Supreme Court Requires High Standard to Show Actual Knowledge

On Wednesday, the unanimous Court held that ERISA’s shorter three-year limitations period applies only when the plaintiff gains “actual knowledge” of the alleged fiduciary breach.   Intel Corp. Investment Policy Comm. v. Sulyma, __ U.S. __, No. 18-1116 (U.S. 2-26-20).   A plaintiff does not necessarily have “actual knowledge” under §1113(2) of information contained in disclosures which he is provided on a website but he does not read or cannot recall reading.  The statute “requires more than evidence of disclosure alone. That all relevant information was disclosed to the plaintiff is no doubt relevant in judging whether he gained knowledge of that information.  . . . . To meet §1113(2)’s “actual knowledge” requirement, however, the plaintiff must in fact have become aware of that information.”  Nonetheless, “actual knowledge” may be proven through “usual ways” at any stage in the litigation, including through “inference from circumstantial evidence.”  Defendants may also contend that evidence of “willful blindness” supports a finding of “actual knowledge.”  Methinks that we will see many more "click" requirements to demonstrate that we have read legal disclosures. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Faults Employer For Denying Transfer Request in ADA Case

This morning, the Sixth Circuit rejected an employer’s summary judgment on an ADA claim on the grounds that a factual dispute existed as to whether vacant light duty positions existed into which the employee could have been transferred as an accommodation.  Fisherv. Nissan North America, Inc., No. 18-5847 (6^th Cir. 2-26-20).   The Court concluded that even if the employee was not explicit about requesting a transfer into such a position, the employer was obligated to educate the employee about possible vacant positions into which he could transfer.   Further, the Court seemed to indicate that an employer would almost never be permitted to terminate an employee based on an inability to report to work because of a disability unless the employee was never going to be able to report or was unqualified for a reason unrelated to his or her disability.    Finally, the Court found that the employer was to blame for a breakdown in the interactive process because it failed to respond to his transfer requests by explaining why the positions were unsuitable or making other suggestions even though it had granted several prior accommodations, including other transfers and medical leaves.


According to the Court’s opinion, the employee had exhausted all FMLA and paid leave due to a failing kidney, and eventual transplant surgery in August 2016.  Although he still had not adjusted to the anti-rejection medication or fully recovered from the surgery (which his physician indicated could take another year), he was released to return to work in October 2016 to avoid being discharged.  He was told that he could not return to work with restrictions.   At his request, the employer transferred him to another position, but he found it physically draining.  He requested and was denied extra breaks or to work half-time.  When his physician indicated that he required a month of gradual work hardening, the employer then granted him another leave of absence.  


He then returned to work about a month later at the end of November to his regular job, but left work early three times and called off three times in the next two months because of his health.  Each time he received disciplinary action, he requested a transfer to a light-duty inspection position or to reduce his work hours, but his supervisor told him that such transfers were only available for work-related injuries.  On February 3, Human Resources told him that another transfer would not solve his inability to report to work and he was issued a final written warning for poor attendance.  Although he had previously been told that he could not return to work with restrictions, Human Resources told him that they needed written medical restrictions, not his own suggestions about possible accommodations.  He then stopped coming to work altogether and was fired for absenteeism.  After filing suit for failing to engage in the interactive process or providing a requested accommodation, the trial court granted the employer summary judgment.  The Sixth Circuit reversed.


The Court’s decision ultimately hinged on a factual dispute as to whether there were vacant light duty positions into which the employee could have been transferred while he recovered from his kidney transplant.  The Court conceded that the employer was not required to bump employees to make room for the plaintiff, but the employer had not explicitly produced any evidence about the light duty positions and the plaintiff testified that he believed that there were such vacancies.


Prior to reaching that conclusion, the Court seemed to indicate that an employer would never be able to terminate an employee for poor attendance if that attendance was caused by the employee’s disability.   According to the Court, every denial of accommodation is evaluated only under the direct evidence test.  Once the employer concedes, as it must, that the employee is qualified, has a disability, was denied a particular reasonable accommodation (i.e., a transfer, etc.) and then was fired for poor attendance caused by the employee’s disability, the employer has then violated the ADA and can only prevail if it can show undue hardship or that the requested accommodation required the elimination of an essential job function (i.e., business necessity).


In this case, the employer argued that the plaintiff was “otherwise unqualified” for his position based on his poor attendance. “But this logic does not apply if the absenteeism is caused by an underlying failure to accommodate a disability. . . . If, by contrast, no reasonable accommodation would cure the attendance problem—as, for example, when an employee is not medically cleared to work at all . . . or blames his absences on car problems rather than disability,  . . .. —the employee is not qualified.”   When an employee’s attendance problems are not related to his disability, the employee is free to terminate the employee.  “For purposes of the “otherwise qualified” analysis, absenteeism that can be cured with a reasonable accommodation is treated differently” than other job requirements.

[The plaintiff] stated on the record that all the absences were “because of [his] kidney.”  In its  briefing, [the employer] does not dispute this point.  Thus, [his] absences do not in and of themselves render him unqualified for his position.  Instead, under Dolgencorp, we ask whether those absences could have been avoided with reasonable accommodation—or, as in Brenneman, whether no reasonable accommodation would cure them [because the absences were not caused by the disability].   

               . . .

The ADA requires employers to “mak[e] reasonable accommodations.”   . . .  The plaintiff bears the initial burden of showing “that an ‘accommodation’ seems reasonable on its face, i.e., ordinarily or in the run of cases.”   . . . The defendant then must show either “special (typically case-specific) circumstances that demonstrate undue hardship in the particular circumstances,”  . . . or that the proposed accommodation eliminates an essential job requirement, . . .

The plaintiff requested three types of accommodations and only needed to prove that one of them would have been effective to prevail on his claims.  The Court ultimately only addressed his request for a transfer.  One of the positions – an offline/rotating substitute position --  was admittedly filled with more senior employees and, thus, the employer was not required to grant that request. “First, if there was no opening, the position was not “vacant,” as required by 42 U.S.C. § 12111(9)(B).  . . . .  And second, it is not “reasonable in the run of cases” for a disability-related request for accommodation to “trump the rules of a seniority system.”

To show disability discrimination in the reassignment context, a plaintiff must show either that “he requested, and was denied, reassignment to a position for which he was otherwise qualified” or that “he requested and was denied some specific assistance in identifying jobs for which he could qualify.”    . . .  If an employee requests assistance in identifying vacant positions—even a request as generic as “I want to keep working for you—do you have any suggestions?”—then “the employer has a duty under the ADA to ascertain whether he has some job that the employee might be able to fill.”   . . . .The employee is not required to use magic words such as “accommodation” and “disability”; rather, we ask whether “a factfinder could infer that [the interaction] constituted a request for an accommodation.”   . . . .  Then, “to overcome summary judgment, the plaintiff generally must identify the specific job he seeks and demonstrate that he is qualified for that position.”

Between the plaintiff’s requests to his supervisor to transfer him to an inspection position and his request to HR to transfer him, the employer was required to explore transferring him to the inspection position or tell him about open vacancies, including positions that would constitute a demotion. “There is no evidence in the record of comparable attempts by Nissan to identify suitable alternative positions for Fisher.”  Further, although the plaintiff testified that he believed that there were vacant inspection or fit positions available, the employer produced no evidence to the contrary.   


Thus, with sufficient evidence of a possible transfer being available, the employer could only prevail by showing that the transfer would have constituted an undue hardship or required the removal of an essential function of the job. The employer argued that the prior transfer proved unsuccessful, so it assumed that this transfer would be equally unsuccessful.  However, this did not consider the differences in physical effort required in the two positions which might have affected the plaintiff’s health.   The Court concluded that simply because the last transfer was unsuccessful does not mean that a transfer to a less physically demanding position would be equally unsuccessful and the employer failed to produce specific facts to support its position.


The Court never once discussed whether attendance or reliable attendance was an essential function of the job and assumed that the plaintiff would be able to meet the attendance requirements of the new position.


The court also faulted the employer for the breakdown in the interactive process.  All was going well and in good faith as far as the Court was concerned until the employee returned to work at the end of November and continued to have health issues.  The employee requested to transfer to the inspection position or for help finding another suitable position.

At a minimum, [the employer] was then required to “show[] how the accommodation would cause an undue hardship . . .  or “that a challenged job criterion is essential,”  . . .  As discussed above, [the employer] has not carried this burden.  Nor is there any evidence that, from late December through early February, as [the employee’s] need for accommodation became even more apparent, [the employer] took any steps that evidenced good-faith participation in the interactive process, such as proposing counter accommodations.

Accordingly, a jury could find that the employer was at fault for not responding to the employee’s requests for assistance, for not proposing alternatives and not acting in good faith to preserve the employee’s employment. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court Rejects Public Policy Wrongful Discharge Claim for Protesting Payroll Fraud

Earlier this month, a divided Ohio Supreme Court ruled in favor of an employer on a public policy discharge tort.  House v. Iacovelli, Slip Opinion No. 2020-Ohio-435. The Court found that the plaintiff’s discharge for protesting her payroll stubs’ failure to accurately report her income “does not jeopardize any public policy that employers must accurately report employees’ pay and tips to the Bureau of Unemployment Compensation.” The Court found that the existing statutory structure and penalties on employers were sufficient to protect public policy. Therefore, “a personal remedy is not necessary to discourage wrongful conduct by employers  . . . “  Further, the unemployment tax statutes cited by the plaintiff do not prohibit retaliation against whistleblowers.  


As previously reported two years ago here, the plaintiff waitress alleged in her complaint that she confronted the restaurant’s owner about her payroll stubs underreporting her wages and tips.  He allegedly admitted that he had underreported her income and failed to make all of the required contributions in violation of Ohio Revised Code Chapter 4141.  She “further alleged that instead of addressing the issue, [he]  accused [her] of creating “too much drama” and terminated her employment.”  Thereafter, she alleged that he requested that she mislead ODFJS by claiming that she was laid off for lack of work and he agreed to give her $150 every two weeks to make up for the unemployment tax shortfall.  


Even though the defendant employer failed to file a timely motion to dismiss or summary judgment motion, the trial court dismissed the claim on the eve of trial on the basis that the plaintiff failed to satisfy the jeopardy element for public policy wrongful discharge claims.  That trial court found that the sole remedy under ORC 4141 was for the Attorney General to bring suit; no individual remedies were created. The Court of Appeals reversed. “While the administrative appeal process [to challenge the amount of awarded benefits] provides a viable mechanism to challenge a determination of benefits, it fails to set forth a remedial scheme for a situation such as this where an employee is terminated merely for inquiring about why her pay did not reflect the amount she had earned.”  The Court also found that failing to recognize such a claim would chill public policy because employees would not report such payroll failures if they could be fired for bringing them to the employer’s attention.


The Supreme Court reversed.  

When the sole source of the public policy is a statutory scheme that provides rights and remedies for its breach, as it is here, we must consider whether those remedies are adequate to protect society’s interest as to the public policy.   . . .  It is less likely that a wrongful-termination-in violation-of-public-policy claim is necessary when remedies for statutory violations are included in the statutory scheme. . . . This is especially true “when remedy provisions are an essential part of the statutes upon which the plaintiff depends for the public policy claim and when those remedies adequately protect society’s interest by discouraging the wrongful conduct.”  

            . . . After reviewing R.C. Chapter 4141, it is apparent that the General Assembly has provided remedies that discourage employers from inaccurately reporting employees’ pay and tips to the Bureau of Unemployment Compensation (violating R.C. Chapter 4141) and that punish employers who fail to comply with the requirements in R.C. Chapter 4141.

The statutory scheme is structured to protect only the government’s interest and was not designed to protect employees, unlike other statutory schemes  for whistleblowing, etc. where employee protections were contemplated.   In addition, an anti-retaliation remedy would only prevent retaliation and would not address or discourage the employer’s alleged failure to accurately report payroll information, which is the primary focus of the statute.  Finally, the unemployment tax statutes cited by the plaintiff do not contain any prohibition against retaliation towards whistleblowers.


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

EEOC Releases 2019 Fiscal Year Enforcement Statistics

Last month, the EEOC released its annual enforcement statistics for the fiscal year that ended on September 30, 2019.  It received 72,675 Charges in the last fiscal year (a 4% decrease from last year) and, like last year, approximately 3% of those were filed in Ohio.    Retaliation remains the most common form of allegation made in Charges of Discrimination, being asserted in over half of all charges filed.  About the same percentage of Charges were filed on the basis of race, sex and disability (approximately 32% each).  There was a slight decrease in the number of sexual harassment and age discrimination charges filed.  (Obviously, Charges may contain more than one type of allegation).   

The EEOC also reported that it resolved 80,806 charges of discrimination (compared to the 72,675 filed) to continue to reduce its long-standing backlog.  It reported that it had filed 144 lawsuits, resolved 173 lawsuits and recovered $39.1M through litigation. The EEOC secured approximately $346.6M prior to litigation (a reduction from past years) and other relief.

As for the pre-litigation resolution of Charges, 6.6% were resolved through settlement and 6.1% were withdrawn by the Charging Party (without a formal settlement) with benefits.  More than fourteen percent were administratively closed (which likely means that the Charging Party could not be located or had stopped returning calls). Almost 70% of Charges were dismissed for lacking probable cause (i.e., lacked merit or proof).   All of these statistics are similar with the prior year.   Only 3% of Charges (approximately 2,385 of the Charges) were found after an investigation to assert probable cause of discrimination.  This is a decrease over last year.   Less than half of these Charges were successfully conciliated prior to litigation. 

Sixth Circuit Does Not Require Employers to Give Any Explanation for Termination Decision Until EEOC Charge is Filed

Yesterday, the Sixth Circuit affirmed an employer’s summary judgment on an ADEA claim where the plaintiff had been fired by the new executive director without an explanation, but was later justified by the documented mismanagement (by the state controller) of two of her departments and her toxic relationship with subordinates (as reflected by numerous complaints) even though she received no progressive disciplinary action.  Miles v. South Central Human Resources Agency, Inc., No. 19-5202 (6^th Cir. 1-7-2020).  Further, the Court did not require the employer to conduct an investigation to justify its decision and rejected the plaintiff's challenges for failing to administer progressive disciplinary action. 

According to the Court’s opinion, the agency was investigated for financial mismanagement by state and federal agencies, which found significant problems.  The executive director resigned and two financial managers were immediately fired by the Board after being specifically identified in the government report and admitting their culpability.  Two of the mismanaged departments were the responsibility of the plaintiff, who was terminated 10 days later by the new executive director without any explanation. She blamed her subordinates, threatened to retaliate and filed an EEOC Charge.  At that point, the employer explained that she had been terminated for her poor management of the two departments criticized in the government reports and having a toxic relationship with her subordinates (as reflected by numerous complaints received by the new executive director).  The trial court granted summary judgment and the Sixth Circuit affirmed. 

The Court observed that the plaintiff could not show that age discrimination was the “but for” cause of her termination in light of the government reports and the complaints about her.   Further, she could not show that the employer’s explanation was pretexutal.  There are three primary methods to show that an employer’s explanation is pretextual: “(1) that the proffered reasons had no basis in fact, (2) that the proffered reasons did not actually motivate the employer’s action, or (3) that the proffered reasons were insufficient to motivate the employer’s action.”

1)     The plaintiff could not show that there was no basis in fact for her termination in light of the government report or the receipt of the numerous employee complaints.  “For a plaintiff’s challenge to the factual basis of an employer’s proffered termination rationale to establish pretext, the plaintiff must provide evidence that the employer’s allegations never happened.”  The Court rejected the following challenges:

a)      The government report did not specifically identify her by name, unlike the two financial managers. “But this hardly means that the report did not implicate her.”   It did specifically identify wrongdoing in several departments and two of them were her responsibility.  She “cannot argue that the report failed to implicate her simply because it does not mention her name.”

b)     The employer’s failure to investigate the employees’ complaints about her or even to be able to describe them showed the lack of a particularized facts and were hearsay. The employer “did not offer . . . testimony to show that [the plaintiff] in fact treated her subordinates poorly.  It did so to show that her subordinates lodged these complaints  . . .”   While generally an employer should investigate the basis of an employee’s termination prior to making the decision, the Court did not require it here.  “Terminating an employee only because of complaints from her subordinates— without investigating the merits of those complaints—may be unwise, but that’s not the question here.”  None of her challenges disputed that the employee complaints were made and only focused on the merits of the employee complaints.  However, the employer terminated her based on the fact of the complaints, not their merits. 

2)     The plaintiff could not show that the articulated explanation was not the true motivation for her termination.

a)     The Court rejected her argument that the employer’s shifting explanation for her termination – to no explanation in her termination meeting to its articulated reason given only after she filed an EEOC Charge – was suspicious because the eventual explanation did not conflict with the lack of explanation during her termination meeting. “’[P]roviding additional, non-discriminatory reasons that do not conflict with the one stated at the time of discharge does not constitute shifting justifications.’”  Endorsing the practice of refusing to give any explanation at time of an employee’s discharge: the employer’s “proffered rationales do not conflict with the reason stated at the time of discharge because [the employer] provided no reason at the time of discharge.”

b)     Employers are not required by the ADEA to given an employee any explanation when they are terminated: “[N]othing in the ADEA requires an employer to justify a termination to the fired employee, even if she is among the protected class.  So an employer’s explanation for not providing such a rationale cannot alone establish a genuine dispute as to pretext.” It was irrelevant that the employer informed her peers 10 days earlier why they were being terminated because they were not similarly-situated to her (in that they were named specifically in the government report and acknowledged their culpability).

3)     The plaintiff could not show that the reasons given were insufficient to motivate a decision to terminate her employment. 

a)      The plaintiff could not identify similarly-situated comparators by identifying two of her subordinates (of unknown ages) whose culpability  and performance standard was less than her own or by comparing herself to two peers who were fired for cause 10 days earlier after admitting their culpability in the mismanagement.   “It cannot be said that conduct that might be tolerated or treated with progressive discipline at lower ranks must be similarly accepted from the [highest employee’s] advisors, who are held to a higher level of professionalism and who are expected to set the standard of conduct for the [employer].”    Indeed, “[f]iring the most senior employee responsible for mismanagement while maintaining, or even promoting, their subordinates, despite their involvement in the mismanagement, is an employment practice that is not unorthodox and is in fact common in some industries.”  Moreover, the plaintiff’s misconduct was worse because she granted unlawful favoritism in the bidding process to the spouse of a co-worker and was responsible for two programs (instead of one), while the subordinates were passively each responsible for only one program.  At the pretext stage, the comparators must have engaged in substantially similar misconduct.   

The Court also rejected a variety of miscellaneous arguments that the plaintiff raised to question the truth of the employer’s explanation for her termination.  She pointed out that five of the nine program directors and senior staff who were fired or resigned were all over the age of 40, but she failed to identify the ages of the remaining directors and senior staff. “To [be relevant], the statistics must show a significant disparity and eliminate the most common nondiscriminatory explanations for the disparity.”  Here, some of the replacements were older than the terminated employees.

In addition, she could not rely on comments 6 months later about trying to recruit young people because they were irrelevant to the termination of her employment. “Even if [the employer] wanted to attract young people, that says nothing about terminating older employees.”  Moreover, even “[i]f these are discriminatory remarks, they can only serve as pretext if “a person in a position to influence the alleged employment decision” made them and they are not “so isolated or ambiguous as to be nonprobative.”

Finally, she could not show pretext from the employer’s failure to utilize the progressive disciplinary policy which for serious misconduct required the suspension of the employee pending investigation because, among other things, the employer did not rely on the policy to justify her termination, did not treat anyone similarly situated was differently and had reserved for itself the right to change the policy when it saw fit.

“an employer’s failure to follow self-imposed regulations or procedures is generally insufficient to support a finding of pretext.”   . . .  We have held that failure to uniformly apply a progressive discipline policy can be evidence of pretext, especially when the company asserts that policy as a rationale for the employee’s termination.   . . . And SCHRA did not articulate its progressive discipline policy as a rationale for Miles termination.  SCHRA was also not even bound by its own policy.  As stated in the first paragraph, SCHRA “retain[ed] the right to administer discipline in any manner it [saw] fit,” such as “bypass[ing] the disciplinary procedures suggested . . .Thus, even in not complying with the ordinary procedures, SCHRA was still acting within its discretion provided by the policy.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.