Avoiding the Claim of Selective Investigations of Employees

There is an interesting decision from the federal court of appeals in St. Louis discussing the theory that selective investigations of employees who are in protected groups can provide evidence of pretext.  The idea behind the theory is that investigating a member of the protected group but not non-members shows the decision maker is searching for a reason to impose discipline. 

To give an example, one cited in the decision, evidence that an employer required more extensive documentation of pregnant employee’s medical appointments than those of non-pregnant employees, in addition to employer’s comments, supports the jury’s finding of pregnancy discrimination.  

The employer in the appeal, however, avoided harm.  The allegedly selective enforcement was the viewing of a store's surveillance video shortly after the employee (the store supervisor) requested not to work a shift due to her pregnancy.  The evidence showed that area managers regularly reviewed surveillance videos.  In addition, the court further held that any question about why the manager reviewed the surveillance video was not material given the sound reasons for the supervisor's discharge (which the manager consistently enforced).

The decision whether to investigate often can't be objectively defined (though here, a showing of a standard practice helped).  The factual scenarios are simply to varied.  Even so, employers should nevertheless consistently investigate reports of misconduct once it comes to their attention.

Here is a link to the pregnancy discrimination decision in Weirman v. Casey's General Stores

Get Your Story Straight Before Taking Action

A decision released today from the Sixth Circuit illustrates that Tennessee employers need to get their story straight before firing an employee. 

Brookdale Senior Living, Inc. is, its website says, the nation’s largest owner and operator of senior living communities throughout the United States and a leading national provider of senior-related services. The plaintiff, David Eades was a Regional Director of Start-up Operations.  Eads thought his new supervisor harassed and degraded him because of his age (he was in his early 40s).  Eads complained about it to HR and later to the company president.  Eads and the company discussed a severance package and Eads was sent home with the assurance that he was not fired.  Eads later learned his supervisor was telling folks he had been fired and he could no longer access his email from outside of work.  

The court of appeals held Eads was entitled to a jury trial.  The problem for Brookdale was that, as the court said it was "advancing different reasons in its brief on appeal than it represented to the district court."  Even worse, Brookdale's assertions in the litigation were not the same as those it made in response to Eads EEOC charge.  Brookdale's in house counsel said in the response that Eads had been terminated for "lack of any performance in any position."  This answer was so far wrong that Brookdale's brief on appeal "explicitly denies having terminated Eades for performance issues" saying its counsel had made a mistake. As the court said, however, "Brookdale offers no evidence that either one suggested that the response was erroneous, nor does it explain how its Senior Vice President for Legal Services made such a 'mistake.'"

The inconsistency with the EEOC response was not the only problem. Brookdale's lawyers appear to have put to much "spin" on the severance discussions. They asserted that Eads said "he could not work with [his supervisor] and that he wanted a severance package, but this position is inconsistent with the record testimony of the attendees of that meeting."

The problem with Brookdale's case wasn't simply that it gave unsupported reasons for firing Eads.  Any one of the reasons Brookdale advance might have valid ones (had the facts been in support).  But when employer  and employer asserts different and inconsistent reasons for a decision, that is itself evidence of pretext, as the court said: “An employer’s changing rationale for making an adverse employment decision can be evidence of pretext.”  

In practice, there will be some debate as to what amounts to a "changing rationale."  Courts rightly look to whether the changing reasons are inconsistent, not merely changing.  For example, courts recognize that expanding on a reason already advanced does not ordinarily amount to taking an inconsistent position.  Here, however, Brookdale's assertion to the EEOC that performance was the sole reason for firing Eads could not be reconciled with its position in the litigation.  

By now, the lesson is obvious.  Before taking any employment action, employers need to investigate the  facts and make sure the explanation given at the start is something the employer can live with if litigation ensues.

New Decision Roundup – Cat’s Paws, Investigations and Comp Time

I usually devote each post to one decision or some part of recently introduced legislation. Several court decisions were released last week but none, in its own right (especially in light of my prior blog posts) justifies my usual (too-involved) devotion. That said, I thought I would just give a short description of the decisions and say why each merits some short attention.

Proctor Hospital fired a reservist (for "insubordination, shirking, and attitude problems) who the sued it under USERRA, claiming his military service was the real reason for his firing. A jury agreed with him but the court of appeals in Chicago set the verdict aside because the court improperly admitted "anti-military" evidence that was not shown to have influenced the final firing decision. The decision has some excellent legal points for employment defense lawyers about whether the judge or the jury determines whether statements should be admitted but for employers (especially for those who read this blog), the message should be familiar. The issue here was whether the decision-maker was free of the anti-military statements made by the subordinate because the decision-maker conducted an "independent investigation" by "look[ing] beyond" the reports of misconduct from the biased supervisors and determined, based upon the employee's poor employment history with the hospital. Interestingly, while the Seventh Circuit essentially coined the "cat's paw" phrase in the discrimination context and other courts have used the phrase, the Seventh Circuit's approach to it is pretty demanding as compared to the Sixth Circuits. Under the Seventh Circuit decisions (and other courts as well), the decision-maker must truly rubber stamp the biased decision of a subordinate. The court says the standard requires the employee to show the decision-maker was blindly reliant on the report. The standard on this issue in the Sixth Circuit is far less clear but for the reasons I've given in prior posts, employers won't err by conducting in-depth investigations.

The Sixth Circuit has brought some needed clarity to what evidence is required before an employee can show the employer's reason for firing is so unreasonable as to be pretextual. One of the Home Depots in Nashville fired an assistant store manager ("ASM") because, on two occasions, she violated the company "no-self-service" policy that prohibits employees from ringing up their personal transactions. The ASM knew of the policy and its purpose (preventing employee theft) but had not been disciplined between the first and second infractions. Home Depot – wait for it – conducted an investigation, met with the ASM, reviewed security camera footage of the infraction and the decision to fire the employee was consistent with its practice in 18 other similar situations. This isn't a "cat's paw" case, however, because there was no evidence that any manager had made sex-based comments. The ASM's argument was that her firing was "unreasonable." While the "fairness" of a firing decision is not the issue in a discrimination claim, pretext can be shown under Sixth Circuit decisions where the firing is so unreasonable that it tends to show the employer was not being honest about its reasons. Prior decisions have, however, muddied the water somewhat giving the ASM the opportunity to argue that firing her for only two violations was so extreme it was unreasonable. That argument failed here, the court said, because Home Depot's "overly strict interpretation" of its "no-self-service" policy was not alone enough to show pretext. What had to be shown was that the ASM's interpretation of Home Depot's rule was "far superior" to how Home Depot interpreted it. In other words, Home Depot might not have won if its interpretation was a pretty-good stretch under terms of its policy; an example of this appears in Mickey v. Zeidler Tool & Die Co., 516 F.3d 516, 527 (6^th Cir. 2008). It also helped, the court said, that Home Depot conducted a "reasonable investigation prior to [the ASM's] termination, which strongly supports the view that it made an honest rather than a pretextual decision when it relied on the self-service rule to terminate her." So, aside from the obvious help the investigation made, before terminating someone based upon a policy violation, be sure the policy language can be reasonably interpreted to prohibit the conduct for which you are going to terminate the employee. This case shows the policy doesn't have to explicitly prohibit the conduct but your interpretation of the policy must still be reasonable.

Turning to a completely different subject, the Seventh Circuit has clarified the DOL Wage and Hour rules on how cities must grant requests to use compensatory time ("comp time) for police officers under the FLSA. The dispute concerned Chicago taking the position that it, not the police officers, was entitled to name the date and time the officers could use their comp time. The officers, Chicago said, could only submit requests and the police department simply needed to offer some leave within a reasonable time of the request. It left the decision as to what was a reasonable time to the shift supervisors. The DOL regulation, 29 C.F.R. §553.25, says employee who request using comp time must be permitted to use the time off within a reasonable period after making the request unless that would unduly disrupt operations. Unlike other courts, the seventh circuit rejected Chicago's attack on the regulation and held that Chicago had improperly denied leave requests. The proper method, the court said, is that the "employer must ask whether leave on the date and time requested would produce undue disruption, and only if the answer is yes may the employer defer the leave—and then only for a 'reasonable time.'" Governmental employers should note that the DOL has proposed amendments to § 553.25 (among other things) which would no longer require employer to grant the leave on the date requested (you can keep up with the status and read comments about the proposed regulations at regulations.gov). Instead, the regulations as proposed would not require a public agency to allow the use of compensatory time on the day specifically requested, but only requires that the agency permit the use of the time within a reasonable period after the employee makes the request, unless the use would unduly disrupt the agency's operations. The lesson to be learned, whatever the new regulations say, is don't refuse comp time leave requests if they are inconvenient. There is a process that must be followed.

Firing an Employee on His Return from FMLA Leave

As lawyers, we sometimes have a non-practical view of the workplace. For example, to us the FMLA is about "leave" when in reality, the more fundamental point of the FMLA is to project the employee's job when the need for leave ends. The right to medical leave would be worthless without the right to reinstatement, a point the Sixth Circuit made last August.

A court of appeals decision last week, however, addressed a situation where the employer discovered performance problems while the employee is on FMLA leave. Mr. Cracco worked as a Service Center Manager for Vitran Express, a trucking company, at one of its Illinois terminals. He took approved leave for a medical condition and Vitran hired "several replacements" to cover his job while he was gone. The replacements discovered numerous problems, disorganization, not following of procedures, freight sitting on the dock, damaged fright hidden, safety concerns, customers complaining, overtime not being handled properly, and discrepancies in freight records. Based on these reports, the company launched an investigation, determining that Cracco had not simply made mistakes but had engaged in "deliberate attempts to disguise late and damaged deliveries." For that reason, Vitran then fired Cracco the day he returned from FMLA leave.

Cracco sued, claiming retaliation and interference under the FMLA. The court rejected all of his arguments. On the retaliation claim, the court held that the FMLA did not per se prohibit an employer from terminating an employee because, while the employee was on leave, the employer learned of misconduct. Notice the "but for" connection here. If the employee had not gone on medical leave, the employer might never have learned of the faked records. But that is not enough in itself to show legal causation under the FMLA.

Cracco's FMLA inference claim foundered because of that portion of the FMLA which provides that an employee's right to reinstatement is not absolute and the employee is not entitled to "any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave." 29 U.S.C. § 2614(a)(3)(B). So, an employee is not entitled to reinstatement if the employer can "present evidence to show that the employee would not have been entitled to his position even if he had not taken leave." Now here is the important point about Cracco v. Vitran.

Vitran presented "substantial evidence" that Cracco had faked records, of its investigation and how it learned of the misconduct in the first place. In contrast, the employee presented "no evidence" that the reports were not made or that Vitran's investigation was not an honest attempt to ascertain the accuracy of the allegations.

There's no question that an employer may take employment action against an employee for what the employer discovers while the employee is on FMLA leave. The real issue is what is behind the discovery. Honest investigations, as I have stressed elsewhere, are the key. Even on the interference claim, the issue in this case wasn't whether or not the misfeasance had occurred but whether or not the employer honestly believed it occurred. The employer showed this by conducting a thorough investigation – though oddly enough, the court never mentioned whether or not the employee had been interviewed as part of the investigation. (There would have been good reasons for not interviewing the employee: he was on medical leave and the performance issues were self-evidence in the delivery records). There was also a lack of evidence regarding how the employer had treated similarly situated employees and this evidence can be quite crucial in any discrimination lawsuit.

A word to the wise. Because the taking of FMLA leave is itself protected, the timing of any employment action is going to look bad so a smart employer will be extra-careful in documenting the investigation, the basis for the decision and whether any other remotely similar incidents are distinguishable or not.

Even "Compelled" Statements During Harassment Investigation are Protected

The Supreme Court has issued its decision in Crawford v. Metropolitan Government of Nashville and Davidson County and not surprisingly held that Ms. Crawford's statements were protected by the "opposition" clause of Title VII. I previously discussed Crawford in a prior post so I won't say too much about it here.

Two points are noteworthy.

The Court generally held statements during an internal investigation that report harassing conduct are protected but the Court also observed: "It is true that one can imagine exceptions, like an employee’s description of a supervisor’s racist joke as hilarious, but these will be eccentric cases . . ."

The Court's decision rested solely on the opposition clause of Title VII. The Court did not address whether an employee's participation in an employer's harassment investigation was "participation" clause protected activity. That avoids at least one headache for employers.

Honest Beliefs and Employer Investigations

For some time now, the Sixth Circuit has waged a debate over what has become known as the "honest belief" rule in discrimination law. (It is no "rule", of course, only legal precedent based upon a number of court decisions. Lawyers tend to label precedent we "like" as a "rule," and if we don't like it, well, we call it something else.)

Last week the Sixth Circuit decided an appeal involving the "honest belief" rule. The case provides Tennessee employers with more or less a "how to" guide on getting a discrimination claim dismissed. A hospital in Kentucky fired two employees after one took home x-rays of a patient. The patient in question happened to be the grand-daughter of one of the employees. The employee other aided grandma. There was no family dispute here; the grand-daughter hurt her arm and had x-rays done where grandma worked. Mom then forgot to take the x-rays with her (to give to another doctor) so she did what we all do, she called grandma. Grandma, however, knew the hospital had to have a signed permission form from mom to release the x-rays and forged, so the hospital concluded, mom's name on the permission slip. The hospital's concluded that the employees had violated the hospital's HIPAA rules by not having written permission.

The employees tried to argue they neither violated HIPAA nor the hospital's policies. The key point, the court said, was that the employer honestly believed the employees had violated hospital policy. The "rule" in the Sixth Circuit is confused but the general consensus is that a belief is honest if the employer can point to the specific facts it relied upon to make the decision and show it reasonably relied on those facts. (Saying the reliance has to be "reasonable" sounds suspiciously like saying the decision must be "fair" as opposed to nondiscriminatory but that is a topic for another day.)

Where the hospital won this case was during its investigation. Firing grandma for taking a grand-daughter's x-rays when grandma has mom's oral permission was pretty radical. But the investigation showed grandma and her co-worker knew they had to have written permission (they were so told when grandma asked for the x-rays) and then grandma "signed" mom's name to the permission slip. The hospital also met with both employees to hear their side of the story but ultimately decided that their justifications did not excuse the misconduct. (And smart hospitals take their HIPAA obligations seriously.)

The important point here is that when taking a serious employment action, the more effort that goes into the investigation, the more chance the employer has of winning a later lawsuit. Take this case. During the investigation, the hospital was apparently confronted with differing versions of events. It interviewed the employees but rejected their assertions. The hospital thus decided what it "believed" before it implemented any decision. Even though the court said the hospital's privacy policy could have been better defined, it still tossed their claims because disagreeing with what the investigation found was not enough. The employees had to show the investigation was dishonest.

Now, in theory, even if the employer had not conducted an investigation, it shouldn't have made a difference legally. Honest beliefs, after all, are not discriminatory even if they are stupid or ill-founded. In practice, however, it is difficult to convince a judge, much less a jury, that you are being honest when you don't even try.