The Right to Fire on Performance

Firing Without Fear of Lawsuits

Just as employers want to be able to hire on ability, they also want to be able to fire on performance. Yet there exist myriad laws that alter the at-will nature of the employment relationship and affect an employer’s capacity to make firing decisions. Most notably, an employer cannot terminate an employee on account of their race, sex, religion, national origin, religion, age, or disability. Moreover, some states and localities impose additional restrictions, such as sexual orientation, gender identity, military status, and family status. Additionally, the common law of many states imposes additional restrictions on firing based on a given state’s public policy.

This chapter discusses some of the more cutting-edge issues that confront businesses in the firing of employees.

Discrimination, Pretext, and Honest Beliefs

For the unfamiliar, the McDonnell Douglas test is an evidentiary framework used in discrimination cases, which lack direct evidence of discrimination, to determine whether an employee’s claim should survive summary judgment and proceed to trial. It first asks whether the plaintiff can establish a prima facie case of discrimination—(i) s/he belongs to a protected class; (ii) s/he was qualified for the position; (iii) though qualified, s/he suffered some adverse action; and (iv) the employer treated similarly situated people outside of his/her protected class differently. If the plaintiff satisfies this showing, the burden shifts to the employer to articulate a legitimate nondiscriminatory reason for the adverse action. Once the employer makes this articulation, the burden shifts again, back to the plaintiff to show that the employer’s reason is a pretext for discrimination. This test is engrained in the hearts and minds of anyone who practices employment litigation.¹

Despite McDonnell Douglas’s long-standing place in employment discrimination jurisprudence, courts are beginning to question its ongoing utility. For example, in Coleman v. Donahoe, the Seventh Circuit (albeit in a concurring opinion), asked whether the McDonnell Douglas test is still meaningful:

Perhaps McDonnell Douglas was necessary nearly 40 years ago, when Title VII litigation was still relatively new in the federal courts. By now, however . . . the various tests that we insist lawyers use have lost their utility. Courts manage tort litigation every day without the ins and outs of these methods of proof, and I see no reason why employment discrimination litigation (including cases alleging retaliation) could not be handled in the same straightforward way. In order to defeat summary judgment, the plaintiff one way or the other must present evidence showing that she is in a class protected by the statute, that she suffered the requisite adverse action (depending on her theory), and that a rational jury could conclude that the employer took that adverse action on account of her protected class, not for any non-invidious reason. Put differently, it seems to me that the time has come to collapse all these tests into one.²

More recently, the Sixth Circuit, in Donald v. Sybra, Inc.,³ helped prove the Seventh Circuit’s point. Sybra, which owns Arby’s franchises, terminated Gwendolyn Donald’s employment after it concluded she had been intentionally mis-ringing customers’ orders to steal from her cash register. Among other issues, she claimed that Sybra terminated her employment both in retaliation for, and to interfere with, her rights under the Family and Medical Leave Act (FMLA). After concluding that the McDonnell Douglas framework applied to both her retaliation and interference claims, the court ignored McDonnell Douglas and affirmed the district court’s grant of summary judgment to the employer:

The district court effectively gave Donald the benefit of the doubt and assumed that she could establish both prima facie cases. This boon notwithstanding, the district court determined that Donald produced insufficient evidence to prove that Sybra’s stated reasons, cash register and order irregularities, were pretextual . . . Donald’s claims fundamentally rest on the timing of Sybra’s decision to terminate her employment [the day after she returned from her FMLA leave], which, we admit, gives us pause. But that alone is not enough, and her other arguments are no more persuasive. Whether Sybra followed its own protocol, or its decision not to prosecute Donald, or even Donald’s history of employment, provides neither us, nor a rational juror, with a basis to believe that Sybra’s decision was improper. The district court therefore correctly dismissed Donald’s FMLA claims.⁴

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If courts skip the first two steps of the McDonnell Douglas test and go right to the heart of the matter—whether a rational jury could conclude that the employer took that adverse action on account of her protected class—does it make sense to continue the charade of pretending that McDonnell Douglas remains useful? Instead, why can’t we simply cut to the heart of the matter? In most discrimination cases, the heart of the matter comes down to pretext.t

Pretext

Pretext is a commonsense inquiry: did the employer fire the employee for the stated reason or not? This requires a court to ask whether the plaintiff has produced evidence that casts doubt on the employer’s explanation, and, if so, how strong it is. One can distill the inquiry into a number of component parts, and it can be useful to do so. But that should not cause one to lose sight of the fact that at bottom the question is always whether the employer made up its stated reason to conceal intentional discrimination.⁵

In 1964, U.S. Supreme Court Justice Potter Stewart famously nondefined obscenity as “I know it when I see it.”⁶ In employment litigation, we often get caught up in formal burdens of proof, legitimate nondiscriminatory reasons, pretext, and direct evidence. Yet, discrimination cases are usually decided with the same informality laid out by Justice Stewart. If an employment decision looks discriminatory, then it probably is. The challenge for employers is to avoid the appearance of a made-up reason.

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For a plaintiff to succeed in a discrimination case, he or she must show that the employer’s stated reason for the challenged decisions was a pretext (i.e., a lie or a cover up) for discrimination. One of the easiest ways for a plaintiff to establish pretext is to show that the employer’s explanation for the decision changed over time. Shifting reasons cast a cloud of doubt over the veracity of the explanation and the legitimacy of the decision. Once the fact finder has reason to disbelieve the employer’s explanation, the case is sunk. As the U.S. Supreme Court stated in St. Mary’s Honor Center v. Hicks, “The fact finder’s disbelief of the reasons put forward by defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may . . . show intentional discrimination.”⁷

Indeed, when you terminate an employee, you only get one shot. The reason you provide at the time of termination—whether communicated to the employee or merely internally documented—is the only reason that will matter in a subsequent discrimination lawsuit. If you try to change that reason down the road, you will open yourself up to a claim of pretext that could doom your defense.

For a textbook example of how shifting or changing rationales can sink your defense, consider Cicero v. Borg-Warner Automotive, Inc.⁸ In that case, the employer provided three different reasons for the plaintiff’s termination—one at the time of firing, another in answering interrogatories, and yet another in responding to Cicero’s summary judgment motion. The court concluded that the changing explanations provided sufficient evidence of pretext from which a jury could infer discrimination:

An employer’s changing rationale for making an adverse employment decision can be evidence of pretext. Shifting justifications over time calls the credibility of those justifications into question. By showing that the defendants’ justification for firing him changed over time, Cicero shows a genuine issue of fact that the defendants’ proffered reason was not only false, but that the falsity was a pretext for discrimination. While the Court does not question business decisions, the Court does question a defendant’s proffered justification when it shifts over time. When the justification for an adverse employment action changes during litigation, that inconsistency raises an issue whether the proffered reason truly motivated the defendants’ decision.⁹

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It is important to have your reason for the decision pinned down at the time the decision is made. Further, the reason must remain reasonably consistent for the lifespan of the case. You cannot offer the employee one reason, have another written in the personnel file, provide the EEOC another in the position statement, and have the decision maker tell yet another at deposition. At best, these shifting explanations will buy you a jury trial; at worst, they will result in a large jury verdict.

Honest Beliefs

The “honest belief” rule is one of most effective shields available to employers in discrimination cases:

As long as an employer has an honest belief in its proffered nondiscriminatory reason for discharging an employee, the employee cannot establish that the reason was pretextual simply because it is ultimately shown to be incorrect. An employer has an honest belief in its reason for discharging an employee where the employer reasonably relied on the particularized facts that were before it at the time the decision was made.¹⁰

To be effective, however, an employer must harness its honest belief properly. Consider Brooks v. Davey Tree Expert Co.,¹¹ in which the Sixth Circuit determined that an employer was not entitled to argue its honest belief in defense of an age discrimination claim.

According to the court in Brooks, the honest belief rule has limits:

[W]e do not require that the decisional process used by the employer be optimal or that it left no stone unturned. Rather, the key inquiry is whether the employer made a reasonably informed and considered decision before taking an adverse employment action. Although we will not “micro-manage the process used by employers in making their employment decisions,” we also will not “blindly assume that an employer’s description of its reasons is honest.”¹²

In Brooks, court concluded that the employer was not entitled to the benefit of the honest belief rule, because it could not “point to specific facts that it had at the time the decision was made which would justify its belief in the proffered reason.”

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Similarly, in Denhof v. City of Grand Rapids,¹³ the issue was whether the Grand Rapids Chief of Police reasonably relied upon a psychological fitness for duty exam in refusing to permit the plaintiff to return to work. The Court found that the Chief’s reliance on the medical opinion was unreasonable because the doctor’s written opinion showed that he had a preordained opinion on Denhof’s unfitness for duty:

In his January 11, 2002, letter recommending a fitness for duty examination for Patricia Denhof, Dr. Peterson employed language that, at a minimum, suggested his opinion had already been formed. For instance, he noted that in view of the tension between Denhof and the department, “it is difficult to imagine how she could continue to work in this environment.” . . . This language should have signaled to Chief Dolan, and indeed any reasonable recipient, that Dr. Peterson was predisposed to finding Denhof unfit for duty. Indeed, after comments like this, it is hard to see any possibility that Dr. Peterson’s examination would yield a result other than finding that Denhof should be separated from the police force. Instead, when Dolan was confronted with a psychologist who had already formed his opinion before examining the patient, he asked that doctor to proceed with the examination. In doing so, he forfeited the protection of the honest belief rule, because the jury could have easily concluded that his reliance on a doctor who had already made up his mind did not qualify as reasonable reliance.¹⁴

According to the Court, the employer could not have an honest belief about Denhof’s lack of fitness to return to work because the opinion of the doctor upon whom it was relying was predisposed. Thus, the decision could not have been bona fide.

Jones v. Nissan N. Am.¹⁵ offers another example of an honest-belief defense gone wrong and illustrates that an employer’s honest belief cannot coexist with a disregard of the cold, hard facts.

In Jones, the employer argued that it could not be liable for an ADA violation by refusing to return an injured employee to work because it held an honest belief that an order of the workers’ compensation court prohibited the employee’s return. The court disagreed:

Nissan’s defense . . . was based on the premise that Nissan imposed unsubstantiated medical restrictions on Jones because it believed the chancellor’s decision and order required it to do so. In the instant case, however, notwithstanding Nissan’s arguments to the contrary, it is clear beyond peradventure that the chancellor’s order did not direct Nissan to restrict Jones from continuing in the trim-fit position he was performing at the time of the workers’ compensation trial. The order only directs Nissan to pay certain benefits. Most glaringly, Nissan concluded that Jones was restricted from using “hand tools,” despite the fact that the chancellor did not make a single finding with regard to Jones’s ability to use hand tools in his job.^16,17

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Courts give wide latitude to employers who make informed decisions based on all available facts and circumstances. As this case illustrates, employers who ignore the facts—or fail to make a thorough investigation to uncover all reasonably available facts—do not fair so well. Strive to be the former; do not succumb to the ease of the latter.

There exist other examples, however, in which an employer was able to rely on its thorough, well-documented investigation to create an honest belief as a defense to a discrimination, retaliation, or harassment claim.

Michael v. Caterpillar Fin. Servs. Corp.¹⁸ is one such case. It concerned a six-year African American who had a good employment record until her manager was replaced. Shonta Michael claimed that the discipline, including a very confrontational meeting in which the new manager aggressively yelled at her, was racially discriminatory and that she was retaliated against after she complained over the manager’s treatment of her. Caterpillar, on the other hand, claimed that any conflict and discipline was solely because of legitimate performance issues. The Court skirted the issue of whether the disciplinary action (a performance plan) constituted an “adverse employment action,” finding that regardless Michael could not prove that the employer’s actions were pretext for discrimination or retaliation. Caterpillar’s investigation included interviews of all of Michael’s coworkers, many of whom found her difficult to work with. Michael claimed that her disagreement with those facts established pretext. The Court disagreed:

Michael’s disagreement with the facts uncovered in Caterpillar’s investigation does not create a genuine issue of material fact that would defeat summary judgment “as long as an employer has an honest belief in its proffered nondiscriminatory reason.” The key inquiry in assessing whether an employer holds such an honest belief is “whether the employer made a reasonably informed and considered decision before taking” the complained-of action. An employer has an honest belief in its rationale when it “reasonably relied on the particularized facts that were before it at the time the decision was made.” “[W]e do not require that the decisional process used by the employer be optimal or that it left no stone unturned.” . . . Caterpillar presented sound, nondiscriminatory reasons for the action that it took based on a reasonable investigation of events that occurred after Michael’s favorable performance review.¹⁹

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Because Caterpillar had extensive documentation of its investigation, it could reasonably rely on its conclusions with no finding of pretext or retaliatory animus.

Seeger v. Cincinnati Bell Telephone Co.²⁰ is another textbook example of the honest belief rule at work for an employer. In that case, the Court used that rule to affirm the termination of an employee who claimed retaliation under the FMLA.

Tom Seeger took an approved leave of absence under the FMLA for a herniated lumbar disc. Four days after Seeger’s doctor certified him as completely unable to work, including any light duty—which entitled him to receive paid disability leave under the employer’s policy—two of Seeger’s co-workers saw him walking, seemingly unimpaired, at the Cincinnati Oktoberfest. One of the employees, who knew Seeger was collecting paid disability leave, reported his sighting to Cincinnati Bell Telephone’s (CBT) human resources manager.

CBT conducted an investigation, which consisted of obtaining sworn statements from the two employees who saw Seeger, reviewing Seeger’s medical records, disability file, and employment history, and consulting with CBT’s internal medical manager. Based on the inconsistency between Seeger’s reported medical condition and his reported behavior at Oktoberfest, CBT terminated Seeger for “disability fraud” (overreporting his symptoms to avoid light duty and continue collecting disability payments).

Relying on the honest belief rule, the Court concluded that CBT’s termination decision did not violate the FMLA:

CBT made a “reasonably informed and considered decision” before it terminated him, and Seeger has failed to show that CBT’s decisionmaking process was “unworthy of credence.” . . . The determinative question is not whether Seeger actually committed fraud, but whether CBT reasonably and honestly believed that he did. . . . CBT never disputed that Seeger suffered from a herniated disc. . . . Seeger’s ability to walk unaided for ten blocks and remain at the crowded festival for ninety minutes understandably raised a red flag for CBT, giving it reason to suspect that Seeger was misrepresenting his medical condition in an attempt to defraud CBT’s paid-leave policy.²¹

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This case has wide implications. There are many laws that entitle employees to take time off from work: FMLA, ADA, PDA, and Title VII, to name a few.²² Many companies use surveillance to curb leave of absence abuses. I am not suggesting that you surveil every employee who takes leave from your workplace. Without a good faith belief supporting the surveillance, a court could conclude that your actions are unlawful. If, however, you have a good faith reason to test the legitimacy of an employee’s leave via surveillance or other monitoring, Seeger’s invocation of the honest belief rule will offer you some protection if you misinterpret the results of your investigation.

Courts Step In When Congress Will Not—Sexual Orientation and Gender Identity

Title VII does not, on its face, protect transgender workers from discrimination. Increasingly, however, courts have extended its protections under the umbrella of Title VII’s protections against sex-stereotyping-as-gender-discrimination, as first explained 23 years ago by the U.S. Supreme Court in its landmark Price Waterhouse v. Hopkins²³ decision:

In saying that gender played a motivating part in an employment decision, we mean that, if we asked the employer at the moment of the decision what its reasons were and if we received a truthful response, one of those reasons would be that the applicant or employee was a woman. In the specific context of sex stereotyping, an employer who acts on the basis of a belief that a woman cannot be aggressive, or that she must not be, has acted on the basis of gender.²⁴

Recently, the EEOC made what might be the most significant pronouncement to date on the issue of the protection of transgender as gender discrimination. Macy v. Holder²⁵ involved a transgender woman, Mia Macy, who claimed that the Federal Bureau of Alcohol, Tobacco, Firearms denied her a job after she announced she was transitioning from male to female.

In reinstating Macy’s Title VII claim, the EEOC concluded:

That Title VII’s prohibition on sex discrimination proscribes gender discrimination, and not just discrimination on the basis of biological sex, is important. . . . Title VII prohibits discrimination based on sex whether motivated by hostility by a desire to protect people or a certain gender, by assumptions that disadvantage men, by gender stereotypes, or by the desire to accommodate other people’s prejudices or discomfort. . . . Thus, we conclude that intentional discrimination against a transgender individual because that person is transgender is, by definition, discrimination “based on . . . sex,” and such discrimination therefore violates Title VII.²⁶

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While this opinion is not binding in courts, one cannot overstate the significance of the fact that the agency responsible for enforcing the federal EEO laws has made this broad pronouncement. Many employers operate under the belief that they are free to discriminate on the basis of sexual orientation or gender identity because Title VII lacks no facial prohibition. As this case illustrates, that belief, no matter how commonly held, might be mistaken.

Moreover, this EEOC decision is in line with the decisions of some courts that have considered this issue. The Sixth Circuit, for example, in Smith v. Salem,²⁷ reversed the district court’s dismissal of a Title VII sex discrimination claim brought by a transgendered firefighter. It found that

Sex stereotyping based on a person’s gender non-conforming behavior is impermissible discrimination, irrespective of the cause of that behavior; a label, such as “transsexual,” is not fatal to a sex discrimination claim where the victim has suffered discrimination because of his or her gender non-conformity. . . . Having alleged that his failure to conform to sex stereotypes concerning how a man should look and behave was the driving force behind Defendants’ actions, Smith has sufficiently pleaded claims of sex stereotyping and gender discrimination.²⁸

In Barnes v. Cincinnati,²⁹ the same court followed suit by affirming a jury verdict in favor of Phillip Barnes, a preoperative male-to-female transsexual who was denied a job in the Cincinnati Police Department.

In Schroer v. Billington,³⁰ the U.S. District Court for the District of Columbia reached the same conclusion. In that case, the Library of Congress had offer a position to David Schroer, until he told his future employer that he would be showing up at work as Diane. He sued for gender discrimination after the Library rescinded the job offer. The trial judge ruled that the employer is liable for sex discrimination:

The evidence establishes that the Library was enthusiastic about hiring David Schroer—until she disclosed her transsexuality. . . . The Library revoked the offer when it learned that a man named David intended to become, legally, culturally, and physically, a woman named Diane. This was discrimination “because of . . . sex.”³¹

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More recently, in Koren v. The Ohio Bell Telephone Co.,³² an Ohio federal court set out the clearest pronouncement to date that courts are taking seriously the expansion of Title VII to cover “sexuality.” The Ohio Bell Telephone Company fired Jason Koren after he missed work for his father’s funeral. Koren suspected that Ohio Bell really fired him because he is homosexual and took his husband’s last name. He sued for gender discrimination. Did the court: a) grant Ohio Bell’s motion for summary judgment because Title VII does not offer protections for sexual orientation; or b) deny the motion because Title VII does protect against the application of unlawful sex-based stereotypes? Give yourself a prize if you answered “b”:

“[A] plaintiff hoping to succeed on a claim of sex stereotyping [must] show that he fails to act and/or identify with his or her gender . . . as all homosexuals, by definition, fail to conform to traditional gender norms in their sexual practices.” Koren’s position is that changing his name upon marriage was a nonconforming “behavior” that supports his gender discrimination claim. Ohio Bell disagrees and attempts to frame Koren’s claims as a simple attempt “to bootstrap protection for sexual orientation into Title VII.” The Court agrees with Koren: homosexual males do not “by definition, fail to conform to the traditional gender norms” by changing their surname upon marriage. And here, Koren chose to take his spouse’s surname—a “traditionally” feminine practice—and his co-workers and superiors observed that gender non-conformance when Koren requested to be called by his married name.³³

Nine out of the last 10 Congresses have tried to pass a version of the Employment Nondiscrimination Act, which among other things, would add “sexual orientation and gender identity” to the list of classes protected under Title VII. It has failed each time. Courts and the EEOC, however, continue to give the LGBT community that which the legislature has rejected.

Indeed, while Title VII lacks protections for sexual orientation or gender identity on its face, employers must check the laws of their individual states and localities. Twenty-one states prohibit sexual orientation discrimination in employment, 16 of which also prohibit gender identity discrimination; another 140 cities and counties have similar laws.³⁴ Many companies have also made the private decision to prohibit this type of discrimination in their individual workplaces.

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For the uncovered, this EEOC decision signals that the time is coming when this type of discrimination will no longer be an open issue. I suggest you get on the bandwagon now, and send a signal to all of your employees that you are a business of inclusion, not one of bigotry and exclusion.

The Sinister Reach of the Cat’s Paw

Do you know what a 17^th century fable and an employment case have in common?

One would guess that the chances are pretty slim that the work of a 17^th-century French poet would find its way into a Chicago courtroom in 2009. But that’s the situation in this case as we try to make sense out of what has been dubbed the “cat’s paw” theory. The term derives from the fable “The Monkey and the Cat” penned by Jean de La Fontaine (1621-1695). In the tale, a clever—and rather unscrupulous—monkey persuades an unsuspecting feline to snatch chestnuts from a fire. The cat burns her paw in the process while the monkey profits, gulping down the chestnuts one by one. As understood today, a cat’s paw is a “tool” or “one used by another to accomplish his purposes.” Webster’s Third New International Dictionary (1976).³⁵

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In discrimination cases, the “cat’s paw” refers to a decision maker who lacks an unlawful bias but who bases the adverse employment decision on the influence of another with such a bias. The Seventh Circuit has described its interpretation of the cat’s paw as follows:

[W]here an employee without formal authority to materially alter the terms and conditions of a plaintiff’s employment nonetheless uses her “singular influence” over an employee who does have such power to harm the plaintiff for racial reasons, the actions of the employee without formal authority are imputed to the employer and the employer is in violation of Title VII. . . . [W]here a decision maker is not wholly dependent on a single source of information, but instead conducts its own investigation into the facts relevant to the decision, the employer is not liable for an employee’s submission of misinformation to the decision maker.³⁶

Courts have long debated the viability of the cat’s paw theory of liability in employment discrimination cases. In Staub v. Proctor Hosp.,³⁷ the Supreme Court finally provided some clarity. Briefly, Staub brought his claim under the Uniformed Services Employment and Reemployment Rights Act (USERRA), which, among other things, protects those in military service from discrimination upon their return to employment from active duty. Staub had been a long-time employee of Proctor Hospital before being called upon to serve in Iraq. Many at the hospital were critical of Staub’s military service because of the strain it put on those who had to cover from him in his absence. When the Vice President of HR, who held no hostility towards Staub, terminated him, he sued, claiming that although the decision maker was not personally biased against his military service, she fired him based on the hostility of Staub’s direct supervisors.

In a unanimous opinion, the Supreme Court concluded that Staub could proceed with his USERRA claim because the discriminatory animus of those critical of Staub could be imputed to the hospital’s Vice President of HR:

We therefore hold that if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA.³⁸

The Court also declined to immunize employers who undertake their own independent investigation of the circumstances leading to the adverse employment action. Instead, the Court only excuses reliance on the biased report of a supervisor if the employer independently determines that the decision was entirely justified apart from the supervisor’s input:

Thus, if the employer’s investigation results in an adverse action for reasons unrelated to the supervisor’s original biased action (by the terms of USERRA it is the employer’s burden to establish that), then the employer will not be liable. But the supervisor’s biased report may remain a causal factor if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified.³⁹

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While the Court limited its holding to USERRA, it pointed out that USERRA’s “motivating factor” causation standard is “very similar to Title VII.”⁴⁰ Indeed, in the months following the Staub decision, the lower federal courts have begun to apply its rationale (and, therefore, the cat’s paw) to employment decisions challenged under statutes other than Title VII.

For example, consider Chattman v. Toho Tenax Am,⁴¹ in which the Sixth Circuit applied Staub to reverse summary judgment in a race discrimination case. Chattman alleged that his employer’s HR director, Tullock, who recommended his termination for horseplay and fabricated that other supervisors supported the decision, was racially biased.

In support of this allegation of race-based animus, Chattman pointed to three separate incidents:

1. Tullock told a “joke” that O.J. Simpson was innocent and that Nicole Brown was killed by their son because O.J. Simpson responded to a question from his son by answering “go axe your mother.”
2. Tullock responded to another employee’s complaint that her son had gotten into trouble at school for fighting by saying, “You know what my grandmother always says about boys scuffling? That’s how the nigger graveyard got full.”
3. Tullock commented about then-Presidential candidate Barack Obama by saying, “Well, you better look close at Obama’s running mate because Americans won’t allow a nigger president.”

Even though Tullock was not the decision maker, the court concluded that a jury question existed under the cat’s paw theory:

Chattman has shown that a genuine issue of material fact exists regarding whether Tullock intended that Chattman be disciplined. There can be little doubt that Tullock desired Chattman’s termination when he made his recommendation and fabricated the agreement of the other supervisors. . . . Chattman alleges that Tullock knew that white employees engaged in horseplay but never reported any of those incidents to upper management, instead reporting the only incident on record of a black employee engaging in horseplay. Tullock was the Human Resources manager, and he actively inserted himself in the decisionmaking process. He both misinformed and selectively informed . . . about the incident. A reasonable fact finder could find Tullock’s actions were a proximate cause of the adverse decisions.⁴²

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Blount v. Ohio Bell Telephone Co.⁴³ provides another good example of the cat’s paw in action. In Blount, two former Ohio Bell employees claimed that their employer discharged them in retaliation for taking protected leave under the FMLA. They argued that their managers punished FMLA users more severely than nonusers who engaged in the same alleged workplace misconduct. Ohio Bell, however, argued that those managers lacked the discretion to fire the plaintiffs and that the decision to terminate was made higher up the supervisory chain. The Court, however, concluded that the plaintiffs presented enough evidence to defeat the employer’s motion for summary judgment:

Moreover, even if the decision to punish and terminate resided higher in the supervisory chain, as Defendants argue, the animus of the Center Sales Managers can be inferred upwards where it had the effect of coloring the various adverse employment actions in this suit. See Staub v. Proctor Hospital (holding that discriminatory animus can be inferred upwards where the employee who makes the ultimate decision to punish does so in reliance upon assessments or reports prepared by supervisors who possess such animus).⁴⁴

What is the practical takeaway for employers in handling the implications of the cat’s paw? You must know who you have managing and supervising your employees. Companies do not make personnel decisions in a vacuum. Executives often rely on the front-line managers and supervisors for advice on who and when to discipline or fire. Yet, under Staub, businesses are on the hook for the discriminatory animus of these managers and supervisors, even if they have nothing to do with the ultimate decision. You never want a bigot managing your employees. The cat’s paw, however, provides employers added incentive to purge them from your managerial ranks.

Moreover, if employers will be liable for the animus of managers and supervisors in all but the most unconnected of decisions, then businesses should get started training those managers and supervisors on their EEO responsibilities. If courts will hold you responsible for their actions, you want some peace of mind that you did everything you could to guide those actions.

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Going forward, employers have to be very wary of the cat’s paw. The Staub Court’s holding hinges on ideals such as “intent” and “proximate cause,” which are almost always fact-based inquiries. Because it is very difficult for an employer to win summary judgment on these issues, the Court has likely turned nearly every “cat’s paw” case into a jury case—an expensive proposition for employers.

Family Responsibility Discrimination

In October 2009, Working Mother magazine named Novartis Pharmaceuticals one of its 100 best companies for working families, lauding its flexible work schedules, job-sharing, telecommuting, and customizable childcare offerings.⁴⁵ According to a federal jury in Manhattan, all was not what it seemed at Novartis. That jury found that Novartis had discriminated against women over pay and promotions. The cost to Novartis was staggering—$3.3 million in compensatory damages to the 12 named plaintiffs, and another $250 million in punitive damages to a class of 5,600 female sales representatives and entry-level managers. The allegation that perhaps led the jury to award more than a quarter billion dollars was this gem from a Novartis manager explaining his preference against hiring young women: “First comes love, then comes marriage, then comes flex time and a baby carriage.” That statement has not only cost Novartis a whopping 2.6% of its annual revenue, but also its reputation as a great workplace for working moms.

Three years earlier, a Cuyahoga County, Ohio, jury, swayed by this same pro-family sentiment, awarded a former assistant manager for Kohl’s Department Stores $2.1 million. The plaintiff, Teresa Lehman, claimed that Kohl’s discriminated against her because of her parenting role for her two young children. According to the Cleveland Plain Dealer, the evidence at trial showed that in a “two-month period, five store-manager jobs went to less-experienced and less qualified men than Lehman, or to women with no children or women who assured their bosses that they would have no more children.”⁴⁶ At the same time, Lehman, who had previously been told by her bosses that she was manager material and on track for a promotion, was passed over and transferred to less desirable stores. Witnesses testified at trial that Lehman’s bosses asked her questions such as: “You’re not going to get pregnant again, are you?” “Did you get your tubes tied?” “I thought you couldn’t have any more kids?” “Are you breast feeding?” and “Are you having any more kids?”⁴⁷ In a lesson that all employers should take to heart, the Cleveland Plain Dealer quoted juror Linh Duong’s explanation of the panel’s sentiments: “I think she was very poorly treated because she was pregnant, because she wanted to have a family.”⁴⁸

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Employers must take these issues seriously. Whether you call these issues work/life balance, or maternal profiling, or the glass ceiling, employers that force employees to choose between their families and their jobs face the wrath of judges, juries, the EEOC, and the court of public opinion.⁴⁹

Yet, if you scour the federal antidiscrimination laws, you will not find “caregiving” or “family responsibilities” as a protected characteristic. Nevertheless, according to the EEOC’s Unlawful Disparate Treatment of Workers with Caregiving Responsibilities, employers that disparately treat employees who have caregiving responsibilities may be guilty of actionable discrimination.⁵⁰

According to the EEOC, the Guidance is intended to address the connection between caregiving roles, such as motherhood, and employment discrimination. It does so, not by creating “a new protected category” but by illustrating “circumstances in which stereotyping or other forms of disparate treatment may violate Title VII or the prohibition under the ADA against discrimination based on a worker’s association with an individual with a disability.”

As examples of family responsibility discrimination, the EEOC provides a 27-page laundry list that should be HR 101 for all but the most myopic of employers:

• Asking female applicants, but not male applicants, if they have children (sex discrimination);
• Making derogatory comments about a female employee after she becomes pregnant (sex discrimination);
• Quizzing a female job applicant on how she would handle her job and her family at the same time (sex discrimination);
• Forcing pregnant employees to take unpaid leaves of absence (sex/pregnancy discrimination);
• Refusing to permit a male employee to take permissible paternity leave or denying a request for part-time status to enable one’s wife to return to work full-time, because it is not “masculine” (sex discrimination);
• Permitting a white employee time off to care for an ill child, but not a black employee (race discrimination);
• Failing to hire an employee who has to care for a disabled child (disability discrimination);
• Repeated negative comments about breastfeeding, motherhood, or pregnancy (sexual harassment).

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Two years after publishing its initial guidance defining and discussing caregiver discrimination, the EEOC published a best practice guide for employers. In its Employer Best Practices for Workers with Caregiving Responsibilities,⁵¹ the agency offered some guidelines that all employers should consider to avoid potential family responsibility bias claims:

• Develop, disseminate, and enforce a strong EEO policy that provides examples of illegal conduct and identifies a contact person for questions or complaints.
• Ensure that managers at all levels are aware of, and comply with, the organization’s policies.
• Respond to complaints of discrimination efficiently and effectively.
• Protect against retaliation.
• Focus on qualifications, not characteristics.
• Develop specific, job-related qualification standards for each position that reflect the duties, functions, and competencies of the position.
• Identify and remove barriers to re-entry for individuals who have taken leaves of absence from the workforce.
• Ensure that employment decisions are well-documented and transparent (to the extent feasible).
• Monitor compensation practices and performance appraisal systems for patterns of potential discrimination.
• Reassign job duties that employees are unable to perform because of pregnancy or other caregiving responsibilities.
• Provide reasonable personal or sick leave.

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What is the bottom-line takeaway for employers on the issue of caregiver discrimination? To avoid being subjected to these types of claims and to be able to defend them effectively, employers must adopt more flexible policies and a more open mind on the role of caregivers in the workplace and the balance between careers and families.

Public Policy

Many states have recognized a common-law exception to the at-will nature of employment when a discharge “contravenes the dictates of public policy.”⁵² In other words, employees are not limited to specific statutes when challenging a termination decision. If a termination jeopardizes or places at risk a public policy embodied in a statute or regulation that lacks a specific remedy for an aggrieved employee, the common law of most states will permit an employee to bring a common law claim challenging the discharge as wrongful.

These cases are often fact specific, and their outcome may depend on whether your particular state recognizes that the public policy at hand gives rise to such a claim. For example, in my home state, Ohio, a plaintiff must state with particularity the clear public policy placed in jeopardy by the termination or face summary dismissal of the lawsuit. In Dohme v. Eurand Am., Inc.,⁵³ the plaintiff merely claimed that his termination “jeopardized workplace safety.” The appellate court saved his claim by articulating a public policy favoring workplace fire safety, supported by citations to various state and federal statutes and regulations. The Supreme Court, however, concluded that is not a court’s job to engage in a search and rescue for a public policy to support a wrongful termination claim:

As the plaintiff, Dohme has the obligation to specify the sources of law that support the public policy he relies upon in his claim. Because Dohme did not back up his assertion of a public policy of workplace safety in his summary judgment documents with specific sources of law, he has not articulated the clarity element with specificity. Unless the plaintiff asserts a public policy and identifies federal or state constitutional provisions, statutes, regulations, or common law that support the policy, a court . . . may not fill in the blanks on its own.⁵⁴

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Examples of public policies that various state courts have concluded support a common law wrongful discharge claim include:

• Filing a workers’ compensation claim.⁵⁵
• Consulting with an attorney,⁵⁶ or threatening to consult with an attorney.⁵⁷
• Complaining about product safety.⁵⁸
• Serving on a jury contrary to an employer’s wishes.⁵⁹
• Refusing to take a polygraph test.⁶⁰
• Refusing to alter state-mandated pollution control reports.⁶¹
• Refusing to commit perjury.⁶²
• Refusing to engage in criminal activity.⁶³
• Refusing to disclose confidential information.⁶⁴

One universal point that is worth clarifying is that these claims are called wrongful discharge claims for a reason. The challenged decision must be a discharge. There is no such animal as a common law wrongful refusal to hire claim. In Berrington v. Wal-Mart,⁶⁵ the court considered the issue of whether a company could be liable for refusing to hire someone because he filed an unemployment claim. William Berrington claimed that a Kalamazoo, Michigan, Wal-Mart’s refusal to rehire him after he filed an unemployment claim related to a prior termination wrongfully violated the state’s public policy.

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The Sixth Circuit disagreed. It ignored (more or less) the issue of the public policy at issue, and instead focused on the nature of the employment decision at hand—a refusal to hire.

Berrington’s appeal presents us with the question of whether Michigan law recognizes a public policy cause of action for an employer’s wrongful refusal to rehire because an individual claimed unemployment benefits…. The common denominator in all the recognized public policy exceptions to at-will employment is the existence of an employment relationship. An employee’s right to be hired or rehired by an employer, on the other hand, has never been recognized as actionable, under common law on public policy grounds. . . . In fact, neither party has been able to provide a single decision from any jurisdiction enforcing a retaliatory failure to rehire claim in state common law or public policy, absent some other statutory basis.⁶⁶

While this case was decided under Michigan law, it has implications beyond that state. As the opinion points out, there exist no cases from any jurisdiction recognizing a failure to hire claim under state common law or public policy.⁶⁷

While you might not be presented with the issue of refusing to rehire an ex-employee who filed an unemployment claim, you may have other reasons not to hire someone. For example, you might decide that a potential employee is tainted because he or she filed a lawsuit against a previous employer. If the lawsuit raised issues protected by the employment discrimination statutes, for example, those same statutes’ antiretaliation provisions likely protect the employee from failure to hire on that basis. What if, however, the prior lawsuit involved something other than protected activity in its own right (e.g., a common law tort such as invasion of privacy, defamation, or intentional infliction of emotional distress)? If a prospective employer locates the old lawsuit on the Internet and refuses to hire someone it perceives as a potential problem down the road, Berrington suggests that the employer might be off the hook for any potential liability stemming from the refusal to hire. If state common law does not recognize a failure to hire claim, as Berrington suggests, then lawsuits against prior employers should be acceptable fodder for hiring decisions (the civil rights statutes notwithstanding).

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Who You Gonna Call (When You Are Sued)?

This chapter has discussed how to follow the various laws when terminating an employee, Even if, however, you follow all of these guidelines, the odds are stacked against you. Indeed, if I can make one guarantee (and, trust me, lawyers are not in the business of making guarantees about anything), it is that if you are a business you will get sued by an employee or ex-employee. It is inevitable.⁶⁸ You can abide by every law, follow every best HR practice, and be the number one workplace in America according to every business publication. None of it will matter. You will disgruntle one of your workers, and when you do, he or she will sue you. It is the cost of doing business in the United States in the 21st century.

If the employee is claiming discrimination, the process might start with a charge of discrimination with the EEOC or its equivalent state agency. In fact, if an employee wants to file a lawsuit claiming a violation of a federal employment discrimination statute (Title VII, ADA, ADEA, GINA), he or she must first file a charge with the EEOC, exhaust that administrative process, and receive what is called a “Right to Sue” letter from the agency. Without following this process, the federal claims are barred. Most states follow this same process.⁶⁹

Suppose you have just received notice from the EEOC (or its state equivalent) that an employee has filed a charge of discrimination against you. What happens next is often confusing to businesses, and mistakes can have serious consequences in later lawsuits.

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Starting with the Basics—What Happens When An Employee Files A Discrimination Charge?

EEOC charges of discrimination follow a predictable pattern.

1. The EEOC will notify you that a charge of discrimination has been filed against you. The charge packet will include the name and contact information of the investigator assigned to your case.
2. The charge will likely include an offer to submit the case to voluntary mediation. Mediation can be useful for two purposes—to see if you can resolve the charge early and cost-effectively, or to obtain some early fact gathering from the charging party.
3. Absent mediation, the case will proceed to an investigation. During the investigation, you will be required to submit a written statement of position. This document is your chance to tell your side of the story. It is the most critical piece of the agency investigation. More on this in a bit.
4. The investigation may also include a request for information (documents), a request for an onsite visit, or contact information for witness interviews of management and non-management personnel. Do not assume, however, that you have to turn documents over, open up your business, or make people available simply because the agency is asking. The requests still must comply with basic notions of relevancy and discoverability.
5. Once the investigator has completed the investigation, the EEOC will make a determination on the merits. If the agency determines that there is no reasonable cause to believe that discrimination occurred, the charging party will be issued a letter called a Dismissal and Notice of Rights. The letter tells the charging party of the right to file a lawsuit in federal court within 90 days from the date of receipt of the letter (with a copy to the employer).
6. If EEOC determines there is reasonable cause to believe discrimination has occurred, both parties will be issued a Letter of Determination stating that there is reason to believe that discrimination occurred and inviting the parties to resolve the charge through an informal conciliation process. If conciliation fails, the EEOC has the authority to file a lawsuit in federal court or issue the same Notice of Right to Sue, releasing the employee to file his or her own lawsuit within 90 days. The process is different with the state agencies and varies from state to state.

There is an inclination within companies to go it alone in EEOC and other agency proceedings, believing that the expense of hiring an attorney is not justified at this early junction. I cannot more strongly caution against this urge.

The statement of position is the critical piece of the agency investigation. It not only tells your story, but it locks in your story because it is discoverable by the employee in a later lawsuit. One of the easiest ways to create a jury question on the issue of pretext and lose a summary judgment motion is to give a reason for termination different than that set out in your EEOC position statement.

You should assume that every charge—no matter the merit, or lack thereof—will turn into a lawsuit. Employment litigators can interview witnesses, review policies and personnel files, and make decisions as to your best defense. Not involving an attorney as early as your first receipt of the charge of discrimination can cost valuable insight into your best effort to win the case.

Regardless of whether the case starts with an agency charge or a court complaint, there are other steps you should take immediately upon receiving notice.

1. A litigation hold should be put in place to preserve emails, other electronic records, and paper documents that could bear on the litigation. Key documents should be gathered and secured. Your attorney can help make sure that documents are not deleted or destroyed, a flub that could submarine your entire case. Employment lawsuits are not as document intensive as some other disputes in which businesses are involved. Nonetheless, the documents are crucial. They provide a roadmap to the justification for the termination or other employment action, and the reasonableness of the employer’s actions. All key documents (personnel files, handbooks, other policies, investigative reports, emails, and other communications) should be gathered and set aside.
2. Witnesses should be identified and told that they should not communicate with anyone other than counsel about the case. If any employee is at risk for leaving your organization, potential testimony should be memorialized in an affidavit while the employee is still on favorable terms and under your control.
3. If you have employment practices liability insurance coverage, you should put your carrier on notice so that coverage is not jeopardized and any defense costs are properly credited against your deductible. If you have purchased a rider that permits you to select counsel, make sure you enforce that right. If you have not purchased that protection, consider having a candid conversation with the insurance company about the counsel they will choose for you. Employment law is highly specialized. Retaining counsel that knows the ins and outs of this area of law is the best way to keep costs down as much as possible, while at the same time doing everything possible to defend the company aggressively.

You’ve Been Sued In Court. Is There Anything Else You Should be Doing?

Additionally, there are a few other steps specific to claims that are filed in court.

1. An answer or other response must be timely filed, which, in federal court, means you have 21 days from the date you receive the summons and complaint to file your response.⁷⁰ Your mileage under state rules of civil procedure might vary.⁷¹ You could waive the right to file certain counterclaims and raise certain jurisdictional and other defenses by missing this critical deadline.
2. If you want to remove a case from state court to federal court, you have only 30 days to act.⁷² For the uninitiated, removal is a legal process through which a defendant can take a case filed in state court to federal court if the plaintiff could have originally filed the action in federal court. This is a hard-and-fast deadline, with no extensions possible. Counsel needs to be involved early to analyze whether the case is removable and to prepare the necessary paperwork.
3. Depending on the size and notoriety of the case, you may want to get out of the blocks early with some public relations. That message has to be crafted and managed by counsel so that it does not hurt a successful defense.

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Tripping on any one of these important early steps can have serious consequences on your overall defense. Resist the do-it-yourself urge and “lawyer up” as soon as you find out there is a claim against you.

What About Documents?

Another reason to “lawyer up” as early as possible in the process is because a lawyer can help you ensure that key documents related to the lawsuit (or potential lawsuit) are preserved and not destroyed. We ensure this preservation via a document called a “litigation hold.” Its purpose is to stop the destruction of potentially relevant or discoverable documents and information pursuant to a retention policy or otherwise. With the advent of electronic discovery, it is incumbent upon litigants to employ litigation holds as soon as claim or potential claim is reasonably clear. Otherwise, relevant documents might be destroyed, leading to sanctions such as adverse inferences, dismissal of claims, or default judgments. In other words, failing to implement a litigation hold is a quick way to focus your case away from the law and the facts and onto discovery issues.

The following are ten practical tips that should be included in any meaningful litigation hold during active or pending litigation. This document should be sent to anyone who you believe might have documents in his or her possession, control, or custody that are relevant to the claim. You should designate one company employee to be responsible for the dissemination of the hold, to answer any questions from employees about the litigation hold and their duties to preserve information and documents, and to collect any documents from employees.

1. Describe the pending claim, both by the parties involved and the general subject matter(s) alleged.
2. Identify the recipient of the hold letter as someone who may have personal knowledge regarding the matter or who may be in possession of or have access to information or documents potentially relevant to the matter.
3. Put your IT department (or other employees responsible for the maintenance of your network and computer systems) on notice of the litigation hold.
4. Order the suspension of any deletion, overwriting, or any other destruction of electronic information relevant to the matter that is under the recipient’s control. This task will be much more daunting for an IT manager than an individual employee’s workstation.
5. Broadly define the scope of covered information to include all documents, records or data of every kind residing or recorded (intentionally or unintentionally) in any medium or location other than within a person’s memory: paper, magnetic tape, photographs, maps, diagrams, applications, databases, micro-film, microfiche, emails, intranet, instant messages, blogs, voicemails, metadata, and any other electronic means of communication that are created, stored or received on the company’s computers or network systems or any other devices (phones, PDAs, applications or storage devices) or systems capable of storing electronic information.
6. Instruct that the recipient search all information for anything relevant or potentially relevant to the claim. Emails and other electronic information should be segregated in a PC or Outlook folder and all paper documents in a hard file.
7. Unlike what reality TV might suggest, at least in the context of pending or active litigation, hoarding is not a bad thing. Tell recipients to err on the side of oversaving.
8. Alert recipients to the risk to the company and its employee for failing to heed the litigation hold request.
9. Ensure that the recipient signs a verification signifying the receipt the litigation hold.
10. Periodically recirculate the litigation hold to ensure continuing compliance.

Concluding Thoughts: Document, Document, Document

The facts of Weimer v. Honda of Am.⁷³ are straightforward. James Weimer requested FMLA leave from Honda after injuring his head at work, which Honda approved. After Weimer returned to work, two of his neighbors reported to Honda that they had seen Weimer build a new front porch on his home while on leave. Honda conducted an investigation, which included surveillance video. During the investigation, Weimer admitted to working on his porch during his FMLA leave. Honda terminated him for misrepresenting his need for medical leave.

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The Sixth Circuit held that the jury, which found in Honda’s favor, was properly instructed that Honda could prevail if it was wrong as to its stated reason for discharge, but its belief was honestly held:

Weimer asserts that the only way the jury should have been able to decide against him was to conclude that he had deliberately lied to the physicians to go on FMLA leave, and he did not actually have a serious health condition. If Weimer engaged in personal behavior at home that was beyond the job-related restrictions given to him by his physicians, he argues he could do so at his own risk. . . . When considering whether Honda terminated Weimer for a legitimate reason, the jury was instructed that the issue was not so much whether Weimer actually lied, but rather whether Honda reasonably and honestly believed that Weimer lied. . . . Honda presented evidence of its investigation into Weimer’s alleged misrepresentations, including the video surveillance tape, interviews with eye-witnesses who saw Weimer working on his porch, and who reported that Weimer admitted that he came back to work because he realized he had been “busted,” and interviews with Weimer himself. Weimer’s own testimony at trial included contradictory statements about his activities that would lead a reasonable fact finder to question his credibility. There was sufficient evidence for the jury to conclude that Honda reasonably relied on the facts before it at the time its decision to terminate Weimer was made.⁷⁴

The takeaway for employers from the Weimer case is to make sure that all reasons in support of a termination are documented. Because Honda could prove that Weimer violated its conduct standards, it became irrelevant whether he had actually lied about his need for FMLA leave. All that matter is that Honda could backup its conclusion by its investigation. If you can verify the legitimacy of a termination rationale, a court is unlikely to second guess you, even if your judgment turns out to be incorrect after the fact.

Perhaps the best takeaway for employers is this passage, taken from Abdulnour v. Campbell Soup Supply Company,⁷⁵ a national origin discrimination case brought by an Iraqi national fired by Campbell Soup for job performance that was less than “M’mm M’mm Good.”

As the record reflects, there was a myriad of problems with Plaintiff’s job performance and treatment of his subordinates that justified Defendants’ decision to fire Plaintiff. This, however, is not what Defendants told Plaintiff during their final meeting. Defendants did not tell Plaintiff he was being fired for poor performance, but rather because of an unspecified “personality conflict.” While the law does not specifically require an employer to list every reason or incident that motivates its decision to terminate an employee, we are skeptical of undocumented accounts of employee conduct that may have been created post-termination. Under the facts of this case, however, ample evidence exists that indicates that Plaintiff’s performance was inadequate to meet his job requirements. In sum, Plaintiff has not put forth sufficient evidence for a jury reasonably to conclude that Defendants did not have an honest belief that Plaintiff performed his job duties poorly.⁷⁶

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Despite the lack of documentation, the Sixth Circuit upheld the trial court’s dismissal of the lawsuit on summary judgment because Abdulnour could not come forward with any evidence, other than his own subjective disagreement, that Campbell Soup did not honestly believe in the reasons proffered for his termination. Clearly, however, as the quote above demonstrates, the appellate court was troubled by the lack of documentation in Abdulnour’s personnel file for the alleged performance deficiencies. It is safe to assume that if Abdulnour could have come forward with any evidence at all to support his allegation of pretext, the court would not have hesitated to ding the company for its poor documentation.

The lesson to be learned is basic but one that cannot be repeated enough. Any employer’s greatest defense against a claim of discrimination is a well-documented history of performance problems to support the termination, coupled with comparable treatment of similarly situated employees. When in doubt, document all performance problems with all employees. If the discipline or counseling is oral only, document that fact also. Have all employees sign off on all such records, and if the employee refuses to signify the receipt of the discipline, document that failure as well. The Sixth Circuit in the Abdulnour case cannot be any clearer that when an employer relies on undocumented accounts of misconduct to support a termination, it is fair for the court and a jury to draw the inference that those accounts were created post-termination. The Abdulnour decision is the anomaly, and almost universally cases with poorly documented personnel files will not end well for the employer. Campbell Soup dodged a bullet; do not put your company in similar risk.

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