Tag Archives: retaliation

June 13, 2014

Forced “Onionhead” Practices At Work Result in EEOC Religious Discrimination Lawsuit

“I love you, man.” Appropriate for beer commercials but perhaps not for the workplace. A New York employer who allegedly required employees to participate in prayer circles, thank God for their job and say “I love you” to managers and co-workers faces a religious discrimination lawsuit filed recently by the Equal Employment Opportunity Commission (EEOC). The EEOC seeks compensatory and punitive damages on behalf of three employees who were fired, allegedly for opposing the required “Onionhead” practices, and a class of similarly harmed individuals. EEOC v. United Health Programs of America, No. 14-cv-3673 (E.D.N.Y. filed June 11, 2014).

Company Required “Harnessing Happiness” or “Onionhead” Practices

According to the EEOC complaint, three former employees of United Health Programs of America filed charges alleging religious discrimination in violation of Title VII because the company required employees to engage in practices under a belief system called “Harnessing Happiness” or “Onionhead.” According to the Harnessing Happiness website, Onionhead is an “incredibly pure, wise and adorable character” who “wants everyone to know how they feel and then know what to do with those feelings.” The three women claim that the company required them to participate in various Onionhead-related activities on a daily and weekly basis, including praying, reading spiritual texts, burning candles, keeping lights at work very dim, thanking God for their employment and saying “I love you” to colleagues and managers. They assert that every day, employees were asked to select Onionhead-related cards to keep next to their computers and to wear Onionhead-related pins. In addition, one of the company’s upper managers and the aunt of the company owner, “Denali,” was the leader of the Onionhead practices and allegedly would require employees to attend one-on-one sessions with her in order to read and discuss books about “divine plans,” “moral codes” and “enlightenment.”

Fired – Allegedly for Opposing Onionhead Practices

Each of the three Charging Parties, Elizabeth Ontaneda, Francine Pennisi and Faith Pabon, were allegedly fired for objecting to the Onionhead practices. Pennisi, an Account Manager and IT Project Manager, spoke up at a managers’ meeting in July 2010, stating that she was Catholic and did not want to participate in the Onionhead activities. Ontaneda, a Senior Accounting Manager for Customer Service, also spoke up at the meeting, saying she felt the same way. A few weeks later, both women were relocated to work in an open area on the customer service floor, rather than in their offices, and their duties were changed to require answering phones. Denali placed a large statue of Buddha in Pennisi’s empty office. Denali also spoke of “demons” in connection with Ontaneda’s and Pennisi’s resistance to Onionhead practices. The day after losing their offices, the women called in sick and were terminated by the company owner by phone and voicemail.

Pabon, a Customer Care Consultant, attended a spa weekend in Connecticut with Denali and about 20 other customer service employees. Pabon alleges that Denali stated that the purpose of the trip was spiritual enlightenment and that they were to be together at all times, holding hands, praying and chanting. Pabon refused to participate in some of the group activities and on Monday following the spa weekend, Denali fired Pabon for “insubordination.”

Hostile Work Environment, Failure to Accommodate and Retaliation

The EEOC asserts numerous religious discrimination claims against the company, including creating a hostile work environment based on religion, failure to accommodate the employees’ own religious beliefs or lack thereof, terminating employees based on religion and retaliating against employees for opposing the required Onionhead practices in the workplace. The EEOC also alleges that some employees were constructively discharged when they felt compelled to leave the company to avoid participating in the required Onionhead activities.

Reports suggest that the company denies any merit to the lawsuit and that they expect it to be dismissed. We don’t yet know the basis of their defense and must remember that at present, the allegations are unproven. It will be an interesting case to follow. We will keep you posted as it proceeds through the court

Click here to print/email/pdf this article.

June 2, 2014

Disabled Employee Not Entitled to Additional Leave as Reasonable Accommodation

By Jude Biggs

After Kansas State University denied her request to extend a leave of absence for longer than six months, assistant professor Grace Hwang, who suffers from cancer, filed suit against the University alleging disability discrimination and retaliation under the Rehabilitation Act. The Tenth Circuit Court of Appeals ruled that the University had not violated the Rehabilitation Act because Ms. Hwang could not show that she was able to perform the essential functions of her job. In addition, the Tenth Circuit held that requiring the University to extend the six-month’s leave was not a reasonable accommodation. Hwang v. Kansas State Univ., No. 13-2070 (10th Cir. May 29, 2014).

Policy Provided Six-Month’s Paid Leave of Absence

Ms. Hwang was set to teach classes at Kansas State University under a one-year contract that covered all three academic terms — fall, spring and summer. Before the fall term, Ms. Hwang was diagnosed with cancer. She asked for a leave of absence to seek medical treatment. The University granted her a paid six-month leave under its regular policy which capped the length of a leave at six months.

As the six-month leave was coming to an end, Ms. Hwang’s doctor advised her to seek more time off of work. She asked the University to extend her leave through the end of the spring semester, intending to return before the summer term. The University refused to extend her leave but instead arranged for Ms. Hwang to receive long-term disability benefits, effectively ending her employment with the University.

Ms. Hwang sued the University in federal court alleging that the University’s denial of her request for extended leave constituted disability discrimination under the Rehabilitation Act. The Rehabilitation Act prohibits disability discrimination by entities that receive federal funds, such as Kansas State. 29 U.S.C. § 794(a). The federal district court dismissed her lawsuit on a motion to dismiss (before any discovery was done), and Ms. Hwang appealed to the Tenth Circuit Court of Appeals, which covers the states of Colorado, Utah, Wyoming, Kansas, Oklahoma and New Mexico.

Extended Leave Not A Reasonable Accommodation Under Rehabilitation Act

The University did not dispute that Ms. Hwang was a capable teacher and that her cancer rendered her disabled as defined by the Rehabilitation Act. The central issue in the appeal was whether the University was required to ignore the six-month time limit in its leave policy to extend Ms. Hwang’s leave of absence beyond six months. The Court said no. Because Ms. Hwang wasn’t able to work for an extended period of time, she was not capable of performing the essential functions of her job. In addition, requiring the University to keep her job open for that extended period of time did not qualify as a reasonable accommodation. The Court wrote: “[a]fter all, reasonable accommodations – typically things like adding ramps or allowing more flexible working hours – are all about enabling employees to work, not to not work.”

The Court noted that a “brief absence from work” for medical care may be required as a reasonable accommodation, as it likely allows the employee to continue to perform the essential functions of the job. Determining how long employers must provide for leave as a reasonable accommodation depends on factors such as the duties essential to the job in question, the nature and length of the leave sought and the impact of the leave on co-workers. That said, the Court stated that it would be difficult to find a six-month leave of absence in which the employee performs no work (e.g., no part-time hours or work from home) reasonable in any job in the national economy today. Ms. Hwang’s terrible problem, in the Court’s view, was one other forms of social security aim to address. In addition, the Court noted that the aim of the Rehabilitation Act is to prevent employers from denying reasonable accommodations that would allow disabled employees to work, not to turn employers into a “safety net” for those who cannot work.

“Inflexible” Six-Month Leave Policy Not Inherently Discriminatory

Ms. Hwang asserted that the University’s “inflexible” sick leave policy that capped the maximum length of sick leave at six months violated the Act. She cited the EEOC’s guidance manual which states that if a disabled employee needs additional unpaid leave as a reasonable accommodation, the employer must modify its “no-fault” leave policy to provide the additional leave, unless the employer can show that there is another effective accommodation that would allow the individual to perform the essential functions of her job, or that granting additional leave would cause the employer an undue hardship. The Court, however, pointed to another section of the EEOC’s guidance manual to counter Ms. Hwang’s argument, as the EEOC manual states “ . . . six months is beyond a reasonable amount of time.” In fact, the Court stated that an “inflexible” leave policy can actually help protect the rights of disabled employees rather than discriminate against them because such a policy does not permit individual requests for leave to be singled out for discriminatory treatment.

Not all leave policies will past muster, however. The Court stated that policies that provide an unreasonably short sick leave period may not provide enough accommodation for a disabled employee who would be capable of performing his or her job with just a bit more time off. Alternatively, policies that are applied inconsistently, such as where some employees are allowed more time off and others are held to a strict time limit, could be discriminatory. In this case, however, the Court found that Ms. Hwang did not allege any facts to support a claim that she was treated differently than other similarly situated employees.

Retaliation Claim Fails As Well

Ms. Hwang also asserted that she was unlawfully retaliated against for reporting disability discrimination. In particular, she based her claims on two theories : (1) the University failed to explain her COBRA health benefits before or immediately after her termination; and (2) she wasn’t hired for two other positions at the University that she applied for after losing her teaching job. The Court easily dispensed with both theories.

First, COBRA allows thirty days for an employer to provide separating employees with a COBRA notice. Consequently, the University was not required to provide Ms. Hwang with notice of her COBRA benefits before or immediately after her termination of employment. Second, although Ms. Hwang alleged that she was not hired for two other University positions for which she applied, she failed to allege any facts suggesting that the University’s decision not to hire her was because she had engaged in legally protected opposition to discrimination. She not only failed to provide facts showing that she was qualified for the two jobs, but she also failed to offer facts suggesting that the University officials who decided not to hire her knew about her disability and her complaint about disability discrimination. Without such allegations, the Court ruled that Ms. Hwang’s retaliation claim failed.

ADA Application

Although this case alleged a violation of the Rehabilitation Act, courts typically analyze such claims similarly to those alleging a violation of the Americans With Disabilities Act (ADA). Consequently, this case may prove helpful to employers defending ADA claims where the employer denies an employee’s request for an extended leave of absence. Employers should heed the Court’s warning about leave policies that may be discriminatory if they provide an unreasonably short leave or are inconsistently applied. However, lengthy leaves of six months or more, or leaves of an unlimited duration in which the disabled employee provides no work, will likely not be considered a reasonable accommodation.

Click here to print/email/pdf this article.

May 6, 2014

Separation Agreements Targeted By EEOC Again

By Mark Wiletsky

The Equal Employment Opportunity Commission (EEOC) recently filed a lawsuit seeking to stop a Colorado employer from using its form separation and release agreement and to allow employees who have signed the form agreement to file charges of discrimination and participate in EEOC and state agency fair employment investigations. In its federal court complaint, the EEOC alleges that CollegeAmerica Denver violated the Age Discrimination in Employment Act (ADEA) by conditioning employees’ receipt of severance benefits on signing a separation and release agreement which, according to the EEOC, chills and interferes with the employees’ rights to file charges and/or cooperate with the EEOC and state fair employment practice agencies.

As we wrote on this blog earlier, the EEOC has been scrutinizing employers’ separation agreements. This is the second such lawsuit challenging language in the separation agreements that does not permit the filing of discrimination or retaliation charges with the EEOC or other government agencies. As in the EEOC’s earlier complaint against a national pharmacy, the recent complaint against CollegeAmerica Denver targets numerous provisions in the separation agreement, including the release of claims, a non-disparagement clause and provisions in which the employee represents that he/she has not filed any claims, has disclosed to the company all matters of non-compliance and will continue to cooperate with and assist the company with any investigation or litigation.

Many of the targeted provisions are standard clauses in form separation agreements. Although it remains to be seen whether the courts will agree with the EEOC’s claims, it is always a good idea for organizations to review their agreements and ensure they do not raise any red flags for the EEOC while still protecting the company from future payouts for employment-related claims. We will continue to provide updates as new developments arise.

Click here to print/email/pdf this article.

March 6, 2014

SOX Whistleblower Protection Extends to Employees of Private Contractors, According to Supreme Court

By Jude Biggs and Jeff Johnson

On March 4, 2014, the U.S. Supreme Court ruled that employees of private contractors and subcontractors who contract with public companies are protected under the whistleblower provisions of the Sarbanes-Oxley Act of 2002 (SOX). Lawson v. FMR LLC, 571 U.S. ___ (2014). The ruling means that private employers who have a contract with a public company may not retaliate against their employees who report a potential fraud. As pointed out in the dissenting opinion, the holding by the six-justice majority creates the potential for increased litigation as it offers private sector employees another avenue to bring retaliation claims. In addition, it implies private sector employers with such contracts may need to strengthen their corporate compliance and complaint procedures to discover and fix problems early.

Whistleblowers Reported Potential Fraud In Mutual Fund Operations

Two former employees of private companies that contracted to advise and manage mutual funds filed separate administrative complaints alleging retaliation under 18 U.S.C. §1514A, the whistleblower provision of SOX. The mutual funds themselves were public companies, but they did not have any employees. Instead, the funds contracted with private companies to handle the day-to-day operation of the funds, including making investment decisions, preparing reports for shareholders and filing reports with the Securities and Exchange Commission (SEC).

Jackie Hosang Lawson was the Senior Director of Finance for a private advisory firm that contracted to provide services to the Fidelity family of mutual funds. Lawson alleged that she suffered a series of adverse employment actions that resulted in her constructive discharge after she raised concerns about certain cost accounting methods being used with the funds. She alleged that she believed that expenses associated with operating the funds were being overstated.

The second petitioner, Jonathan M. Zang, was a portfolio manager for a different division of the company that advised Fidelity mutual funds. Zang alleged that he was fired after he expressed concerns about inaccuracies contained in a draft SEC registration statement concerning some of the mutual funds.

After pursuing their administrative complaints, both whistleblowers filed retaliation lawsuits under §1514A in federal court in Massachusetts. Their employers, collectively referred to as FMR, moved to dismiss the suits, arguing that §1514A only protects employees of public companies, and because FMR is a private company, neither plaintiff had a viable claim under §1514A. The District Court denied FMR’s motion to dismiss. FMR sought an interlocutory appeal to the First Circuit, which reversed, ruling that §1514A only refers to employees of public companies, not a contractor’s own employees. The Supreme Court agreed to hear the case to resolve a division of opinion on the issue. The question before the Supreme Court was whether the SOX whistleblower provision shields only those employed by a public company itself, or also shields employees of privately held contractors and subcontractors who perform work for the public company.

“Employee” Presumes an Employer-Employee Relationship Between the Retaliator and the Whistleblower

Section 1514A provides: “No [public] company . . ., or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].” FMR argued that the prohibition against retaliating against “an employee” meant an employee of the public company. The Court (in an opinion by Justice Ginsburg) disagreed. It looked at the provision as stating that “no . . . contractor . . . may discharge . . . an employee” and found that the ordinary meaning of “an employee” in that context was the contractor’s own employee. The Court stated that contractors are not ordinarily in a position to take adverse actions against employees of the public company for which they contract so to interpret the provision as FMR did would “shrink to insignificance the provision’s ban on retaliation by contractors.” The Court rejected FMR’s argument that Congress included contractors in §1514A’s list of governed parties only to prevent companies from hiring contractors to carry out retaliatory terminations, such as the “ax-wielding specialist” portrayed by George Clooney in the movie “Up in the Air.” The majority believed that Congress presumed that there must be an employer/employee relationship between the retaliating company and the whistleblower.

Purpose of SOX Supports Extending Whistleblower Protections to Employees of Private Contractors

The Court emphasized that SOX was enacted to safeguard investors in public companies and to restore trust in the financial markets after the collapse of Enron Corporation. The Court found that because outside professionals, such as accountants, lawyers and consultants, have great responsibility for reporting fraud by the public companies with which they contract, such employees of contractors and subcontractors must be afforded protection from retaliation by their employers when they comply with SOX’s reporting requirements. The fear of retaliation was a major deterrent to the employees of Enron’s contractors in reporting fraud. Consequently, the Court’s reading of §1514A extending whistleblower protection to the employees of private contractors is consistent with the purpose for which SOX was enacted.

Mutual Fund Industry Should Not Escape Ban on Retaliation

Because virtually all mutual funds are structured as public companies without any employees of their own, the Court expressed the need to protect the employees of the investment advisors who are often the only firsthand witnesses to shareholder fraud in the mutual fund industry. To rule otherwise, said the Court, would insulate the entire mutual fund industry from §1514A.

Dissent Worries About Opening the Floodgates to More Retaliation Claims

Justice Sotomayor, joined by Justices Kennedy and Alito, dissented from the majority, believing that the Court’s holding creates an “absurd result” that subjects “private companies to a costly new front of employment litigation.” According to Sotomayor, the Court’s ruling means that any employee of an officer, employee, contractor or subcontractor of a public company, including housekeepers, nannies and gardeners, can sue in federal court under §1514A if they suffer adverse consequences after reporting potential fraud, such as mail fraud by their employer’s teenage kids. The majority dispels this concern, stating that there is “scant evidence that [this] decision will open any floodgates for whistlelowing suits outside §1514A’s purposes” given that FMR did not identify a single case in the past decade in which an employee of a private contractor had asserted a §1514A claim based on anything other than shareholder fraud. Still, the dissent believes that only employees of a public company should be protected from retaliation for whistleblowing activities under §1514A.

Private Employer Take-Aways

Despite the majority’s reassurances that employers will not see a substantial increase in new whistleblower retaliation cases, only time will tell if they are right. Private employers who contract with public companies should review their employment policies to ensure that employees are protected from retaliation as a result of reporting concerns or unlawful activities involving the public companies with whom they do business. Employers also should train their managers, supervisors and human resources professionals on this new development so that decision-makers do not inadvertently expose their company to the risk of a whistleblower retaliation claim under §1514A.

Click here to print/email/pdf this article.

October 14, 2013

“Pretaliatory” Firing Recognized as Wrongful Discharge Claim in Utah

By Elizabeth T. Dunning

Does an employee have to actually file a workers’ compensation claim to be protected from retaliatory termination? No, says the Utah Court of Appeals. In the recent Stone v. M&M Welding and Constr. Inc. decision, the Court ruled that an employee who was fired after expressing his intention to file a workers’ compensation claim could pursue a retaliatory discharge claim even though he failed to actually file his worker’s comp claim until eight months after he was fired.

Employee Discusses Desire to File Workers’ Compensation Claim

Terry Lee Stone was injured at a party hosted by M&M Welding and Construction in November of 2009. Within days of the injury, Stone informed the company president that he wanted to file a workers’ compensation claim. The president dissuaded Stone from doing so, instead holding his position open for two months until he could return to work. Upon his return, however, Stone’s hours were reduced. In March and April of 2010, Stone again informed the company that he intended to file a workers’ compensation claim, but failed to do so.

In early May, a customer demanded that Stone be fired, believing that he exaggerated in reporting a spill of contaminated water at the customer’s site. A few days later, Stone contacted M&M to obtain insurance information for his workers’ compensation claim. M&M fired him the following day. Stone sued, alleging that M&M terminated him in retaliation for expressing his intent to file a workers’ compensation claim. M&M argued that because Stone did not file his workers’ compensation claim until eight months after he was fired, his termination could not be in retaliation of the filing. The trial court agreed, awarding summary judgment to M&M.

Utah Court of Appeals Rules that Notifying Employer of Intent to File Workers’ Compensation Claim is Enough

On appeal, the Court pointed to the Utah Supreme Court’s decision in Touchard v. La-Z-Boy Inc. which recognized that “retaliatory discharge for filing a workers’ compensation claim violates the public policy of this state; thus, an employee who has been fired or constructively discharged in retaliation for claiming workers’ compensation benefits has a wrongful discharge cause of action.” In Stone, the Court of Appeals extended the basis for a wrongful discharge claim by concluding that conduct short of actually filing a workers’ compensation claim was protected conduct. The Court wrote that preparing a claim, notifying the employer of the intent to file a claim or discussing his claim with coworkers could be sufficient to support a claim of retaliatory discharge. In Stone’s case, he had repeatedly expressed to the company president and others that he intended to file a workers’ compensation claim so that conduct was sufficient to proceed with his retaliatory discharge lawsuit.

Policy Behind Recognizing “Pretaliatory” Discharge

The Court recognized that a rule that protected employees only after they actually filed a workers’ compensation claim “would create a perverse incentive for an employer to discharge an injured employee as soon as the employer learns of the employee’s intention to file a claim.” The Court found such a rule would contradict the important public policy embodied in the state’s workers’ compensation act.

The Court’s ruling also squares with the conduct that can underlie a retaliation claim under other employment laws. For example, retaliation claims under Title VII can be based on conduct where the employee either opposes workplace discrimination or participates in a discrimination claim, investigation or proceeding. “Opposing” discrimination can include the threat of filing a discrimination charge as well as complaining about or reporting discrimination at work. The Stone decision recognizing a retaliation wrongful discharge claim based on an employee’s expressed intent to file a workers’ compensation claim is analogous to the “opposition” retaliation claims recognized in such other employment laws.

Employer Take-Aways

Employers should be careful when making adverse employment decisions related to an employee who has either filed a workers’ compensation claim or is preparing to do so. Decisions should be unrelated to the claim or threat of claim and should be based on a reason that can be clearly articulated and is supported by thorough documentation. Anything less may lead the affected employee to conclude that the adverse action was in retaliation for the workers’ compensation claim and make it difficult to defend a retaliation lawsuit.

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

June 26, 2013

Employers Benefit From Supreme Court Ruling On Title VII Retaliation Claims

By Jude Biggs

In a favorable ruling for employers, on June 24 the U.S. Supreme Court held that a retaliation claim under Title VII of the Civil Rights Act of 1964 requires an employee to show the employer’s desire to retaliate was the “but-for” cause of the challenged employment action. University of Texas Southwestern Medical Center v. Nassar, No. 12-484 (U.S. June 24, 2013). This establishes a different causation standard for retaliation claims than is required for underlying Title VII discrimination claims, which only require an employee to show the motive to discriminate was one of the employer’s motives in making an adverse decision. Although cumbersome to have two standards, the decision is good news for employers, as often a jury will not find any discrimination by an employer, but may find retaliation after an employee speaks up about alleged discrimination. Making it more difficult to prevail on a retaliation claim will, hopefully, encourage plaintiffs to bring fewer cases or resolve them earlier than going through an expensive trial.

Employee Must Prove Employer Would Not Have Taken Action But For an Improper Motive

In a 5-4 decision, the Supreme Court ruled a plaintiff making a retaliation claim under Title VII must establish that the employer would not have taken the alleged adverse employment action but for the plaintiff having engaged in protected activity. Protected activity that may trigger a retaliation claim includes the employee opposing, complaining of or participating in a proceeding about unlawful discrimination in the workplace. Through this ruling, the Court instructs that retaliation claims should fail if an employer had other reasons or motivations – singly or together — that caused the employer to take the adverse action (even if one other factor was retaliatory in nature). In less legal terms, the employer wins if it can show its non-retaliatory reasons caused it to make the decision, even if a small portion of the decision was based on retaliation against the employee for engaging in protected conduct.

Justice Kennedy, writing for the majority which included Justices Roberts, Scalia, Thomas and Alito, stated that the text of Title VII’s anti-retaliation provision appears in a different section of the law from the provision that prohibits discrimination based on race, color, religion, sex or national origin. When Congress inserted the less rigorous “motivating factor” standard for discrimination cases in 1991, it could have inserted that standard into the anti-retaliation provision. In choosing to omit it, Congress deliberately concluded that retaliation claims are to be treated differently and retaliation is unlawful only when the employer takes adverse action against an employee “because” of their protected activity. The Court pointed to its interpretation of the Age Discrimination in Employment Act of 1967 in Gross v. FBL Financial Services, Inc. to require “but for” causation for retaliation claims.

The Court also stated that this causation standard is essential to the fair and responsible allocation of judicial resources. Recognizing that retaliation claims have been on the rise, the Court recognized that lessening the causation standard could contribute to the filing of frivolous claims, diverting resources from employers, agencies and courts in other efforts to fight workplace harassment.

Dissent Urges Congressional Action

Justices Ginsburg, Breyer, Sotomayor and Kagan dissented, alleging that fear of retaliation is the leading reason why employees do not speak up about discrimination in the workplace. Because Title VII plaintiffs often have been subjected to both discrimination and retaliation, they now will have to litigate their claims under two standards: (1) discrimination under the “motivating factor” test which requires a plaintiff to show only that a prohibited characteristic was a motivating factor in the employer’s adverse action, even if other factors also motivated the action; and (2) retaliation under the “but for” standard which requires a plaintiff to show that the employer would not have taken the adverse action but for a retaliatory motive. The dissent concluded that this decision is at odds with a line of previous decisions that recognize retaliation claims are inextricably bound up with an underlying discrimination claim. Justice Ginsburg, writing the dissenting opinion, stated “the Court appears driven by a zeal to reduce the number of retaliation claims filed against employers.” Calling the majority decision “misguided,” the dissent urges Congress to enact another Civil Rights Restoration Act to counter and remedy the injustice done by the majority opinion.

Employers May Face Fewer Retaliation Claims or At Least, Fewer Successful Claims

In practice, it is questionable how relevant the causation standard may be to potential litigants of retaliation claims. Employees believing they have been wronged after they complain about discrimination will likely still file retaliation claims, no matter what causation standard applies. Juries often will conclude retaliation occurred based on a general “fairness” standard. However, employers may be able to resolve such claims at the summary judgment stage (when a court decides a claim does not merit a trial), because proof of other factors that contributed to the adverse employment decision will defeat the retaliation claim.

Disclaimer:This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

May 7, 2013

Small Colorado Employers Face Higher Damages for Discrimination Claims

By Mark Wiletsky and Steve Gutierrez

Small businesses beware: your employees now have more incentive to sue you. As of January 1, 2015, employees can recover compensatory and punitive damages for employment discrimination claims against businesses that employ between one to fourteen people under Colorado’s Job Protection and Civil Rights Enforcement Act of 2013, signed into law by Governor John Hickenlooper on Monday, May 6, 2013. But don’t despair. By taking some proactive steps now, businesses can minimize their exposure to potential claims.

Increased Exposure for Small Employers

Colorado’s new anti-discrimination law changes the landscape for small employers by allowing compensatory and punitive damages against Colorado’s small businesses (with 1-14 employees), along with attorneys’ fees and costs to the employee if he or she prevails, back pay, front pay, interest, and other potential relief. Thankfully, the new Colorado law contains some safeguards against outrageous damage awards that would likely put small employers out of business. For businesses with 1-4 employees, compensatory and punitive damages are capped at $10,000. For businesses with 5-15 employees, such damages are capped at $25,000. Businesses with greater than 15 employees are subject to the existing damages caps found in the federal anti-discrimination laws.

The availability of these damages to employees of businesses with fewer than 15 employees will likely result in more discrimination cases filed in Colorado against small businesses, significantly raising the potential exposure for small business owners. That is especially true given that such claims may be filed in state court, which is often viewed by attorneys representing employees as a more favorable forum for such claims.

Age Discrimination No Longer Cut Off at Age 70

The Job Protection and Civil Rights Enforcement Act of 2013 also eliminates the age 70 cutoff for age discrimination claims brought under Colorado law. This brings the state law into line with the federal Age Discrimination in Employment Act which does not have an upper age limit. Consequently, employees age 40 and older are protected from employment discrimination under both state and federal law.

Good Faith Efforts May Avoid Punitive Damages

Under the new Colorado law, employers will not be subject to punitive damages if they can demonstrate good-faith efforts to prevent discriminatory and unfair employment practices in the workplace. In addition, no punitive damages are available in a lawsuit involving a claim of failure to make a reasonable accommodation for a disability if the employer can demonstrate good-faith efforts to identify and make a reasonable accommodation that would provide the disabled employee with an equally effective opportunity and would not cause an undue hardship on the employer’s operation. Small businesses should begin those good-faith efforts now so that policies and procedures to prevent and respond to discrimination are in place when the law goes into effect.

Steps Small Businesses Should Take to Minimize Risk

Unfortunately for small businesses, the mere threat of a lawsuit, however meritless, may stretch tight resources to the breaking point. That is why it is so important to take proactive measures now, which will help minimize the risk of such lawsuits. Among other things, small businesses should:

1) Adopt and distribute policies that prohibit discrimination, harassment, and retaliation in the workplace. Require new and existing employees to acknowledge their receipt of these policies, preferably on an annual basis.

2) Train supervisors, managers and employees. Everyone in the workplace should be trained on your anti-discrimination policies and procedures with specialized training provided to supervisors and managers who must recognize harassment and discrimination and know what to do when they observe it or receive a complaint. In small workplaces, dealing with complaints of discrimination or retaliation can be difficult. Still, if you address it promptly and appropriately, you will be in a better position to avoid or defend against a claim.

3) Document performance issues. We often see meritless lawsuits filed because legitimate performance concerns were not shared with the employee or appropriately documented. If an employee has performance issues, be sure to get it in writing. Focus on the problem, give concrete examples, and warn the employee that a failure to achieve immediate and sustained improvement may result in termination.

4) Arbitration agreements. Consider whether it would be appropriate to have employees sign an arbitration agreement. Such agreements take discrimination claims out of the civil court system, and generally allow for a more streamlined resolution. However, arbitration is not necessarily cheaper than a court proceeding; in fact, in some cases it might cost more. Be sure to consider all the benefits and burdens of arbitration before relying on such agreements. And if you prefer arbitration, make sure your agreement complies with all applicable legal requirements.

Essentially, small employers need the same policies and procedures to deal with discrimination as larger employers do, even though many smaller employers simply do not have the same resources. Take the next 18 months before the law becomes effective to educate yourself, your supervisors and your employees on discrimination issues and take the steps that will help minimize your risk to the damages that will be available soon to aggrieved employees.

June 7, 2012

Last-Chance Agreements — Employer beware!

The EEOC, in its recent press release (http://www.eeoc.gov/eeoc/newsroom/release/5-29-12.cfm) of May 29, 2012, announces a rare victory on summary judgment in what could be a bad trend for employers. In the underlying case of EEOC v. Cognis Corporation, a foreign multinational corporation, the federal judge ruled that the company retaliated against an employee for refusing to waive his rights to file a discrimination charge, both for past conduct and prospective conduct.

The employee, as a condition of continued employment, was asked to sign a last-chance agreement that prohibited him from filing a discrimination charge. According to the EEOC, Cognis conditioned the employment on the execution of the last chance agreement and when the employee refused to be bound by that agreement he was fired. As the Court noted in its opinion, it is not often that an employee is granted summary judgment on a Title VII retaliation claim.

The outcome here is problematic for two reasons. First, in most cases there is often a fact issue over the stated motivation for the adverse action taken by the employer because the motivation for the underlying decision is almost always in dispute; thus, there is a necessary question of fact that would defeat a summary judgment. Second, the Court’s willingness to discount the fact that had the employee not executed the last-chance agreement in the first instance he would have been terminated for a legitimate and non-discriminatory reason – poor performance – is worrisome. In rejecting Cognis’s argument on this point, the Court reasoned that even if it credited Cognis’s argument; it was the employee’s revocation of the last-chance agreement that constituted an adverse action, an act that might dissuade a reasonable worker from making or supporting a charge of discrimination. (See Opinion). This reasoning, of course, doesn’t adequately address the fact that the worker essentially was given consideration to remain employed under the last-change agreement.

What is clear from the Court holding in Cognis is the fact that the last-chance agreement is said to have threatened termination for undertaking future protected activity, which the Court says satisfies one element of the prima facie case of retaliation – a preemptive retaliatory act. Now, all that remains for the Court is a determination of damages. If the Cognis last-chance agreement had not included this prospective provision, I wonder how the case would have turned.

This holding is sure to motivate the EEOC to seek out similar cases of this kind. The EEOC concludes its release by indicating that “[f]iling EEOC charges is a fundamental right of American employees, and this agency always stands ready to protect that right.” EEOC’s Chicago District Director John Rowe further states, “This court’s opinion should cause employers to remember that seeking to dissuade employees from exercising that right is not only bad policy, it’s a violation of federal law which can give rise to very substantial liability.”

Despite the Court’s finding and the threats by the EEOC, this author maintains that narrowly crafted last-chance agreements are often useful to employers, both to ensure employees understand that future satisfactory performance is demanded and to give the employee fair opportunity to improve his/her conduct.

For more information contact Steven M. Gutierrez.

May 3, 2011

EEOC files suit against retailer alleging retaliation

The EEOC announced last Thursday that it was filing suit against a large retailer under Title VII. The EEOC complained that retailer retaliated against an employee when she heeded mandatory evacuation warnings. According to the EEOC, the retailer terminated the employee for "excessive absenteeism." The case will now proceed in federal court. Whether or not the EEOC can prevail in its suit remains to be seen.

The lesson for employers is that the EEOC is paying close attention to claims of retaliation by employees and is filing suit when it believes that employers have retaliated against employees for engaging in protected activity. Employers should tread carefully in this area, as the costs of defending a suit can be significant, as can the negative publicity that can result from an EEOC enforcement action. In recent days, the EEOC has announced settlements of retaliation claims totaling thousands of dollars. In addition, some of the settlements have involved mandatory training for all company personnel and other policy changes. Employers are well advised to train their management team on these issues to ensure that all key personnel understand the importance of disconnecting complaints about protected activity from employment decisions about that individual.