Employment Law Developments
© Bob E. Lype, 2008
Prepared in connection with the seminar, "Employment Law Update," presented by Sterling Education Services, LLC in Chattanooga, Tennessee in October, 2008
A. EQUAL EMPLOYMENT DEVELOPMENTS WITH REGARD TO EMPLOYMENT PRACTICES: HIRING AND FIRING
(1) The hiring process. When an employer seeks to hire an employee, the process of gathering information about applicants and candidates is crucial in making the best, most informed decision. However, the scope of permissible inquiries is limited by applicable equal employment opportunity laws, as well as employee privacy considerations. Employers in some industries (such as child care and elder care) are required to screen applicants for certain types of convictions.
To balance the competing interests, the general guideline for employers in making pre-employment inquiries (whether in writing on applications, in person during interviews, or in any context) should be: tailor all inquiries to information related to the applicant's suitability for the position in question; and do not make an inquiry which would cause the applicant to reveal his or her membership in any protected category. The protected categories include:
- National origin
The EEOC's Compliance Manual emphasizes that Title VII forbids not only recruiting practices which purposefully discriminate on the basis of a protected class, but also practices which disproportionately limit employment opportunities based upon status in a protected category. All screening and selection criteria should be job related and consistent with business necessity.
For example, screening applications and eliminating those showing a home address in a predominantly minority area is unlawful. There are no legitimate inquiries which can be made regarding an applicant's race or color. There are no legitimate inquiries which can be made regarding an applicant's national origin, but an employer may inquire about an applicant's eligibility to work in the United States. However, it is illegal to discriminate against any individual because of that individual's national origin or citizenship status, and it is also illegal to discriminate against work eligible individuals.
No inquiries are permitted as to an applicant's age. Employment applications should not contain a request for the applicant's date of birth. Applications should not ask for the years the applicant attended high school or college, or similar inquiries which might reveal the applicant's age.
Discrimination based upon sex/gender is illegal unless there is a bona fide occupational qualification (BFOQ) for one sex only. Inquiries about an individual's sex/gender (other than what is revealed by a person's name) are unacceptable. It is not appropriate to inquire as to an individual's marital status or a spouse's job. Such questions are not job-related and are intrusive. Separate questions, or separate applications, for men and women are not permitted.
Because pregnant women are protected from discrimination under the Pregnancy Discrimination Act, inquiries into whether an applicant is pregnant are not permitted. Likewise, inquiries as to an applicant's future child-bearing plans or the number or ages of the applicant's children are inappropriate. However, it is lawful to make a general inquiry about any commitments or responsibilities that would preclude the applicant from meeting the job's work or travel schedules. After an individual is hired, it is permissible to inquire about an individual's dependents, for tax or insurance purposes.
The Americans With Disabilities Act (ADA) prohibits preemployment inquiries about an individual's medical history, illnesses, diseases, or any physical/mental impairments. Also prohibited are questions pertaining to predisposition to disabilities, family medical history, and current medical care or medication. A pre-employment physical examination cannot be required. Medical examinations are permitted only after an applicant has been offered employment, provided medical examinations are required of all individuals in the same job classification or job position. The focus of inquiry must be on the applicant's ability to perform the essential functions of the given job and any reasonable accommodation necessary toward that end.
As a general rule, there are no acceptable inquiries regarding religion. It is unlawful to discriminate against an applicant upon the basis of religious denomination, beliefs, practices, or dress. An exception applies to religious institutions, associations, and the like that have a bona fide occupational qualification that makes it reasonably necessary to limit hiring to individuals whose practices and beliefs are consistent with the religious precepts of the institution.
An employer's inquiries into an applicant's personal life and conduct is a grey area legally. Generally speaking, employers should limit such inquiries to that which is job related, and not make any unnecessary investigation into an applicant's private life.
(2) Terminations. Equal employment and discriminations considerations related to terminations will be discussed in a separate section, below.
B. THE INCREASING IMPORTANCE OF WRITTEN POLICIES, EMPLOYEE HANDBOOKS, AND DOCUMENTATION
(1) Why have employee handbooks and personnel policies? Why is it so important that an employer have a good handbook, good personnel policies and procedures, and document its personnel decisions?
- To assist in maintaining consistency. When employers consistently apply the same rules to everyone, collect the same information from everyone, etc., they have a much stronger defense to any claim that an employment decision was based upon a discriminatory reason.
- To clearly communicate the company's policies and expectations. Even though most employees never read their employee handbooks, a handbook can be a ready reference source.
- To assist in training supervisors and employees. If everyone is given a copy of the same rules, then everyone is on a level playing field. Supervisors have guidelines as individual situations arise, so that decisions need not be made "on the fly."
- To comply with record-keeping requirements. Various federal and state laws require employers to keep information concerning applicants and employees. Having a systemized approach to personnel matters helps meet these requirements.
(2) Employee handbook versus "policies and procedures manual." Larger employers may have separate documents – an employee handbook and a "policies and procedures manual." Sometimes these overlap, but they generally speak to different audiences and serve different purposes. While the employee handbook is usually more "basic" and is intended to be read by the employees, as a body of general rules and expectations, a "policies and procedures manual" is usually more detailed, more technical, and may contain reasoning behind the policies and strategies or procedures for implementation. The "policies and procedures manual" is typically a confidential document which is intended to be used by management.
In a recent case involving sexual harassment claims, Gordon v. W.E. Stephens Mfg. Inc. (Tenn. App. M.D., decided September 16, 2008), the employer had a detailed sexual harassment policy in its "operating manual," but that document was only given to supervisors. Employees received a shorter, more generic employee handbook, and the sexual harassment policy in the employee handbook was neither detailed nor specific. The Court held that the question of whether the employer's handbook policy was a "reasonable preventative measure" was a jury question, under the circumstances.
(3) Can employee handbooks be deemed contractual in Tennessee? In short, maybe. The general rule under Tennessee law is that handbook policies and provisions are not construed to be binding and contractual unless the handbook specifically speaks in terms of "guarantees." Typically the best way for an employer to avoid creating contractual obligations is to include statements at various places in the handbook specifying that the policies are not promises or guarantees, that the handbook does not create a contract, and that the employer reserves the right to change any of the policies at any times. The disclaimer should appear prominently at the beginning and end of the document, and if the employee is required to sign an acknowledgment of receipt of the handbook, the disclaimer language should be included there, too.
Despite this general rule, invariably there are employees who claim that handbook "promises" were understood to be contractual obligations, and that they deserve damages or relief due to breach of contract.
The more "dangerous" employee handbook provisions, in terms of claims of contractual obligations, include:
- References to "permanent employment"
- References to "just cause" or "reasonable cause" for disciplinary actions, including termination.
- References to "long terms futures relationships" and the like.
- References to an employee's "right to" certain things.
Probably the landmark case in Tennessee regarding handbooks as contracts was Whittaker v. Care-More, Inc., 621 S.W.2d 395 (Tenn. App. 1981). In that case, the employer promised that "an employee may reasonably expect uninterrupted employment year in and year out." Even though the handbook language was couched in terms of a promise the Court held that it was insufficient to create a contractual right to continued employment.
A survey of more recent cases applying Tennessee law in this context includes:
- Michael King v. TFE, Inc., 15 S.W.3d 457 (Tenn. App. 1999). In this case, the employee received a document which was divided into an "Employee Manual," "Schedule Wages & Fringes," and "Employee Notices." After the employee was involved in a driving accident, his employment was terminated. When he was told of the termination, his supervisor referred to a handbook provision which stated that employees were "subject to discharge" for "major chargeable" accidents. After discussing Tennessee's general "employment at will" rule, the Court explained that the employee's claim must fail under the following Tennessee legal standards:
Even in the absence of a definite durational term, an employment contract still may exist with regard to other terms of employment. Williams v. Maremont Corp., 776 S.W.2d 78, 80 (Tenn. App. 1988); accord Hooks v. Gibson, 842 S.W.2d 625, 628 (Tenn. App. 1992). In this regard, this Court has recognized that an employee handbook can become a part of an employment contract. Smith v. Morris, 778 S.W.2d 857, 858 (Tenn. App. 1988) (citing Hamby v. Genesco, Inc., 627 S.W.2d 373 (Tenn. App. 1981)); accord Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273, 1278 (M.D. Tenn. 1990). In order to constitute a contract, however, the handbook must contain specific language showing the employer's intent to be bound by the handbook's provisions. Smith v. Morris, 778 S.W.2d at 858. Unless an employee handbook contains such guarantees or binding commitments, the handbook will not constitute an employment contract. Whittaker v. Care-More, Inc., 621 S.W.2d 395, 397 (Tenn. App. 1981). As stated by one court, in order for an employee handbook to be considered part of an employment contract, "the language used must be phrased in binding terms, interpreted in the context of the entire handbook, and read in conjunction with any other relevant material, such as an employment application." Claiborne v. Frito-Lay, Inc., 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989).
An employer's reservation of a unilateral right to modify such provisions within an employee handbook generally precludes such provisions from being considered part of the parties' employment contract. See Rose, 953 S.W.2d at 693-94 (citing Claiborne v. Frito-Lay, Inc., 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989)).
- Logue v. Shelbyville Housing Authority, 2000 Tenn. App. LEXIS 69 (M.D. Tenn. 2000)(same).
- McCarthy v. UT-Battle, LLC, 2004 Tenn. App. LEXIS 118 (E.D. Tenn. 2004)(same).
However, employers do not always win these lawsuits. For example, in Vargo v. Lincoln Brass Works, Inc., 115 S.W.3d 487 (Tenn. App. 2004), the employee was terminated and sued for damages under the company's "severance policy," claiming the policy gave her a "vested right to severance pay under the facts." After reciting the general rules discussed above, the Court of Appeals held in favor of the employee. In so doing, the Court stated:
An employment relationship is essentially contractual. Hamby v. Genesco, Inc., 627 S.W.2d 373, 375 (Tenn. Ct. App. 1981). Its terms and conditions are supplied from two sources – applicable federal and state law and the agreement of the parties. An employment agreement may be written, oral, or a combination of the two. If written, it may be memorialized in a single document or in a series of documents.
Whether an employee handbook or manual contains contractually enforceable terms depends upon the specific language used in the handbook or manual. Rose v. Tipton County Pub. Works Dep't, 953 S.W.2d at 692. The interpretive rules used to determine what the language means are the same as the rules used to construe contracts. Accordingly, the courts will focus on the four corners of the manual or handbook and the other related employment documents and will construe these documents as written. They will also give the terms in the documents their natural and ordinary meaning, Williams v. Maremont Corp., 776 S.W.2d 78, 80 (Tenn. Ct. App. 1988), and will construe these terms in the context of the entire agreement.
The Court noted that the severance policy in question "guaranteed" payment of severance benefits. The policy did not contain a disclaimer of contact status, but indicated that the severance policy was "designed to provide a period of income after termination." While the policy stated that the employer had the "sole discretion to determine eligibility for severance pay," the Court held that the reservation of "discretion" did not make the policy non-contractual.
(4) Record-keeping obligations. Part of the "documentation" required of employers is the records which the government requires to be kept. Failure to maintain the records can result in civil, and even criminal, penalties. Obviously, the employer has a great incentive to maintain the required records.
Record-keeping requirements vary somewhat from state to state. Both the federal government and state governments may require certain records to be kept. The following is a generic summary of the types of records which are typically required to be maintained, although the list may vary depending upon the size of the employer and the state of employment:
- Recruitment materials, including job advertisements, job orders placed with recruiting agencies, internal notices posted for employees regarding training, promotions, etc., all applications or resumes received for the position, and any test papers or interview records on which hiring decisions were made. Such documents should be maintained for at least one year.
- Employee selection materials, including job descriptions, selection criteria, test results, physical examination results, Form I-9 (eligibility verification), Form W-4, and written affirmative action plans (if applicable). Most of these documents should be retained for one year, but I-9 forms should be retained at least three years (and possibly longer).
- Employee compensation records, including payroll records, documents reflecting wages and rates of pay, hours worked each day and each workweek, work schedules, records reflecting any additions to or deductions from pay, any individual contracts, records of weekly compensation, and documents containing current names and addresses. These documents should be maintained at least three years.
- Employee benefit plan documents, including seniority and merit systems, plan descriptions, participant election forms, beneficiary designations, documents related to any eligibility determinations, COBRA notices and related documents, and the like. As a general rule, these documents should be retained indefinitely, and at least six years from the date of any event.
- OSHA records, including logs and summaries of occupational injuries, records of required medical examinations, records of monitoring exposure to hazardous materials, and the like. These records should be kept at least five years, and certain records are supposed to be kept thirty years.
- Records related to drug and alcohol testing, including test results, equipment calibration documents, administration records, records related to the collection process, and the overall testing policy. These records should be kept for five years.
- Records related to discrimination charges, including charging documents and responses, complaints, and the like. Records should be kept until the final disposition of any charge, and then for an additional three years.
- Leave of absence documents, including all documents required by the FMLA, if applicable. These should be maintained for at least three years.
- Medical-related records, such as records related to workers' compensation claims, requests for medical leave or disability accommodation, etc. These should be maintained separate from general personnel records, and access should be strictly limited, in order to comply with privacy requirements.
(5) Protecting sensitive employee information. With the tremendous growth in identity theft, and with the theft frequently occurring in the workplace, employers may be at risk when they are negligent in protecting confidential employee information, resulting in theft. Personnel files and payroll records may contain a wealth of sensitive information, including Social Security numbers, birth dates, etc. While there is currently no Tennessee statute imposing a specific duty on private employers in these regards, the general laws of negligence, invasion of privacy, negligent supervision, etc. may be applicable.
Employers should create and enforce policies limiting access to confidential employee information; stop using Social Security numbers as employee "identifiers"; restrict access to physical files; implement electronic and software security measures, including firewalls, encryption programs, etc.; require signed authorizations, subpoenas or court orders before releasing information requested by third parties; routinely change locks, passwords, etc.; and mark files "confidential" when they contain personal information about employees.
C. MINIMIZING EMPLOYER RISKS IN TERMINATIONS
(1) Appropriate and inappropriate considerations.
- Economic necessity
- Employee's skills and experience
- Employee's job performance
- Employee misconduct
- Any other legitimate, non-discriminatory reasons
- Sex (including pregnancy and related conditions)
- National Origin
- Marital status
- Age (if the employee is age 40 or older)
- An actual or perceived mental or physical disability
- Exercise of leave rights (including FMLA)
- Having made, assisted or participated in a charge of discrimination
- Having made a claim for workers' compensation benefits
- Having refused to go along with, or refused to remain silent about, any unlawful activities
(2) "WARN Act" (Workers Adjustment and Retraining Notification Act). The WARN Act is fairly complex, but it only applies when a business has at least 100 employees. If a covered business intends to close a facility or engage in a mass layoff or reduction in force, it must give at least 60 days' notice to affected workers, unions, and state and local governments. Generally, a "mass layoff" means at least 50 or more employees will be affected for at least a 30-day period.
(3) Steps to minimize risks in terminations.
- Implement effective hiring policies. Poor hiring practices "on the front end" frequently result in bad situations "on the back end." Selecting qualified applicants with a good work ethic will help minimize the risks inherent in any eventual termination.
- Draft employment documents with care. This includes employment agreements, policies, procedures, applications, separation notices, and all documents in between. If the employment is "at will," leave no doubt about it in all documents, from offer letters to handbooks.
- Effective employee training is critical. This includes training in discrimination and harassment policies and procedures, training in job performance and expectations, training regarding employer policies, and training supervisors regarding legal obligations and handling situations.
- Implement your progressive discipline policies. It is almost never a good idea to make a termination decision on the spur of the moment. The person responsible for the decision should take time, discuss the situation with colleagues, and consider the options. If your policies speak in terms of warnings, progressive discipline, etc., then strive to follow the protocol, except in the most egregious of cases.
- Review the documents before termination. If the terminated employee files a discrimination charge, one of the first things you will have to do is to produce the personnel record. Therefore, review it before the termination, to make certain you have documented all problems, you have followed your own policies, and everything is in order. Make certain the employee cannot claim retaliation because of an on-the-job injury, another discrimination charge, etc. Review performance reviews for glowing comments which would be hard to explain in hindsight.
- Conduct the termination meeting with care. Before the meeting, make certain the employee no longer has computer access, to prevent sabotage or theft. If the employee is volatile, have security available. Write an outline/script and stick to the script. Do not permit the meeting to turn into a lengthy discussion. On the other hand, treat the employee with respect, which includes giving a brief, honest reason for the decision. Do not go "off script," and this will prevent you from saying things which may be regretted. Never conduct the meeting alone – have at least one other employee present. Have the other person take detailed notes of the meeting. After the meeting, permit the employee to retrieve personal belongings, but do not permit him or her to "stick around" for discussions. Avoid the temptation to give any lengthy explanations to his or her coworkers.
- Provide the required separation notice. The reasons for separation as stated on the notice should be accurate and concise. Do not try to "do any favors" for the terminated employee in the wording, but at the same time, do not try to justify or defend the decision.
- Decide if there is a reason to offer a severance If there is an apparent risk that the employee may make a legal claim based upon the termination, decide whether it may be worthwhile to offer some severance in exchange for a release of all claims. This is a delicate matter. Offering a severance in exchange for a release can send a subtle message that the employee may have a viable legal claim. Avoid being extorted under a threat of a claim.
- Handle post-employment inquiries carefully. Expect that future prospective employers of the terminated employee may contact you for references, etc. Follow your company policies. Frequently the employer's policy is to limit information to an affirmation of employment, the dates worked, and the position held.
D. LAYOFF CONSIDERATIONS: OLDER WORKERS BENEFIT PROTECTION ACT; JOB TRANSFERS; SENIORITY AND PAY ISSUES
The OWBPA. Part of this topic is subsumed in the discussion immediately above. With regard to the Older Workers Benefit Protection Act (OWBPA), this is part of the federal Age Discrimination in Employment Act (ADEA), which applies to workers over age 40. The OWBPA provides that, when an employee overage 40 is asked to sign a release of ADEA (age discrimination) claims, then in order for the release to be effective, certain conditions must be met. The minimum requirements are:
- The release must be "knowing and voluntary" by the employee
- The release must be in writing
- It must be drafted in plain language, understandable to the employee signing it
- It must not mislead, misinform, or fail to inform the signer of any material facts
- It must specifically state that it is a waiver of ADEA rights and claims
- The employer must advise the employee in writing to consult with an attorney before signing the release
- The employer must give the employee something of value, which the employee was not already entitled to receive, in consideration for the release (this is usually severance pay)
- The employer must gibe the employee twenty-one (21) days to consider the release (forty-five (45) days for terminations due to a voluntary retirement or similar incentive program), although the employee may sign the release before this time expires
- The employee must be provided a right to revoke the release within seven (7) days after signing it
Reductions in Force. In the case of reductions in force (RIFs), these may be prompted by a variety of business reasons, such as decreased revenues, technological changes, outsourcing, etc. In many cases an employee terminated or laid off due to a RIF will accept the business reason necessitating the RIF, but the employee may claim that he or she was selected for the RIF due to improper, discriminatory reasons. In some cases the employee may challenge whether there was really a business reason for the RIF in the first place.
Once it is determined that a RIF is necessary, the employer should adopt a selection process to identify the employee who will be included. The goals of the selection process are to ensure (1) that the terminations are based upon nondiscriminatory factors, (2) that facially neutral factors do not have a disparate impact, (3) if the company has an affirmative action program, the RIF selection process is consistent with it, (4) that both the criteria used and the process are applied consistently, (5) that reasonable documentation is created to identify who was selected, and why, and (6) that a reasonable review process was followed with multiple management representatives who can testify or corroborate the process and any individualized decisions.
The employer should first decide what positions need to be eliminated or combined. Then, the employer must decide what individual employees will be affected. As a general rule, the employer should seek to create a "grid" to permit ranking of employees by classification, without regard to age or other protected classes, and then the employees "scoring" at the lower ends should be the ones who are let go.
E. THE LURKING THREAT OF EMPLOYEE RETALIATION CLAIMS AND HOW TO AVOID IT
Tennessee employers should be aware of the possibility of retaliation claims in at least two contexts – (1) retaliation made unlawful by statute, such as Title VII and other federal anti-discrimination laws, or by the Tennessee Human Rights Act; and (2) retaliation made unlawful by common law, such as a termination of employment in violation of some public policy, or under Tennessee's "whistleblower" statute. The different types of claims are similar, but they are also distinct. These materials will discuss them separately.
2. Elements of Prima Facie Case of Retaliation.
To make a prima facie claim of retaliation under Title VII, a plaintiff must prove:
- he engaged in an activity protected by Title VII;
- this exercise of protected rights was known to the employer;
- the employer thereafter took adverse employment action against the plaintiff; and
- there was a causal connection between the protected activity and the adverse employment action.
See Ford v. General Motors Corp., 2002 U.S. App. LEXIS 20501 (6th Cir. 2002); Morris v. Oldham County Fiscal Court, 201 F.3d 784, 792 (6th Cir. 2000).
Once an employee has established a prima facie case, the burden of production of evidence shifts to the employer to articulate some legitimate, nondiscriminatory reason for its actions. Once the employer meets this burden of production, the plaintiff, who bears the burden of persuasion throughout the process, must then demonstrate the employer's proffered reason was false. Id.
The prima facie case of unlawful retaliation under the Tennessee Human Rights Act is identical. Austin v. Shelby County Government, 3 S.W. 3d 474, 480 (Tenn. App. 1999); see also Mountjoy v. City of Chattanooga, 2002 Tenn. App. LEXIS 277 (E.S., decided April 23, 2002).
3.What does "engaging in a protected activity" mean?
For purposes of a retaliation claim under Title VII, 42 U.S.C. § 2000e-3 provides, in relevant part, that "it shall be an unlawful employment practice for an employer to discriminate against any of his employees… because [the employee] has opposed any practice made an unlawful employment practice by this title, or because [the employee] has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this title." Thus, there are two anti-retaliation provisions in the statute, frequently referred to as the "opposition" and the "participation" clauses.
The "participation" clause is relatively straightforward. It protects those who participate in the process of vindicating civil rights under Title VII, such as by filing a charge with the EEOC or filing a lawsuit.
The "opposition" clause is a little more difficult, and the federal courts sometimes disagree about what "opposition" activities are protected. If an employee makes a good faith complaint to the employer that his or her rights are being violated under Title VII, then even if the employee is wrong, he or she cannot be subjected to an adverse employment action because of raising the complaint. See Johnson v. University of Cincinnati, 215 F.3d 561, 579 (6th Cir. 2000), cert. denied, 531 U.S. 1052 (2000). The EEOC has identified several examples of what it would consider protected "opposition," including complaining to anyone (management, unions, other employees, or newspapers) about allegedly unlawful practices; refusing to obey an order because the worker thinks it is unlawful under Title VII; and opposing unlawful acts by persons other than the employer – e.g., former employers, union, and co-workers. EEOC Compliance Manual, (CCH) P 8006. The EEOC has qualified the scope of the opposition clause by noting that the manner of opposition must be reasonable, and that the opposition be based on "a reasonable and good faith belief that the opposed practices were unlawful." Id. In other words, a violation of Title VII's retaliation provision can be found whether or not the challenged practice ultimately is found to be unlawful. Id. Moreover, the person claiming retaliation need not be the person who engaged in the opposition, such that "Title VII . . . prohibits retaliation against someone so closely related to or associated with the person exercising his or her statutory rights that it would discourage that person from pursuing those rights." Id.
Issues can arise when an employee protests too little – does a vague complaint about generalized mistreatment or unfair decisions qualify? Issues can also arise when an employee protests too much – if the employee's protesting conduct is considered wholly inappropriate or unnecessarily injurious to the employer's interests, the statutory protection may be lost. For example, if an employee removes and photocopies personnel materials from her supervisor's desk, then sends them to a woman who recently resigned complaining of sexual harassment, one court has held that would not be protected opposition. Laughlin v. Mreto Washington Airports Authority, 149 F.3d 253, 259-60 (4th Cir. 1998).
4.What is an "adverse employment action"?
In 2006, the Supreme Court decided White v. Burlington Norther & Santa Fe Railway Co., which resolved this question in the context of Title VII retaliation. Before this decision, several Circuits had held that only "ultimate employment decisions," such as termination or demotion with loss of pay, were actionable as "adverse employment actions." In White, the employee in question claimed that she was retaliated against because she was transferred to a more demanding job, after she filed a lawsuit against the employer for sexual harassment, even though she did not suffer a change in pay. The Supreme Court held that this type of employment action can be actionable retaliation. In fact, the Court's holding indicates that a retaliation claim can even be based upon acts not directly related to the employment, such as actions occurring outside the workplace. The Court instructs that to be actionable, the retaliatory conduct in question must be of a type that would dissuade an objective, reasonable person from making or supporting a charge of discrimination. It need not involve an "ultimate employment decision." The context of the action is important. The Supreme Court's ruling broadened the protections for employers who complain about discrimination, or who participate on behalf of another employee who complains.
5. How to prove the required "causal connection" (and the Effect of "Proximity in Time")
Like most types of discriminatory conduct, retaliation is difficult to establish by direct proof. Therefore, plaintiffs must usually prove the required "causal connection" by circumstantial evidence from which unlawful retaliation can be inferred. Most frequently plaintiffs argue that retaliation can be inferred because of: (1) the "temporal proximity," or short lapse of time, between the complaint and the adverse act; or (2) a pattern of antagonism linking the complaint and the adverse action.
The law in this area reflects two fundamental, common sense approaches: (1) time heals all wounds; and (2) retaliators retaliate, they do not forbear. In other words, the longer the time between the employer learning of the plaintiff's complaint or other conduct and the employer's taking of an adverse employment action, the less an unlawful retaliatory motive can be inferred. Conversely, the shorter the time, the better the chance for the employee to make the inference successfully.
In Clark County School District v. Breeden, 532 U.S. 268, 121 S. Ct. 1508, 149 L. Ed 2d 509 (2001), the Supreme Court considered both a sexual harassment claim and a retaliation claim under Title VII. In that case, the plaintiff claimed that during a review of job applicant files, a male co-worker made a sexually explicit comment. She claimed that when reading a psychological report regarding a job applicant, it disclosed that the applicant had once stated "I hear that making love to you is like making love to the Grand Canyon." When the plaintiff said she did not understand what that meant, her male co-worker said, "Well, I'll tell you later," then chuckled. She complained to her supervisor and others about the comment, and she later filed a charge of discrimination (i.e., she engaged in both "opposition" and "participation"). She claimed that she was thereafter punished by being transferred.
In Breeden, the Supreme Court noted that plaintiff's entire proof of the required causal connection consisted of the "temporal proximity" between her filing of a complaint and her supervisor's disclosure to plaintiff's union representative that he was contemplating transferring the plaintiff to a different position. However, the proof showed that the employer was not served with the complaint until one day after the supervisor made the statement. The plaintiff then tried to argue that the employer's receipt of notice of her right-to-sue letter preceded the decision, but the Court held that this was not a "protected activity" by the plaintiff, particularly since she had no control over it. The Court stated that employers need not suspend previously planned actions upon discovering that a Title VII suit has been filed, and there is no "causality" between consummation of a previously contemplated job action and Title VII charge which was first learned of subsequently. Further, regarding the right-to-sue letter, the Court noted that if that were deemed the trigger of the employer's notice of the employee's complaint, then that was known almost two years prior to the job transfer. The Court reiterated that if "temporal proximity" is used to establish the required causal connection, then that temporal proximity must be "very close," and something the employer learned of twenty months before the alleged adverse decision showed "no causality at all."
In other words, in Breeden the Supreme Court followed the common sense rule – if the employer had been motivated to retaliate, it would have done so when it first received notice that the plaintiff had filed a charge, not two years later when it learned that she had filed the lawsuit.
In the Sixth Circuit, some cases have stated that mere "temporal proximity," standing alone, would not be sufficient to establish the required causal connection. Instead, if a plaintiff is relying upon temporal proximity as part of his or her circumstantial evidence, he or she will also need to come forward with something more. See Cooper v. City of North Olmstead, 795 F. 2d 1265 (6th Cir. 1986)(rejecting the idea that temporal proximity is enough, in and of itself); Parnell v. West, 1997 U.S. App. LEXIS 12023 (6th Cir. 1997)("temporal proximity alone will not support an inference of retaliatory discrimination when there is no other compelling evidence"). In Nguyen v. City of Cleveland, 229 F. 3d 559, 567 (6th Cir. 2000), the Sixth Circuit seemed to backtrack somewhat on this position, noting: "[W]hile there may be circumstances where evidence of temporal proximity alone would be sufficient to support that inference, we do not hesitate to say that they have not been presented in this case."
6. Tennessee Common Law Retaliatory Discharge and "Whistleblower" Statute.
Apart from retaliation which is prohibited by Title VII and the Tennessee Human Rights Act, Tennessee employers must also be aware of common law claims for unlawful retaliation in violation of public policy, commonly referred to as "retaliatory discharge." Tennessee also has a statutory "whistleblower" statute.
(a) Retaliatory discharge for filing a workers' comp claim. Tennessee public policy favors permitting injured employees to receive the benefits to which they may be entitled under workers' compensation law freely and without fear of reprisal. Under Tennessee law, an employer may discharge an at-will employee with or without cause, but not on account of the employee's assertion of a workers' compensation claim. Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn. 1993). The elements of a prima facie case of this type of retaliatory discharge are:
- the plaintiff was an employee of the defendant at the time of the injury;
- the plaintiff made a claim against the defendant for workers' compensation benefits;
- the defendant terminated the plaintiff's employment; and
- the claim for workers' compensation benefits was a substantial factor in the employer's motivation to terminate the employee's employment.
Id. at 558.
A "claim" for workers' compensation benefits need not be a formal claim nor the filing of a lawsuit. Instead, once an employer has notice that an employee has been injured on the job and requires medical attention, the employer has an obligation to furnish medical treatment and a panel of physicians, whether the employee asks for such items or not. At that point, if the employer terminates the employment on account of this knowledge, the "claim" element is met. See Elliott v. The Blakeford at Green Hills Corp., 2000 Tenn. App. LEXIS 806, 17 BNA IER Cas 129.
The burden of proof in a retaliatory discharge case is on the plaintiff to produce some evidence of retaliatory motive. In order to establish the fourth, or "substantial factor" element of the prima facie case, the employee must present either direct evidence of the necessary causal link, or he or she may introduce circumstantial evidence of the causal link. However, proof by circumstantial evidence must be "compelling." Reed v. Alamo Rent-A-Car, Inc., 4 S.W.3d 677, 685 (Tenn. App. 1999).
Tennessee courts have recognized that "direct evidence of such motive is hard to come by," and thus courts "usually rely upon inferences that arise from indirect evidence." Elliott, 2000 Tenn. App. LEXIS at *16. In Mason v. Seaton, 942 S.W.2d 470, 474 (Tenn. 1997), the Supreme Court noted in the context of a retaliatory discharge "whistleblower" case:
Evidence of that motivation is largely within the possession of the defendants. Consequently, where, as in this case, the plaintiff's claim for causation is consistent with the facts and circumstances shown, and the employer chooses to offer no explanation of the employee's discharge, fairness requires that any credible evidence from which the trier of fact could infer causation will defeat the motion for summary judgment.
An employee's "subjective beliefs and speculations about the reasons for her discharge" do not establish the necessary causal link. Reed, 4 S.W.3d at 685. In addition, the mere proximity in time between the employee making a claim for workers' compensation benefits and her termination is insufficient, in itself, to establish a prima facie case. See Birchett v. Nashville Co., Inc., 2000 Tenn. App. LEXIS 322, at * 7.
Once the employee establishes a prima facie case of retaliation, the burden shifts to the employer to show a "legitimate, non-pretextual, non-retaliatory reason for the employee's discharge." Anderson, 857 S.W.2d at 559. Such legitimate reasons could include termination on account of excessive absenteeism, tardiness, lack of skill, lack of truthfulness, or the employee's physical inability to do the job. Id.
When an employer presents a legitimate, non-discriminatory reason for the discharge, the burden then shifts back to the employee to show that the employer's explanation is pretextual or not worthy of belief. See Speakman v. ADA Ferrell Garden Apartments, 2000 Tenn. App. LEXIS 344, and cases cited therein. In doing so, the employee must present specific admissible facts which realistically challenge the defendant's stated reasons. Id.
If the employee tenders proof calling into disbelief the employer's proffered reasons for the termination, the trier of fact may find a retaliatory discharge based upon that disbelief of the employer's reasons, without any additional proof offered by the employee. See Smith v. Bridgestone/Firestone, Inc., 2 S.W.3d 197 (Tenn. App. 1999)(discussing Tennessee retaliatory discharge claims and the adoption of federal case law rules regarding the burden-shifting analysis). See also Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 147 L. Ed. 2d 105, 120 S. Ct. 2097 (2000)(clarifying that under federal discrimination law, meeting the prima facie case, combined with sufficient evidence for a reasonable factfinder to reject the employer's non-discriminatory explanation for its decision, is adequate to sustain a finding of liability for intentional discrimination).
In Hayes v. Computer Sciences Corp., 2003 Tenn. App. LEXIS 23 (M.S., decided January 14, 2003), the Court of Appeals held that where an employee is terminated because he had previously filed a workers' comp claim against a former employer, the employee still had a viable cause of action against the terminating employer.
(b) Retaliatory discharge related to other public policy concerns. Apart from terminations substantially motivated by the employee's filing of a workers' compensation claim, Tennessee also recognizes that when an employee is terminated for other reasons which violate clear public policy, the employee has a cause of action.
In Crews v. Buckman Laboratories International, Inc., 78 S.W.3d 852 (Tenn. 2002), the Tennessee Supreme Court held that an in-house attorney could sue for retaliatory discharge, where she was fired for reporting the unauthorized practice of law by her employer's general counsel. In so holding the Court noted:
In Tennessee, the elements of a typical common-law retaliatory discharge claim are as follows: (1) that an employment-at-will relationship existed; (2) that the employee was discharged; (3) that the reason for the discharge was that the employee attempted to exercise a statutory or constitutional right, or for any other reason which violates a clear public policy evidenced by an unambiguous constitutional, statutory, or regulatory provision; and (4) that a substantial factor in the employer's decision to discharge the employee was the employee's exercise of protected rights or compliance with clear public policy.
78 S.W.3d at 862.
In Sloan v. Tri-County Electric Membership Corp., 2002 Tenn. App. LEXIS 109 (M.S., decided February 7, 2002), the employee claimed that she was forced to resign pursuant to the employer's anti-nepotism policy, after she married a co-worker. She claimed that the right to marry is a fundamental right favored by the State's public policy. The employer argued that enforcing the anti-nepotism policy did not infringe upon the employee's right to marry whom she pleased. The Court of Appeals agreed with the employer and affirmed the dismissal of her claims by the trial court. The Court agreed that the employee was not prevented from being married, and therefore she was not deprived of her fundamental rights.
Finally, the Tennessee Supreme Court has clarified that "public policy" retaliatory discharge is not subsumed in or preempted by the statutory "whistleblower" cause of action (discussed below). In Guy v. Mutual of Omaha Ins. Co., 79 S.W.3d 528 (Tenn. 2002), the employee, who worked for an insurance company, reported an incident involving an insurance agent to the Tennessee insurance commissioner, but he did not report the incident to his employer for another eight months. Several months after he did report the incident to his employer, he was fired, and he thereafter sued for retaliatory discharge. The employer moved for summary judgment on the grounds that the employee's claim was really one for "whistleblowing," or reporting illegal activity, which is limited to the statutory cause of action (below), and that the employee could not prove that the sole reason for his discharge was his report, as required by the statute. The Supreme Court found that Tennessee recognizes two distinct causes of action for retaliatory discharge on account of "whistleblowing" or reporting unlawful activities – the statutory claim, and a common law claim. The statutory claim is not the exclusive remedy. This is significant because, under the statutory claim, the employee must prove that the "sole reason" for his discharge was for blowing the whistle, while under the common law claim he need only prove that blowing the whistle was a "substantial factor" in the termination. The Court noted that the legislature could have made clear that the statutory claim was the only viable claim, but it did not do so.
(c) The Tennessee "whistleblower" statute. Finally, as alluded to above, Tennessee does have a "whistleblower" statute, located at Tenn. Code Ann. § 50-1-304. This statute states that "no employee shall be discharged or terminated solely for refusing to participate in, or refusing to remain silent about, illegal activities." Historically it has proved extremely difficult for employers to prevail under this statute, primarily because of the difficulty in proving that reporting the illegal activity was the "sole" reason behind the discharge.
As discussed above, the Tennessee Supreme Court has clarified that Tennessee recognizes both a statutory and a common law "whistleblower" cause of action, and under the common law claim, the employee need only prove that the whistleblowing was a "substantial factor" in the termination decision. Guy v. Mutual of Omaha Ins. Co., 79 S.W.3d 528 (Tenn. 2002).
In Foster v. Colonial Development, Inc., 2002 Tenn. App. LEXIS 108 (E.S., decided February 6, 2002), for example, the plaintiffs claimed that they were terminated for objecting to and reporting fraudulent practices involving billing the same nursing home beds to both Medicare and TennCare. The employer claimed that they were terminated for failing to clock out for lunch. The trial court granted summary judgment to the employer, and the Court of Appeals affirmed, finding that the plaintiffs were unable to meet their burden of proof.
In Moore v. Averitt Express, Inc., 2002 Tenn. App. LEXIS 725 (M.S., decided October 11, 2002), a unique situation was presented. The employee had only recently begun to work for Averitt Express when he was fired. The reason was that he had made statements alleging illegal conduct by state officials following his previous employment with the State of Tennessee. The statements were made in a television interview, and he alleged that state officials had used state aircraft for personal use. He had made no complaint or allegation regarding Averitt Express, but the company terminated his employment because of "confidentiality concerns," i.e., he had publicly discussed what the company's clients would consider private matters. He sued under the whistleblower statute, as well as for common law retaliatory discharge. The trial court dismissed his claims, and the Court of Appeals affirmed, holding that, taking into account the policies behind these claims, to be actionable the threat of being fired must have existed at the time the employee reported the illegal act. Since the employee was fired for what he had "reported" regarding another employer, which reports were made before he was hired by Averitt Express, then he was not in the "protected class" of people under this claim.
7. Recent Decisions.
In May of 2008, the U.S. Supreme Court decided CBOCS West, Inc. v. Humphrey and Gomez v. Potter, both of which expanded the scope of federal retaliation claims. In Perez, the Court held that federal employees who claim age discrimination are protected against retaliation, and in CBOCS, Inc. the Court held that a cause of action for retaliation also exists under 42 U.S.C. § 1981, which is sometimes used in asserting race discrimination claims.
In March of 2008, the Sixth Circuit decided Thompson v. North American Stainless, LP, 2008 U.S. App. LEXIS 6776. This case involved a Title VII retaliation claim asserted by an employee whose employment had been terminated because his fiancee had filed a discrimination charge against their common employer. The employee was terminated, and he claimed it was because of his close association with someone who had asserted a discrimination claim. The Sixth Circuit agreed that this would be actionable, because terminating the employment of someone closely associated with an employee could dissuade or discourage that employee from exercising his or her rights.
Finally, according to published reports from July, 2005, in Luri v. Republic Services, Inc., an Ohio jury recently awarded a terminated employee $46.7 Million in a retaliation case. This is one of the largest (and possibly the largest) verdicts reported in any retaliation case. The plaintiff claimed that he had refused to go along with the discriminatory firing of three older workers. According to the jury, it was dismayed that the plaintiff's supervisor had fabricated an e-mail by adding critical paragraphs to a performance evaluation two weeks after the lawsuit was filed. The employer had also enforced a non-compete agreement against the plaintiff after it terminated him, so that he could not work in his given profession for a year. Obviously, the jury was incensed.