a verbal complaint to one’s supervisor.

Kasten appealed the Seventh Circuit’s opinion after seeking rehearing, which was denied with a dissenting opinion. Oral argument on the question of whether an oral complaint is protected conduct under the FLSA’s anti-retaliation provision is scheduled for October 13, 2010.

Wage-and-hour lawsuits filed under the Fair Labor Standards Act (FLSA), are the hottest thing going for plaintiffs’ lawyers. And a worst-case scenario for an employer named as a defendant. FLSA cases can be very difficult to defend; the law imposes what is almost strict liability under most circumstances. So, when a court issues a decision in favor of an employer, it is worthy of notice. And when the U.S. Supreme Court grants certiorari of such a decision, it’s definitely worthy of notice.

In Kasten v. Saint-Gobain Performance Plastics Corp., a Wisconsin factory worker filed suit alleging that he was unlawfully terminated in retaliation of his FLSA-protected activity (i.e., an FLSA-retaliation claim). The protected activity, he alleged, was his oral complaint about the placement of time clocks. Specifically, he alleged that he complained that employees were not being properly compensated for “donning and doffing time” because of the location of the time clocks.

The employer argued that the oral complaint was not sufficient—that only written complaints were protected by the FLSA. The trial court disagreed, finding that oral complaints were protected but the Seventh Circuit reversed and held that only a written complaint could trigger the protections of the FLSA. (Kasten v. Saint-Gobain Perform. Plastics Corp., No. 08-2820 (7th Cir. Oct. 15, 2009)) (pdf)

The law prohibits employers from retaliating against an employee “who has filed any complaint” against the employer. The Seventh Circuit concluded that an oral complaint cannot be “filed.” The conclusion seems perfectly logical, based on the plain language of the statute.

But, on the other hand, other employment laws do extend retaliation protection to oral complaints. For example, under Title VII, an employee is protected from unlawful retaliation for making an oral complaint about discrimination or harassment in the workplace.

The Supreme Court’s decision could redirect the course of FLSA litigation, either expanding the types of suits commonly brought to include retaliation claims—or by preventing retaliation claims from becoming the next-big-thing in employment-law litigation.

Scott Holt, Adria Martinelli, and I will be sure to cover this development in our panel discussion, Wage and Hour Update, at the Annual Employment Law Seminar on April 28, 2010. We hope to see you there!

The February 2010 issue of Law Practice Today, the webzine published by the ABA's Law Practice Management section, is now available and can be read in its entirety at the Law Practice Management section's website.  I was the issue editor for this edition, which focuses on the Human Resources side of management.  The articles are great and offer lessons that apply to all industries.  They include:

Managing Your Relationships With Your Staff

Avoiding Retaliation Liability

Fostering an Entrepreneurial Spirit in Associates

Taking a Break From the Professional Hurricane

How Law Firms Can Use an Ombudsman to Resolve Conflicts

Appreciating the Difficulty Involved in HR Issues

Important Keys to Practice Success

Outsourcing Legal Support Services

Hardcore Scanning for Law Offices of Any Size

Women Rainmakers: Wanji J. Walcott, American Express

28th Edition: What's Hot in Technology for 2010 (Podcast)

All of the articles are excellent but I want to give an extra-loud "thanks" to fellow employment-law bloggers, Jon Hyman of the Ohio Employment Law Blog, and Phil Miles of Lawffice Space, who each wrote features for the webzine.  John authored Avoiding Retaliation Liability, which deals with the hottest topic in employment litigation these days and gives great advice on how not to become a defendant in a retaliation lawsuit. And Phil wrote Fostering an Entrepreneurial Spirit in Associates, which reminds us of the undeniable link between engagement, motivation, and success. 

The U.S. Equal Employment Opportunity Commission ("EEOC") has filed suit against Philadelphia-employer, Verizon, alleging unlawful retaliation.  The complaint was filed on behalf of former service technician, Theresa Allen, who worked at the company's Bryn Mawr facility until last year.  Allen, who is in her 50s, was the only female employee at that location until October 2006. 

According to the EEOC's complaint, Allen was sexually harassed during the 21 years of her employment by being exposed to pornographic magazines, which were commonly left out in the open in the workplace.  She was also subjected to inappropriate physical contact.

Philly.com reports that, in August 2006, Allen began to complain to management about the various offenses.  In September, Allen claims, after the conduct had not ceased despite her complaints, a plastic rat was hung in the service technician's garage.  She removed the rat but it reappeared several times.  Phrases like "Ratteri" and "Stop telling on everybody" were written in various places around the garage.  Allen was fired in February 2007, allegedly for taking home two cups of rock salt, which she claims to have later replaced with a 10-pound bag. 

Minimizing retaliation claims
There are a number of ways you can reduce your likelihood of being faced with a retaliation claim, including the following:

1. Ensure that you have a policy prohibiting retaliation included in your harassment and discrimination policies.
2. Make sure your policies clearly state that suspected retaliation must be reported, and provide employees several avenues through which they can do that.
3. Train all supervisors and managers so they know that it's unlawful to retaliate against employees for protected activity. That includes formal charges of discrimination as well as internal complaints about harassment or discrimination.
4. When you receive a complaint about unlawful activity or are charged with discrimination, protect the source of the complaint as much as possible. One of the best defenses to a retaliation claim is to be able to show that the person who supposedly retaliated wasn't even aware of the charge or complaint in the first place. Of course in many situations, the employee's immediate supervisor must be told about a complaint so that an adequate investigation can be conducted.
5. Treat the complaining employee like nothing has changed.  Of course, filing a charge or internal complaint doesn't insulate the employee from future disciplinary action.

Three female attorneys filed suit against the New Jersey State Office of Attorney Ethics (“OAE”), alleging gender discrimination. The plaintiffs claimed that women were assigned to lower-grade positions than their male counterparts. According to the article on Law.com, males without law degrees, some without college degrees, were awarded higher ranked jobs than females with law degrees.

The suit was filed in March 2005 under the Equal Pay Act, Title VII of the Civil Rights Act and its state equivalent, the New Jersey Law Against Discrimination. The case settled in June and each of the three plaintiffs received $5,000 in back pay and a total of $135,000 in emotional-distress damages. This is a relatively small sum, especially given the number of plaintiffs and the involvement of a government defendant.

But what makes this settlement even more interesting are its conditions. The settlement agreement makes an express denial of wrongdoing by the defendants, which is not uncommon. Unlike suits settled with the Equal Employment Opportunity Commission, no remedial measures were required by the agreement, nor were the defendants required to implement any training programs or make any workplace postings.

Most significantly, though, are the provisions whereby the two plaintiffs who had resigned from their jobs during the lawsuit agree to never seek employment with the OAE. Last year, there was a bit of murmuring that the EEOC was going to take a formal position against such “banishment” clauses, also known as “no reapplication” or “no re-employment” provisions.

These provisions are of the highest importance to employers when settling a lawsuit brought by a former employee. If employers were prohibited from including this type of clause in settlement agreements, there would be a greatly decreased incentive to settle at all. Employers would risk the very real possibility that they’d pay a significant sum of money only to be taken “hostage” by an employee determined to inflict permanent suffering on his employer.

The United States Supreme Court is anything but anti-employee.  The Supreme Court's decisions in Cracker Barrel and Gomez-Perez, filed yesterday, continue to broaden the limits of Section 1981 in favor of employees.

Recently, employee-advocate groups have made great sport out of attacking the Supreme Court’s employment-discrimination decisions--using them to raise the hue and cry for legislative reform. This week's rulings in CBOCS West, Inc v. Humphries (the “Cracker Barrel” case), and Gomez-Perez v. Potter show that employee advocates and plaintiffs’ lawyers have little to complain about.

The Background of Section 1981

The Court's 7-to-2 ruling in the Cracker Barrel case addressed a novel question of law: Whether there can be a claim of unlawful retaliation based on Section 1981. Section 1983, originally known as the Ku Klux Klan Act, was passed in 1871 during Reconstruction following the civil war.  The law was intended to provide a federal remedy for private conspiracies such as those being committed by the KKK, which the Southern state courts had been unsuccessful in prosecuting. In short, the law prohibits discrimination based on race in all aspects of contractual relationships, including written and unwritten employment contracts.

But Section 1981 contains no anti-retaliation language at all. What’s more, when Congress amended the law in 1991, it did not add an anti-retaliation provision.  By that time, many other anti-discrimination statutes had been enacted to explicitly included anti-relation provisions. Nevertheless, in yesterday's Supreme Court opinion by Justice Breyer, the Court concluded that retaliation claims may brought under the statute and are “well embedded in the law.”

The Significance of the Cracker Barrel Decision

The ruling is significant in at least two ways. First, unlike the perhaps more familiar racial discrimination claim under Title VII, damage awards under Section 1981 do not include monetary caps. Employers are therefore exposed to substantially higher damage claims.

Second, Section 1981 claims do not require an administrative filing with the EEOC. The statute of limitations for such claims is much longer for these claims as compared to Title VII.  The statute of limitations in a Section 1981 claim is borrowed from state law.  The limitations period from the analogous intentional tort claim is applied unless the limitations periods vary for different intentional torts.  In that case, the state's general personal injury statute of limitations should apply.

For Delaware employers, that means that, whereas a Title VII employee-plaintiff has 300 days to file a Charge of Discrimination, a Section 1981 plaintiff has more than twice as long, four years, to file a complaint in federal court. Further, since no administrative filing requirement exists under Section 1981, the employer may be unaware of a potential claim for a lengthy period of time.

The Significance of the Gomez Ruling

The Gomez decision is less significant in that it only applies to federal employees. In Gomez, the U.S. Supreme Court, in a 6 to 3 ruling, found that a cause of action for retaliation existed for claims brought pursuant to the Age Discrimination in Employment Act (“ADEA”). The ADEA has an explicit anti-retaliation provision applicable to private sector employees but no anti-retaliation provision applicable to federal workers. The High Court, nevertheless, concluded that Congress “intended” that retaliation be considered another form of “intentional discrimination” under the law.

Cracker Barrel and Gomez continue the Supreme Court trend that began with the Burlington and Faragher decisions, issued in 1998.  Since those rulings, the Court has taken an expansive view of anti-retaliation claims.  It will be interesting to see whether pro-employee groups and Plaintiffs' lawyers will be satisfied by these decisions in light of the decidedly expansive view of employee-retaliation rights that the Court has adopted.

Additional Resources:

The Legal Information Institute (LII) at Cornell has an excellent summary of the Cracker Barrel decision, as well as links to the actual decision and the numerous briefs.  The Gomez decision is also posted at the LII website.

HR Hero is an excellent resource for more information on the broader topics that were addressed in these cases, including Section 1981, Employment Retaliation, and Age Discrimination in Employment (ADEA).

[Update May 29, 2008:  SCOTUS Blog also has an in-depth analysis of both cases from the plaintiff-employee perspective.]

Yesterday, the local newspaper, The News Journal reported on an employment discrimination case that is currently in trial in the federal District Court in Wilmington, Delaware.

The plaintiff in the case is a 19-year veteran of the Wilmington Police Department who claims he was improperly demoted in retaliation for reporting offensive comments made by a supervisor. According to the officer’s attorney, he was demoted and denied transfers after he reported that another officer said that "all Puerto Ricans have low riders and fuzzy dice hanging from their mirrors" and that "all Puerto Ricans and Mexicans are alike."

The City of Wilmington, the named defendant in the case, alleges that the comment was taken out of context and that the demotion and denials of transfers were the result of the officer’s poor work performance.

Retaliation claims like this are clearly on the rise. According to EEOC data, retaliation claims have increased by approximately 100% during the period 1992-2006! (Link to a previous post on the rapid increase of charges filed with the EEOC here). Indeed, retaliation claims now comprise 30% of the total charges filed.

What steps can an employer take to miminimize the risks of retaliation claims?

First, it's important to have a policy prohibiting retaliation your harassment and discrimination policies.

Second, make clear in your policies that suspected retaliation must be reported and provide employees several avenues through which they can do that.

Third, make sure all supervisors and managers know that it's unlawful to retaliate against employees for protected activity, which includes formal charges of discrimination as well as internal complaints about harassment or discrimination.

Fourth, if you receive complaints about unlawful activity or are charged with discrimination, protect the source of those complaints as much as possible. One of the best defenses to a retaliation claim is that the person who supposedly retaliated wasn't even aware of the charge or complaint in the first place. Of course, in many situations, the employee's immediate supervisor must be told about a complaint so an adequate investigation can be conducted.

Fifth, treat the complaining employee as if nothing has changed. Remember, however, that filing a charge or internal complaint doesn't insulate the employee from future disciplinary action