By Lorene D. Park, J.D.
Did you think that giving an employee a transfer he requested or perhaps disclosing an employee’s identity and lawsuit in SEC filings, as required by regulations, could not possibly be adverse employment actions supporting federal discrimination or retaliation claims? Think again. These and other actions deemed adverse enough to support liability may surprise you. And if recent cases are an indication, it is getting easier for employees to prove they were subject to an adverse action. That said, there are also cases where courts have ruled that actions most people would think were adverse did not qualify as such, leaving employers with no clear definition.
As to the employee transfer example, Supreme Court Justice Alito recently dissented from the majority’s refusal to review a Sixth Circuit case, Kalamazoo County Road Commission v Deleon, in which the appeals court concluded that transferring an employee to a lateral position for which he had applied was an adverse employment action for purposes of his discrimination case. The appeals court held that the key inquiry was not whether the transfer was requested but was whether the “conditions of the transfer” would have been “objectively intolerable to a reasonable person.” The employee had alleged that, when he applied for the position, he would have requested a raise, because the transfer involved daily exposure to toxic diesel fuel and soot. He developed bronchitis, had frequent headaches, and occasionally blew black soot from his nostrils.
Believing that the Sixth Circuit’s decision should be reversed, Justice Alito’s January 12, 2015, dissent referred to an old maxim: “Be careful what you wish for; you might receive it.” As it stands now, he lamented, as a consequence of this “unprecedented” decision that was “clearly contrary to the statutes on which the claims are based,” in the Sixth Circuit, “employees need not be careful what they ask for because, if their request is granted and they encounter buyer’s regret, they can sue.”
Adverse actions include more than you thought. If giving an employee something he asked for could be considered an adverse employment action, it seems reasonable to consider what other seemingly normal actions might support a discrimination or retaliation claim under federal law. It bears noting that discrimination and retaliation claims have different standards for what constitutes an adverse action. For discrimination claims, an adverse action typically involves a material change in the terms, conditions, and privileges of employment (termination, demotion, lower pay, failure to hire, etc.). Retaliation requires less: All that usually is required for a retaliation claim is that the employer took an action likely to dissuade a reasonable employee from engaging in statutorily protected activity.
As to both types of claims, recent cases suggest that courts are giving plenty of wiggle room for creative lawyering. For example, courts found triable questions on whether the following were adverse actions:
- Identifying by name, in a publicly available SEC filing, a former employee who filed an EEOC charge. The SEC required the employer to disclose material legal proceedings, including identifying the parties, but the employer previously used the term “former employees” (Greengrass v. International Monetary Systems, Ltd., 7th Cir.).
- Requiring an applicant to fill out new I-9 form on tight deadline (Smith v. State of California, N.D. Cal.)
- Taking away telecommuting privileges was an adverse action for a retaliation claim, but not for a discrimination claim (Stone v. Louisiana Department of Revenue, 5th Cir.).
- Delaying an employee’s return to work (ostensibly for more paperwork) following leave for surgery (Lewis v. Boehringer Ingelheim Pharmaceuticals, Inc., D. Conn.).
- Having an employee arrested on charges of theft that were allegedly false (Rivera v. Balter Sales Co., Inc., S.D.N.Y.)
- Taking no action when coworkers shunned an employee (Clopton v. Animal Health International, Inc., W.D. Tex.)
- Relocating an employee to an office that required a longer commute (Webb v. Round Rock Independent School District, 5th Cir.; Fleming v. Purcell Painting and Coatings Southwest, Inc., E.D. Cal.; Turner v. Parker Security and Investigative Services, Inc., M.D. Ga.).
- Disclosing to an employee’s colleagues by email that he was the whistleblower behind an SEC investigation (Halliburton, Inc. v. Administrative Review Board, 5th Cir.).
The flipside—actions surprisingly not considered materially adverse. To make things even less clear, there also are many cases in which an employment action would appear to an average person to be adverse, but not to a court.
- Issuing a written reprimand or warning (Thibodeaux-Woody v. Houston Community College, 5th Cir.; Moore v. Marriott International, Inc., D. Ariz.)
- Subjecting an anesthesiologist to peer review by other physicians (Romero v. County of Santa Clara, N.D. Cal.).
- Placing an employee on a performance improvement plan (Bosco v. Lincare, Inc., M.D. Ga.).
- Subjecting an employee to internal and criminal investigations (Morshed v. County of Lake, N.D. Cal.). (As with most of these, the opposite result has also been reached (Richardson v. New York State Office of Mental Health, N.D.N.Y.).)
Level the terrain. Given that litigants can be creative in what they argue constitutes an adverse employment action, and some courts are going along for the ride, employers are well advised to take a broad view as well. Just remember that, with respect to any arguably adverse action, context matters. Thus, while courts may be all over the map as to what constitutes an adverse action, employers can still level the terrain (i.e., take a consistent approach to all employees).
For example, termination is the most classic example of an adverse employment action, yet many cases arising from allegedly unlawful terminations still fail before reaching a jury because the circumstances did not suggest unlawful intent. Most often, this is because similarly situated employees who engaged in similar conduct were also terminated. With that in mind, when it comes to any change in how an employer treats an employee, in an employee’s work environment, or in his or her terms or conditions of employment, consider the following:
- Be impartial and consistent; treat similarly situated employees in the same manner (Take a broad view of who is similarly situated. It could be those performing similar duties, working under the same supervisor, having a similar discipline history, and the like).
- Follow your own policies and standard procedures in taking a course of action or deciding on one. If the standard practice has been to deviate from a written policy (e.g., allowing someone to work from home when the policy prohibits telecommuting), change one or the other to be consistent.
- If making a change in a policy or prior practice, ensure that the change is fairly applied to all employees and has no connection (temporal or otherwise) to an employee’s protected activity (as was arguably the case in Greengrass).
- Be able to justify any discipline, relocation, change in assignments, and change in the terms and conditions of employment, or other significant employment action with a legitimate business reason.
- Document your reasons for the action.
- If an employee complains about the action, listen to the employee’s point of view; thoroughly investigate if the employee complains of discrimination or retaliation. Be sure to provide an avenue for complaints that includes more than just a direct supervisor.
- Train supervisors and decisionmakers on all of the foregoing.
While there is no sure-fire defense that applies in all circumstances, taking these steps could go a long way in helping avoid liability, particularly where courts appear to be broadening their view of what constitutes an adverse action supporting a federal lawsuit.
A Seattle bus driver arrived for work one day carrying a junior archery set still in its original packaging. He brought the set to work because the store where he intended to return the gift (it had been bought for a friend’s son) was near where he typically took his break. The set consisted of a junior-sized bow, two metal tipped arrows, and a plastic carrying case (Amalgamated Transit Union, Local 587 and King County Metro Transit, Nov. 21, 2014, Robert Landau, Arbitrator).
The shop steward saw the archery set, warned the bus driver that it might be considered a weapon, and then reported the incident to the window dispatcher, who helped launch an investigation. By the time management began making inquiries, the bus driver had returned the set to the store, as originally intended. Upon being confronted by the inquiry, the driver said that he knew that the he could not bring weapons to work but that this was a toy intended for children. The employer disagreed and terminated him for violating the workplace violence prevention policy, at which point he filed a grievance.
According to the employer’s violence prevention policy, employees were prohibited from using, threatening, or possessing a weapon while on duty. It defined “weapon” as any object or instrument “designed in such a manner to inflict harm or injury to another person, or used in a manner threatening harm or injury to another person.” In this case, because the set was never used threateningly, the arbitrator’s decision depended upon whether it was “designed to inflict harm or injury.”
The employer argued that the packaging warned that the set was not a toy and that the store kept the product in a glass case under lock and key. The arbitrator, however, thankfully took a rational approach and concluded that the set was designed to teach children eight years and older about archery and shooting at targets rather than to inflict harm or injury. The fact that a person could harm someone else with the set, if used improperly, did not transform it into something that had been designed to inflict harm. The arbitrator also pointed out that the employer failed to give the employee notice that the item would be considered a weapon and could subject him to termination. For all of those reasons, plus the fact that the employee had a 23-year clean employment record, the grievance was sustained and the employee was ordered to be reinstated and made whole again, including back pay.
A recent opinion from the Sixth Circuit should send employers, especially those in Kentucky, Michigan, Ohio, and Tennessee, scurrying to dust off their employment policies and handbooks and take a peek at the language therein regarding FMLA eligibility. In this case, the appeals court ruled that a county road commission’s statement in its personnel manual—that full-time employees who had “accumulated 1,250 work hours in the previous 12 months” were eligible for FMLA leave—without qualifying that they would only be covered if they worked “at, or within 75 miles of” a site employing 50 or more employees, subjected it to potential liability for an employee’s FMLA claim.
Both the federal appeals court and the lower court agreed that the employee was not an “eligible employee” under the FMLA because his employer did not employ at least 50 employees at or within 75 miles of his workplace at the time he sought leave. Despite this, the appeals court found that it was up to a jury to decide if the road commission was “equitably estopped” from denying the employee’s eligibility.
Deteriorating relationship. In this case, two years after the long-term employee started reporting to the general superintendent, their relationship began deteriorating. He was ultimately terminated after he failed to submit a required assignment.
Heart attack? According to the employee, he missed the deadline for turning in the report because he was experiencing what he believed to be symptoms of a heart attack and instead of completing the “brief finishing touches” on the assignment, he went to the hospital and was admitted for observation. A few days later, an employer representative sent FMLA paperwork to him, telling him he was eligible for FMLA leave. Three days after that, he was terminated.
He then sued, alleging among other things, that his employer interfered with his right to FMLA leave and retaliated against him for taking leave. Finding that he was not an eligible employee under the FMLA, the district court dismissed his claim on summary judgment.
While the appeals court agreed that he wasn’t an eligible employee, it pointed out that in certain circumstances, an employer’s statements regarding an employee’s FMLA eligibility can bar the employer from raising non-eligibility as a defense. In order to prevail on such “equitable estoppel” an argument, the employee had to show a misrepresentation of material fact, his reasonable reliance on it, and that such reliance resulted in a detriment to him.
Misrepresentation. The employer’s personnel manual contained such a misrepresentation. It stated that covered employees were those who were “full-time employees who have worked for the Road Commission and accumulated 1,250 work hours in the previous 12 months.” That language was “unambiguous and unqualified,” the court explained, stating that employees like the employee here who had logged the requisite hours in the year “are covered by the FMLA and are eligible to apply for FMLA benefits.” While the employer could have qualified that language, it did not.
Reasonable reliance. The employee also presented evidence that he reasonably relied on the manual’s language. He submitted a sworn affidavit stating that if he had known he was not entitled to FMLA leave, he would have made those “brief finishing touches” to the assignment in spite of his illness. He also attested that he relied on the policy in the manual in taking leave and that he believed he was eligible for leave. To the court, this was “sufficient to create a material factual dispute on the reliance element.”
While the employer argued the employee’s statement that he sought treatment because he believed he was covered was not credible, and the court agreed that such an attack was “certainly a fair one,” the credibility of his statement was ultimately a question for the jury. The court was unwilling to find that the employee had behaved unreasonably in relying on the eligibility statement in the manual. “Simply put,” the court explained, “a reasonable person in” the employee’s “position could fairly have believed that he was protected by the FMLA.” And, in fact, the employer itself had concluded that the employee was eligible and had “twice communicated that conclusion to” the employee.
Detriment. Finally, there was evidence that the employee “suffered a detriment” based on that reliance. He was fired, in part, because he missed that deadline and he attested that he would have satisfied it had he not relied on the statement in the manual regarding eligibility.
Employer takeaway. This case should serve as a reminder of the importance of conducting regular legal reviews of your employee handbooks and policies, and especially your FMLA policy. As the Sixth Circuit stated, the road commission could have qualified its statement concerning employee eligibility by adding that its full-time employees would only be covered by the FMLA if they worked at or within 75 miles of a site at which it employed at least 50 employees. Courts have recognized that such qualifying language may effectively communicate to employees that they are assured of eligibility only if the FMLA 50/75 employee threshold is met. The road commission’s failure to do so may prove to be quite costly.
By Lisa Milam-Perez, J.D.
“It is declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining.” So goes the preamble to the National Labor Relations Act, NLRA Sec. 1, enacted in 1935. The statute’s stated purpose: to restore “equality of bargaining power between employers and employees.”
I can’t help but wonder what the labor landscape might look like were we to hold this statement of legislative purpose in the sacrosanct esteem with which we’ve endowed the stated national policy in favor of arbitration, as embodied in the Federal Arbitration Act. If our regard for the sanctity of contracts applied to pension plans and retiree healthcare as staunchly as to mandatory “agreements” to arbitrate (individually, of course) all claims arising from employment.
“The inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries.”
I can’t help but wonder what the employment landscape might look like were workers’ “actual liberty of contract” on equal footing with the oft-stated “strong policy in favor of enforcing arbitration agreements.” Would national restaurant chains impose restrictive covenants on front-line sandwich makers? Would a dairy farm sue to enforce the noncompete agreement of a bovine inseminator who couldn’t read or write English? Would a judge shrug his shoulders and rubber-stamp a one-sided contract between a janitor and a national corporation as just “a fact of modern life”?
The latter happened recently in Sanchez v CleanNet USA Inc.. In that decision, a janitor “franchisee” of a nationwide commercial cleaning company was forced to individually arbitrate his claims that he was improperly classified as an independent contractor (and thus deprived of wages due) and fraudulently induced into signing on to a franchise agreement. It’s the latest ruling in a string of cases in which “franchisee” janitors are challenging the label, which deprives them of the benefit of wage laws and other statutory employment protections.
The janitor in this case, a Spanish speaker with a limited education, purchased a franchise “package” of $2,500 in monthly billing for $11,800. He paid with $6,000 of his own (borrowed) money, and the remainder through a $5,800 loan from CleanNet at 9 percent interest. At a meeting to finalize the deal, he met with a Spanish-speaking company rep to discuss its terms in Spanish, then initialed every page of a 41-page franchise agreement, written in English, and signed a statement affirming that he read and understood its terms. The agreement was offered on a take it-or-leave-it basis and contained a dispute resolution provision of which he allegedly was not informed in the meeting. Nor was he advised that the franchise agreement limited his remedies (waiving punitive and consequential damages, loss of profits, and attorneys’ fees and costs) while leaving CleanNet’s available remedies fully intact.
The federal court balked at the notion that CleanNet’s franchise agreement was a procedurally unconscionable contract of adhesion. It said the failure to translate every provision into the plaintiff’s native tongue did not render the deal unenforceable, as CleanNet “had no obligation to explain every single term in Spanish.” And while the contract’s remedial limitations didn’t pass muster—they ran directly counter to the mandates of the Illinois Franchise Disclosure Act and were necessarily void and unenforceable—the court said the problematic terms could easily be severed, citing the “strong policy in favor of enforcing arbitration agreements,” and the adage that this policy is best served by lopping off unenforceable terms to salvage the valid ones. Such is the case, apparently, even when the drafter included the provisions despite having reason to know they were unenforceable.
A contract’s a contract, though, or what remains of it. And arbitration reigns supreme. So the franchise agreement’s arbitration provision was even held to apply to the cleaning company’s parent entity—a nonsignatory. Equitable principles precluded the janitor from escaping arbitration of his claims against the national cleaning corporation, a sympathetic court held.
I can’t help but wonder who the NLRA’s drafters had in mind when they wrote of the unequal bargaining power of those lacking “actual liberty of contract.” If not folks like our hamstrung janitor, then who?
Typically it’s a kiss of death for a job applicant to acknowledge that he or she has a criminal history in applying for employment. However, Hawaii has adopted a more enlightened approach which reflects the recognition “that persons who have been in trouble are not inherently and permanently bad and that opportunities afforded other citizens should be made available to them.”
That legislation recently came into play in Shimose v. Hawaii Health Systems Corp. dba Hilo Medical Center, when the Hawaii Supreme Court ruled that a hospital failed to establish the existence of a rational relationship between the position of radiological technician and an applicant’s prior felony drug conviction for possession of crystal methamphetamine so as to support its decision to disqualify him from the position.
Rational relationship standard. Under the provisions of Hawaii Revised Statutes (HRS) Sec. 378-2, employers are allowed to deny employment based on an individual’s conviction record, provided the conviction bears a rational relationship to the duties of the position. The primary issue in this case was whether, as a matter of law, the hospital established the existence of a rational relationship between the radiological technician position and the employee’s prior drug conviction that would entitle it to summary judgment.
Here, the court observed that Sec. 378-2.5 was enacted in 1974, and that the legislature had beat back efforts in 1998 that proposed a dramatic policy reversal. At that time, the legislature reached a compromise to allow consideration of a criminal conviction that bears a “rational relationship to the duties and responsibilities of the position.”
Rational relationship lacking. In this instance, the state high court concluded that the hospital failed to establish a rational relationship between the applicant’s conviction and the duties and responsibilities of a radiological technician. As an initial matter, the court observed that job descriptions indicate that radiological technicians are primarily responsible for medical imaging and the preparation and maintenance of medical imaging equipment. There was no indication that radiological technicians administered or even assisted patients with any type of drugs. Thus, the court found that a felony drug conviction simply had no bearing on an individual’s ability to perform the primary imaging duties of a radiological technician.
Controlled substances. Addressing the hospital’s contention that radiological technicians had access to controlled substances, syringes and needles, and patient charts, the court found that questions of fact remained regarding how a radiological technician could obtain controlled substances from a patient in the course of his or her duties. Moreover, it noted that the hospital did not assert that its patients have access to medication that is left out in a patient’s hospital room. Consequently, the court found there was no reason why an employee with a drug conviction would pose a risk because he or she has access to substances contained in crash carts and drug reaction boxes, since those items were not regulated controlled substances. Accordingly, the court concluded that no rational relationship existed between the applicant’s drug conviction and the core duties of a radiological technician that would entitle the hospital to disqualify him from prospective employment.