Supreme Court Upholds “Relative” Retaliation Claim; Avoids Setting “Bright Line” Rule — Part I, the Decision

Ruling in Thompson Fiancé Retaliation Case

Court Uphold’s Fiancé’s Retaliation Complaint

In Thompson vs. North American Stainless, the Supreme Court addressed whether a friend or relative of an employee who made a complaint of discrimination may pursue a claim that they suffered retaliation because of that complaint — despite not having been the one who made it.

In a brief opinion penned by Justice Scalia, the Court unanimously held that such claims may be brought under some circumstances, including those before the Court in Thompson, in which the person alleging retaliation was the original discrimination complainant’s fiancé.

The Court expressly “decline[d] to identify a fixed class of relationships for which third-party reprisals are unlawful,” leaving this to case-by-case determination. The Court did, however, provide some useful guidance to lower courts confronting this issue:

We expect that firing a close family member will almost al­ways [be actionable], and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.

Third-Party Retaliation Issue Raised By Simple Story of Employee and Her Fiancé

The story leading to the retaliation charge dates back to February 2003, when Miriam Regalado filed a gender discrimination charge against North American Stainless, her employer at the time, after being fired.

Three weeks later, Regalado’s fiancé, Eric Thompson, was also terminated. Thompson then filed his own discrimination charge, claiming his termination was in retaliation for Regalado’s discrimination charge.

This charge led to a lawsuit that made its way to the Supreme Court after a 2006 summary judgment for the employer, a Sixth Circuit reversal, and then a 2009 en banc rehearing in which the Sixth Circuit affirmed the original summary judgment, reasoning that because Thompson did not “engag[e] in any statutorily protected activity, either on his own behalf or on behalf of Miriam Regalado,” he “is not included in the class of persons for whom Congress created a retaliation cause of action.”

This simple statement of facts at the Supreme Court level may leave some readers wondering why it took from 2003 to 2011 to obtain a final ruling from the Supreme Court. Part of the explanation is that each step along the way takes time, while issues are briefed and, at some stages, orally argued.

But part is that cases that appear factually simple by the time they reach the Supreme Court look that way because the issues have been narrowed throughout the process, including in the Court’s opinion-writing work. It is a safe bet that at earlier stages there was a major factual dispute as to why Thompson was let go, involving depositions of witnesses and document review; and legal arguments about whether the facts surrounding his termination supported an inference of retaliatory motive.

The Court’s opinion, though final as to the legal issue, merely paves the way for the parties to continue to litigate those issues, as the Court “remanded for further proceedings consistent with this opinion.”

Supreme Court Addressed Two Distinct, But Related Legal Issues in the Thompson Decision

The Court stated the issues this way:

  1. Did NAS’s firing of Thompson constitute unlawful retaliation?
  2. If it did, does Title VII grant Thompson a cause of action?

It might seem obvious as a matter of common sense that if the answer to the first question is that the firing was unlawful, of course Thompson could sue. But who ever said common sense applied to the law?

Not everyone can sue just because unlawful conduct has occurred. For example, an unlawfully terminated employee’s landlord can’t sue because the firing led to the fired employee’s inability to pay rent. Much difficult law has been developed concerning who can sue, often described as “standing to sue.”

In this instance, common sense was quite obviously right: Thompson, after all, was the injured person, not someone remotely affected, so if retaliating against him is unlawful he can sue for it. But whoever said lawyers don’t raise obviously losing arguments — and even take them all the way to the High Court?

Here, the Court actually found that the standing issue was “[t]he more difficult question.”

The Supreme Court’s Ruling On the Fiancé’s Retaliation Claim

The Court’s ruling on the first question, whether Thompson’s firing could be unlawful retaliation, was guided by the Court’s 2006 ruling in Burlington N. & S. F. R. Co. v. White. In Burlington, the Court held:

[T]he anti-retaliation provision does not confine the actions and harms it forbids to those that are related to employment or occur at the workplace. … [T]he provision covers those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant. … [T]he employer’s actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.

Showing remarkable common sense, undoubtedly cutting through plenty of legal obfuscation in the briefs and arguments, the Court said:

We think it obvious that a reasonable worker might be dissuaded from engaging in protected activity [such a filing a charge] if she knew that her fiancé would be fired.

NAS made a classic “slippery slope” argument, contending that:

Prohibiting reprisals against third parties will lead to difficult line-drawing problems concerning the types of relationships entitled to protection. Perhaps retaliating against an employee by firing his fiancée would dissuade the employee from engaging in protected activity, but what about firing an employee’s girlfriend, close friend, or trusted co-worker? Applying the Burlington standard to third-party reprisals, NAS argue[d], will place the employer at risk any time it fires any employee who happens to have a connection to a different employee who filed a charge with the EEOC.

The Court wisely declined to take the bait, stating:

Although we acknowledge the force of this point, we do not think it justifies a categorical rule that third-party reprisals do not violate Title VII. [W]e adopted a broad standard in Burlington because Title VII’s antiretaliation provision is worded broadly. … [T]here is no textual basis for making an exception to it for third-party reprisals, and a preference for clear rules cannot justify departing from statutory text.

As noted above, the only additional guidance the Court provided was to state the polar extremes that a close family member would normally have a retaliation claim if terminated, while a a mere acquaintance suffering a milder reprisal would not.

The Court’s Ruling on the Fiancé’s Standing to Sue

On this issue, the Court had to apply different statutory language, that providing a remedy to a “person claiming to be aggrieved” by a violation. Again, one would think Thompson obviously fit the bill, and the Court agreed, but only after wading through a somewhat dense argument about whether this definition is coextensive with Article III jurisdiction. The Court held it was not:

If any person injured in the Article III sense by a Title VII violation could sue, absurd consequences would follow. For example, a shareholder would be able to sue a company for firing a valuable employee for racially discriminatory reasons, so long as he could show that the value of his stock decreased as a consequence.

Instead, the Court adopted a “zone of interests” test used in other contexts, which provides standing to sue to anyone who “falls within the ‘zone of interests’ sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.”

Applying this standard, the Court easily found Thompson had a right to sue because he:

was an employee of NAS, and the purpose of Title VII is to protect employees from their employers’ unlawful actions. Moreover, accepting the facts as alleged, Thompson is not an accidental victim of the retaliation — collateral damage, so to speak, of the employer’s unlawful act. To the contrary, injuring him was the employer’s intended means of harming Regalado. Hurting him was the unlawful act by which the employer punished her.

In part II of our coverage of the Thompson case, we’ll look at some commentary from new and old media, and some practical implications of the case.

EEOC Getting Tough On Employer Use of Credit Reports

EEOC Files Disparate Impact Lawsuit Based on Use of Credit Records in Hiring

In a press release today, the EEOC (Equal Employment Opportunity Commission) announced the filing of a nationwide hiring discrimination lawsuit against Kaplan Higher Education Corp.

The EEOC alleges that Kaplan’s use of applicants’ credit history discriminates because of race, under the disparate impact theory of employment discrimination.

In the lawsuit, filed by the EEOC’s Cleveland Field Office in the U.S. District Court for the Northern District of Ohio, the EEOC alleges that Kaplan engaged in a pattern or practice of unlawful discrimination by refusing to hire a class of black job applicants nationwide. The core allegation is that:

Since at least 2008, Kaplan Higher Education has rejected job applicants based on their credit history. This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.

The national scope and “pattern-and-practice” allegation virtually guarantee that this will be a very costly case to defend.

Applicable Law on Disparate Impact, Generally

The EEOC press release states the law simply:

It is a violation of Title VII [of the Civil Rights Act of 1964] to use hiring practices that have a discriminatory impact because of race and that are not job-related and justified by business necessity.

More Precisely, Title VII, as Amended by the Civil Rights Act of 1991, Provides:

An unlawful employment practice based on disparate impact is established . . . if:

(A)(i) a complaining party demonstrates that a respondent uses a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin and the respondent fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity; or

(ii) the complaining party makes the demonstration described in subparagraph (C) with respect to an alternative employment practice and the respondent refuses to adopt such alternative employment practice.

(B) (i) With respect to demonstrating that a particular employment practice causes a disparate impact . . . , the complaining party shall demonstrate that each particular challenged employment practice causes a disparate impact, except that if the complaining party can demonstrate to the court that the elements of a respondent’s decisionmaking process are not capable of separation for analysis, the decisionmaking process may be analyzed as one employment practice.

(ii) If the respondent demonstrates that a specific employment practice does not cause the disparate impact, the respondent shall not be required to demonstrate that such practice is required by business necessity.

(C) The demonstration referred to by subparagraph (A)(ii) shall be in accordance with the law as it existed on June 4, 1989, with respect to the concept of “alternative employment practice”.

(2) A demonstration that an employment practice is required by business necessity may not be used as a defense against a claim of intentional discrimination under this subchapter.

More Detail on Credit Reports and Disparate Impact From EEOC Informal Discussion Letter

In a letter dated February 14, 2005, the EEOC stated this explanation:

Rejecting applicants on the basis of financial criteria such as poor credit ratings has sometimes been found to disproportionately exclude minority groups. For example, in United States v. City of Chicago, 385 F. Supp. 543, 557 (N.D. Ill. 1974), the court held that a police department could use financial information in background checks of applicants only if using the information does not have an “adverse impact” or is job related and consistent with business necessity. Note that courts will not assume that an employer’s exclusion based upon financial criteria disproportionately excluded a protected class. That would have to be proved.

Even if such “adverse impact” on a protected group is proven, Title VII is not violated if the employer can show that requiring the financial criteria is job related and consistent with business necessity. For example, in EEOC v. United Virginia Bank/Seaboard National, 1977 WL 15340, 21 FEP Cases 1392 (E.D. Va. 1977), the court concluded that a bank had a business need to conduct pre-employment credit checks because employees handle large amounts of cash.

The Bottom Line on Lawfulness of Employer Use of Credit Record in Hiring

The answer here is the famous lawyer non-answer: “It depends.”

If a very strong correlation between credit history and job performance can be established, as in the case of the bank example above, then the potential of liability for disparate impact can be overcome.

But in many situations, if not most, using credit records as a selection tool in hiring is very risky.

Relatively well-off business owners and managers may think that financial problems necessarily show irresponsibility and reflect poorly on character and integrity, but they don’t necessarily show that at all. People may have trouble paying bills for many other reasons, including having no or inadequate medical coverage and getting hit with high medical bills, one of the most common causes of personal bankruptcy.

The Bigger Lesson About Disparate Impact

Regional Attorney Debra Lawrence of the EEOC’s Philadelphia District Office, which oversees Pennsylvania, Delaware, West Virginia, Maryland, and portions of New Jersey and Ohio, said: “Employers need to be mindful that any hiring practice be job-related and not screen out groups of people, even if it does so unintentionally.”

Fair Credit Reporting Act Adds Further Challenges

Aside from the above discrimination issues, employer use of credit reports implicates the Fair Credit Reporting Act (FCRA) and its detailed consent and notification requirements.

Employers Must Act Immediately to Comply With Genetic Information Nondiscrimination Act

The federal Genetic Information Nondiscrimination Act (“GINA”) takes effect on November 21, 2009. GINA is a congressional response to scientific and medical advances, including advances in the ability to test DNA in ways that can reveal predisposition to disease or disability, among other personal information. Here is a brief summary of what employers need to know and do immediately about GINA.

DNA

Prohibition of Discrimination Based on Genetic Information

Under Title II of GINA, an individual’s genetic information is now among the characteristics protected by federal employment discrimination laws, along with race, sex, age, etc.

Genetic information is defined as information about:

  • genetic tests of an individual;
  • genetic tests of the individual’s family members;
  • manifestation of a disease or disorder in the individual’s family members.

Genetic information does not include:

  • information about any noticeable disease or symptoms of an individual that has been diagnosed, is symptomatic, or is being treated;
  • information about the sex or age of an individual or the individual’s family member; or
  • results of drug or alcohol tests.

GINA prohibits employer use of genetic information in hiring, firing, promotion, compensation, termination, or other terms and conditions of employment. It further prohibits use of such information to limit, segregate, or classify employees, or to deprive individuals of opportunities.

Limitations on Obtaining Genetic Information

Employers may not request or purchase genetic information about an employee or an employee’s family member (with limited exceptions). Employers also may not obtain such information, including family medical history, from job applicants, including during a post-offer medical examination and history. These prohibitions also apply when obtaining information during the ADA interactive process of seeking reasonable accommodation for employee.

Confidentiality

Any genetic information an employer may have must be treated as confidential medical information and stored in separate medical files.

Posting Requirement

As with many other employment laws, GINA includes a posting requirement in order to provide accurate information to applicants and employees.

The EEOC currently provides two options http://www1.eeoc.gov/employers/poster.cfm for meeting this requirement with free downloads:

  1. a supplement to the existing “EEO is the law” poster; and
  2. an amended “EEO is the law” poster.

Additionally, a number of companies provide commercial employment poster services, advantages of which may include that they combine state and federal posting requirements and that they provide larger, laminated posters and automatic updates, by subscription, for any required changes.

Health Insurance Requirements

Title I of GINA prohibits the use of genetic information by group or individual health insurers in setting eligibility or premium or contribution amounts. It does not, however, prohibit underwriting based on the individual’s current health status, and does not mandate coverage for any particular tests or treatments.

GINA also prohibits health insurers from requesting or requiring individuals to submit to genetic tests, but does not prevent treating physicians from requesting such tests.

Employees’ Rights and Remedies

Individuals have the same rights and remedies for violations of GINA as for violations of Title VII. These include reinstatement, hiring, promotion, back pay, injunctive relief, monetary and non-monetary damages (including compensatory and punitive damages), and attorneys’ fees and costs.

Employers Must Act Now

Regulations supporting GINA will be issued soon. In the meantime, employers must prepare for GINA immediately by:

  • revising post-offer medical exams and histories to comply with GINA;
  • reviewing policies and procedures to make sure genetic information is not otherwise sought; and
  • posting the new EEOC poster or supplement.

Looking Ahead to 2009: The Potential Revival of Previously Proposed Federal Employment Laws

In the recently convened Congress, we anticipate the revival of a significant number of labor and employment law bills previously introduced, but not enacted into law. The Democratic electoral successes suggest better prospects for the passage of these laws. In fact, one has already been rushed through the legislative process. However, those that appear to impose substantial cost burdens on business may be less palatable to Congress now that jobs have become such a critical concern.

Labor Law

In addition to the Employee Free Choice Act, discussed in a previous article, federal labor law would also be substantially altered by the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers Act (the RESPECT Act).

This law would redefine “supervisor” for purposes of the National Labor Relations Act. As a result, many workers now deemed to be supervisors would be considered employees. As such, they would be eligible to form and join unions and enjoy other protections afforded to employees under the National Labor Relations Act.

Employment Discrimination Law

The following four efforts to modify existing employment discrimination protections were left on the table by the last Congress:

  1. The Ledbetter Fair Pay Act, a response to a Supreme Court case strictly interpreting the time period within which pay discrimination claims may be brought. This Act has now been passed by Congress. It allows such claims to be brought within a specified time after the date of any discriminatory paycheck, rather than after the date the discriminatory pay practice began.
  2. The Paycheck Fairness Act, which would amend the Equal Pay Act to make it more difficult for an employer to justify differences in pay between male and female employees. This Act would also protect employees who share salary information with their co-workers in furtherance of a sex discrimination investigation, and it would expand Equal Pay Act remedies to include compensatory and punitive damages. It has passed the House already this year, but may face a battle in the Senate.
  3. The Fair Pay Act, which would require equal pay for “equivalent work.” Employers could not pay jobs that are held predominately by women or minority employees less than jobs in the same company held predominately by men or white employees if those jobs are “equivalent in value” to the employer. The Fair Pay Act would make exceptions for different wage rates based on seniority, merit, or quantity or quality of work, and would contain a small business exemption.
  4. The Employment Non-Discrimination Act, which would add discrimination based on sexual orientation to Title VII of the Civil Rights Act of 1964.

Other Employment Issues

Other laws recently proposed involve a variety of other employment issues. These include:

  • The Working Families Flexibility Act, which would create a statutory right for employees to request a change in the number of hours worked, when work is performed, or where work is performed. This Act would not require that the employer agree to any particular request, but would require it to meet with the employee to consider such requests and to provide a written explanation and satisfy other procedural requirements if it refused them.
  • The Patriot Employers Act, which would provide tax credits to employers who increase the proportion of jobs located in the United States.
  • The Employee Misclassification Prevention Act, which would require employers to keep records on and notify workers of their employment or independent contractor classification and their right to challenge that classification. It would also impose penalties on employers who misclassify employees as independent contractors.
  • The Arbitration Fairness Act, which would ban mandatory arbitration agreements in the employment, consumer, franchise, and civil rights contexts.

The ADA Amendments Act of 2008

The ADA Amendments Act was passed overwhelmingly by Congress in response to years of court decisions narrowly defining who was sufficiently disabled to have rights under the Americans With Disabilities Act (“ADA”).

There was surprisingly broad Congressional consensus that these decisions had resulted in the dismissal of far too many ADA lawsuits without the courts ever considering the merits of whether there had been discrimination or failure to provide reasonable accommodation.

Changes in the Definition of “Disability”

To address this situation, the ADA Amendments Act retains the ADA’s basic three-fold definition of “disability” as either:

  1. An impairment that substantially limits one or more major life activities;
  2. A record of such impairment; or
  3. Being regarded as having such an impairment.

However, it changes the way these statutory terms will be interpreted.

Most significantly, the ADA Amendments Act emphasizes that the definition of “disability” should be interpreted broadly, and:

  • Directs the EEOC to revise its regulations defining the term “substantially limits” to require a lesser degree of limitation.
  • Expands the definition of “major life activities” by including two non-exhaustive lists:
    • The first list adds many activities that the EEOC has not previously recognized (e.g., reading, bending, and communicating).
    • The second list includes major bodily functions (e.g., “functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions”).
  • States that mitigating measures, such as medication or prosthetic limbs, shall not be considered in assessing the existence of a disability, with the exception of “ordinary eyeglasses or contact lenses.” This means that in determining whether a person is disabled, their condition will be evaluated as if they were not using the medication or other mitigating measure.
  • Clarifies that an impairment that is episodic or in remission is a disability, if it would substantially limit a major life activity when active.

Significance of These Changes

These changes substantially broaden the reach of the ADA, greatly expand the class of individuals who may be considered disabled, and significantly increase both the employer’s responsibility for reasonable accommodation and areas of potential liability.

Previously, in many ADA cases, employers were able to prevail prior to trial on the basis that the employee or applicant could not establish they had a disability for ADA purposes.

Now, many more ADA cases will be decided on the merits — on the basis of how the employer treated the individual, rather than whether the individual has a disability.

Individuals with medical conditions not meeting a common-sense definition of disability may now very well qualify as having a disability under the ADA.

Bottom Line for Employers

These changes to the ADA make it more important than ever to:

  • Exercise care in making employment decisions involving persons known or believed to have significant medical conditions, even if not manifested in obvious interference with their activities.
  • Take seriously all requests for reasonable accommodation from such persons (whether or not they use the “magic words” “reasonable accommodation”).
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