Sixth Circuit Refuses Employee Claim for Age Discrimination and to Award Attorneys Fees to Prevailing FMLA Plaintiff

This morning, the Sixth Circuit issued a few employment decisions that may be of interest to employers and employees.  In the first case, the Court rejected the plaintiff’s age discrimination claim where she had been fired for insubordination.   Pelcha v. MW Bancorp, Inc.,  No. 20-3511 (6^th Cir. 1-12-21, amended 2-19-21).  The Court reiterated that the Supreme Court has held the ADEA does not permit mixed-motive cases, unlike Title VII.  Further, her evidence of stray remarks by the Bank’s president about an employee who was 40 years older than her were too vague and unrelated to her situation to constitute direct evidence that she had been fired because of her age.    In the second case, the plaintiff physician was denied prevailing party attorney fees in his FMLA claim by the arbitrator because he had failed to educate the arbitrator that the statute prevailed over contrary language in the arbitration clause and because he failed to submit any definitive evidence of the fees he was claiming.

In the first case, the plaintiff teller was fired by her long time banking employer for insubordination for refusing to submit a written request for time off until the day before her day off even though such requests were due a month in advance.  She argued that this was pretext for age discrimination.  The district court granted summary judgment to the employer and she appealed.

The plaintiff attempted to argue that she had proved age discrimination with direct evidence based on a few inflammatory statements that the Bank’s president made about another employee who was 40 years older than the plaintiff and that he wanted to hire younger tellers.  The Court disagreed.  “In reviewing direct evidence, we look for “evidence from the lips of the defendant proclaiming his or her . . . animus.”  . . .Inferences are not permitted.”

“Direct evidence is evidence that proves the existence of a fact without requiring any inferences” to be drawn.  . . . In other words, direct evidence is “smoking gun” evidence that “explains itself.”

                . . .

In determining the materiality of allegedly discriminatory statements, we consider four factors, none of which are dispositive: “(1) whether the statements were made by a decisionmaker . . . ; (2) whether the statements were related to the decision-making process; (3) whether the statements were more than merely vague, ambiguous or isolated remarks; and (4) whether they were made proximate in time to the act of termination.”

             . . . None of the statements were related to [the plaintiff]’s termination. In fact, they were not made in relation to any termination decision and were about an entirely different employee. Additionally, nothing in the record suggests that the statements were more than isolated remarks. Here, it appears as though these statements were only made once or twice to certain higher-level management employees.

                . . . Hiring younger tellers does not require the termination of older employees.

 . . ., in terms of timing, the comments in question come from late 2015 or early 2016, more than six months before her termination. We have previously suggested that time spans of six or seven months can be temporally distant.

That being said, such statements could be considered as circumstantial evidence to argue pretext if the plaintiff attempted to prove her case through burden shifting and to raise a “plausible inference of discrimination.”     Nonetheless, the Court found that the plaintiff failed to prove that the employer’s explanation for her termination – that she was insubordinate – was pretext for age discrimination.

First, the plaintiff could not prove that the explanation had no basis in fact.  She argued that she was not insubordinate because she had submitted a written request one day in advance and had obtained verbal approval a month in advance.  However, the Court pointed out that she had been required by her manager’s policy to submit the written request a month in advance and she had admittedly told her manager that she refused to do so because she disagreed with the policy.  She did not ultimately submit her written request until the day before her took time off.  Her “late completion of the form could not cure her original refusal to follow Sonderman’s directive.”

She also could not prove pretext with the isolated and sparse comments that the Bank president had made about another situation. Those comments “were not directed towards Pelcha, not directed towards anyone near Pelcha’s age, and not made in connection with any termination decision at all.”

She also could not show that her employer changed its explanation for her termination by also later documenting issues with her negative attitude and contribution to a negative work environment.  Prior decisions have held that “providing “additional, non-discriminatory reasons that do not conflict with the one stated at the time of discharge does not constitute shifting justifications”.

In addition, she could not show pretext by arguing that the employer failed to comply with its own progressive disciplinary policy.   The policy was clear of the typical steps in the process and clarified that some offenses would justify skipping some or all of the steps.  In conclusion, “an ‘employer may fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason.’”

Ultimately, she also could not satisfy the prima facie case because she could not prove that she was treated more harshly than another, younger employee because the fact that a younger co-worker may have neglected to turn in the form is not the same as insubordination in refusing to turn in the form. “Neglecting to complete a time off form and defiantly refusing to do so upon being asked by a superior are significantly different actions.”

In the second case, the Court denied the appeal of a physician who was denied in arbitration attorney’s fees as the prevailing party on his FMLA claim.  Gunasekera v. War Memorial Hospital, No. 20-1340 (6^th Cir. 1-12-21).   The physician asserted (correctly) that attorneys’ fees are awarded under the FMLA statute to prevailing plaintiffs.  However, the arbitrator reasoned that the arbitration agreement provided that each party would pay its own fees and, in any event, his attorney had failed to submit evidence of the attorneys’ fees accrued to that point during the hearing.    The Sixth Circuit found that a mere error of law by the arbitrator does not constitute the necessary manifest disregard of the law (if that standard even still applied) as required to overturn an arbitration award.  This was particularly true when the arbitration briefs failed to argue that the FMLA provision overrode the terms of the parties’ agreement.    More importantly, the physician failed to submit any evidence to the arbitrator of the amount of his fees. “In that brief, Dr. Gunasekera merely asserted that he was entitled to receive ‘all of his legal fees,’ which exceeded $35,000.”  Without concrete evidence upon which to base an award of a specific sum, the arbitration could not have erred in failing to award fees to a prevailing party under the FMLA.  

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 Rejects Cat's Paw Theory for Discriminatory Job References in Hiring Cases

 Last month, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment on an age discrimination claim based on its failure to interview or hire an applicant with 30 years of experience, but who had poor job references.  Flowers v. WestRock Services, Inc., No. 20-1230 (6^th Cir. 2020).  The plaintiff admittedly could not satisfy certain qualifications for the job established in the job description and was not entitled to override the employer’s ability to establish its own job criteria.  The plaintiff also could not show pretext based on a generic, automated message about preferring more candidates who more closely matched the job requirements.  Interestingly, the Court held that the cat’s paw theory of discrimination did not apply to hiring decisions because the employer could not independently investigate the basis of a negative job reference from a prior employer. “If every reference comes with a federal duty to investigate, hiring will become exceedingly tedious, especially with the volume of applications submitted through today’s digital platforms.”

According to the Court’s opinion, the plaintiff had 30 years of pipefitting experience prior to his 2013 retirement.  He had been told about an open pipefitting position with the defendant employer, which required the ability to read blueprints, to select the type and size of appropriate pipe, and to weld, etc.  He applied online and did not reveal his age.  However, he was not interviewed when a former supervisor now working for the defendant employer reported on his poor work ethic and this was confirmed by another former supervisor contacted by the employer.  He was informed through an automated message that the employer had decided to pursue other candidates whose skills more closely matched the desired requirements and qualifications.   The employer apparently hired two temporary contractors at a higher billing rate.  After the plaintiff heard that a younger candidate with less pipefitting experience, but extensive welding experience, had been hired, this lawsuit followed.  

During his deposition, the plaintiff admitted that he was unable to read blueprints and lacked experience selecting the type and size of pipe appropriate for a job.  He also was not certified in welding because he did not like welding.  The successful candidate was an extremely experienced welder, but there is no discussion of whether he met the other qualifications.  Accordingly, the trial court granted the employer’s summary judgment motion because the plaintiff could not show that he was qualified for the position due to his failure to satisfy the basic requirements for the position.   The trial court also found it was common sense that the employer would prefer to interview a candidate about whom it knew nothing over a candidate with poor job references.

Flowers’s failure to show he was “otherwise qualified” for the job of Journeyman Pipefitter dooms his claim. From the summary judgment record, Flowers has not demonstrated that his “qualifications are at least equivalent to the minimum objective criteria required for employment in the relevant field,” as set out in the job description. . . . Noting Flowers’s admission that he does not know how to select the size and type of pipes or read blueprints, two of the listed job requirements, and aware of Flowers’s disinterest in welding, another job duty, the district court held that Flowers failed to show he was otherwise qualified for the position. We see no error in that conclusion. Requiring a plaintiff to establish a prima facie case under the ADEA framework serves to eliminate the most common nondiscriminatory reasons for an employer’s action. . . .  One such reason is an applicant’s lack of qualifications. WestRock desired a pipefitter who could read blueprints and select pipes, and who also had an interest in welding. Flowers missed the mark in each respect, the first two by his own admission, and the third due to his lack of interest in welding as much as “seven days a week, twelve hours a day.”

Rather than challenging those conclusions, Flowers instead challenges the premise that these skills are necessary for the position. To his mind, pipefitters do not need to read blueprints, nor should they be required to make pipe selections. But as the one who creates the position in question, the employer largely enjoys the right to decide the qualifications it prefers in one who holds the position and, it follows, whether an applicant lacks the necessary knowledge or experience.. . . And given an employer’s superior knowledge of its workplace and industry, the employer’s stated job requirements will typically be the objective criteria by which we measure a fail-to-hire claim. . . . Who, after all, better understands the relevant field and the corresponding skills necessary to succeed than the employer? Not a federal court, one reason why we do not “substitute [our] judgment for that of management” when it comes to business decisions like setting necessary job qualifications.

The Court also agreed that the plaintiff could not show that the employer’s explanation was pretextual based on the poor job references he received.   The plaintiff did not and could not dispute that he had received poor job references.   He also failed to show that his age was a factor.  His age was never indicated on his job application, in any of the negative job references, and, even considering his 37 years of work experience, he could have been as young as 55 (instead of his actual age of 71).

The plaintiff could not show pretext on the basis that he passed the initial review of his application as “generally qualified” because it was undisputed that he received negative evaluations of his work ethic at the next stage.   The Court also refused to find pretext from the employer’s automated message that the employer was pursuing more qualified candidates instead of bluntly telling him that he had poor references.    (This part of the decision is confusing because it indicates that the employer did not in fact consider other, more qualified candidates, despite the factual summary indicating that a candidate with welding experience was hired).  

Accepting Flowers’s contention, moreover, seemingly would impute a legal duty on employers to reject applicants in blunt, precise terms. Some employers may have no objection to telling someone like Flowers that he was not hired because two people, including a prior coworker, thought he had a bad work ethic. Yet many others surely would prefer to respect social etiquette, avoiding hard truths when possible. Either way, certainly the ADEA does not require the former, nor does it suggest that the latter is evidence of age discrimination.

The Court also found that the plaintiff failed to show that the negative references were insufficient to justify the hiring decision because the plaintiff did not show that any other candidates were considered with similarly poor references.

Flowers says there are three such WestRock employees. Yet of the three, WestRock provided evidence that one was hired before Flowers applied, and another was already employed by the company before being moved into a pipefitting apprenticeship. And as to the third, Flowers provides no evidence that the employee received negative references or lacked required skills as did Flowers.

As a final salvo, Flowers invokes an economic rationality argument to justify his age claim. Noting that WestRock paid two contractor pipefitters substantially more than he would have been paid as an employee, Flowers paints this purported “irrational economic decision” as evidence of age discrimination. True, in some circumstances we may consider the reasonableness of an employer’s decision to the extent it explains whether an employer’s proffered reason for an employment action was its actual motivation. Wexler, 317 F.3d at 576. Whether WestRock relied on temporary contractors, however, has little bearing on whether the company was motivated by the negative references.

Finally, the Court rejected the plaintiff’s attempt to prove discrimination through a cat’s paw theory.  Indeed, the Court found that the cat’s paw theory should not apply in hiring decisions because HR could never independently investigate whether a prior employer held a discriminatory animus.  In any event, the Court found that the plaintiff failed to show that the individuals – inside and outside the employer – held an age bias against him when they recommended against hiring him.

Cat’s Paw.  Failing on these fronts, Flowers embraces a novel understanding of what has come to be known as the “cat’s paw” theory of discrimination. The customary application of that theory involves a supervisor who “performs an act motivated by [prohibited] animus that is intended by the supervisor to cause [the formal decisionmaker to take] an adverse employment action.” Staub v. Proctor Hosp., 562 U.S. 411, 422 (2011). Where a supervisor engages in that type of conduct, and where the supervisor’s “act is a proximate cause of the ultimate employment action, then the employer is liable.” Id. This theory of liability serves to prevent the ultimate decisionmaker—for example, a middle manager—from being a shield for a supervisor’s discriminatory intent.

While this theory has been applied to purported discrimination against a company’s current employees, it is quite another thing to extend it to mere job applicants as well. Doing so would place a tremendous burden on human resources employees in culling through applications. After all, a disgruntled applicant could always allege that those employees did not do enough diligence in considering an applicant’s references, both positive and negative, and that one reference or another had some impermissible bias. If every reference comes with a federal duty to investigate, hiring will become exceedingly tedious, especially with the volume of applications submitted through today’s digital platforms. That is unlike the narrower focus of a cat’s paw claim asserted by a current employee or group of employees.

To the same end, whereas the relevant job history for a current employee is likely internal to the company, in the hiring context the relevant history will often lie with another employer. That makes those matters difficult to investigate. Nor, it bears emphasizing, should an employer be liable for the bias of an outsider. Take this case, for example, where one of the negative reviews of Flowers came not from a WestRock supervisor but rather from an employee of another company. While the cat’s paw theory might apply to root out supervisory employees who attempt to shield their discriminatory motives through an internal third-party, it makes little sense to apply that same theory to an allegedly impermissible motive that stems from one who does not even work for the company in question. In the district court’s words, extending the cat’s paw theory as Flowers urges is simply “beyond the pale.”

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.

Supreme Court Holds that ADEA Claims Apply to All Government Entities Regardless of Size

This morning a unanimous Supreme Court ruled that the provisions of the Age Discrimination in Employment Act apply to all governmental employers regardless of size.   Mt. Lemmon Fire District v. Guido,  No. 17-587  (11-6-18).   Thus, a fire department with fewer than 20 employees would be subject to ADEA claims challenging its reduction in force.   The Court found that the amendment of the ADEA adding government subdivision liability was more similar to the amendment of the FLSA, which applies to all governmental employers regardless of size, than to the amendment of Title VII, which only applies to employers – including governments – with more than 15 employees.  This is consistent with how the EEOC has traditionally interpreted the statutes, but is contrary to a 1990 Sixth Circuit holding (governing Ohio).  The Court’s holding was based on the different language used to amend the ADEA to include governments because the phrase “the term also means” typically is interpreted to create an additional, separate category than to modify or clarify a prior term.

According to the Court’s opinion, the defendant fire district laid off its two oldest full-time firefighters as part of a budgetary reduction in force.  The plaintiffs filed suit challenging their termination under the ADEA.  The employer moved to dismiss on the grounds that, with fewer than 20 employee, it was not subject to the ADEA.

When originally enacted, neither Title VII nor the ADEA covered state or local governmental entities.  However, Title VII was amended to include governmental employers in 1972.  The ADEA and the FLSA were amended two years later to include local and state governmental entities.   

Following the amendment, Title VII defined employers to include “persons”: “[t]he term ‘employer’ means a person engaged in an industry affecting commerce who has fifteen or more employees . . . .”  42 U. S. C. §2000e(a)–(b).  In turn, “persons” was defined to include governmental employers: “[t]he term ‘person’ includes one or more individuals, governments, governmental agencies, [and] political subdivisions,”  as well as other specified entities.  Thus, all employers must have 15 or more employees and can include governmental entities.

In contrast, the ADEA defines employers differently:

The term ‘employer’ means a person engaged in an industry affecting commerce who has twenty or more employees . . . .  The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State . . . .

29 U. S. C. §630(b) (emphasis added). Thus, the Court was faced with deciding whether the ADEA’s failure to define “person” as it did in Title VII to include governmental entities meant that governmental entities were not subject to the 20-employee threshold that applied to other persons. “Does “also means” add new categories to the definition of “employer,” or does it merely clarify that States and their political subdivisions are a type of “person” included in §630(b)’s first sentence?”  In other words, does the “term” refer to “employer” or to “person” in the preceding sentence?

In further contrast, the FLSA was amended to define covered employers to include: “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.”  29 U.S.C. §203(d).   Further, “[p]ublic agency” means the Government of the United States;  the government of a State or political subdivision thereof;  any agency of the United States (including the United States Postal Service and Postal Regulatory Commission), a State, or a political subdivision of a State;  or any interstate governmental agency.”  Id. at §203(x).

In interpreting the three different definitions of “employer,” the Court based its ruling on a number of factors.  “First and foremost, the ordinary meaning of ‘also means’ is additive rather than clarifying.”    “Also” is generally understood to mean “in addition to” or “besides” or “likewise.”  It can be read to create an additional category of employer.   In other statutes, “also means” is generally interpreted to recognize separate and additional categories from the earlier categories.   The Court had previously held that the ADEA did not violate state government’s Tenth Amendment immunity and noted in that it applied to employers with so many employees and to state and federal governments as though governments were never subject to the numerical threshold.  

Second, reading the statute otherwise would create a “strange” result by requiring a 20-employee threshold for persons and government entities, but not for agents, “a discrete category that, beyond doubt, carries no numerical limitation.”  Why would “agents” be included as a separate category if they were required to also employ 20 employees?

Third, the Court rejected the argument that the ADEA should be interpreted to be consistent with Title VII because the statutes utilized different language to define their coverage.  Rather, the Court found the ADEA language to be more similar to the FLSA, on which some of the ADEA is based.  Governmental employers are covered by the FLSA regardless of size.   For that matter, however, “persons” are also covered by the FLSA regardless of workforce because the FLSA relies on a different threshold for its coverage (i.e., gross volume of sales) that is unrelated to the number of individuals employed.   Nonetheless, the Court did not seem to consider that fact.  

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 be changed or 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 Affirms Dismissal of Threadbare ADEA Complaint

This morning, the Sixth Circuit affirmed the dismissal of a “threadbare” complaint under the Age Discrimination in Employment Act.  Smithv. Wrigley Mfg Co., No. No. 18-5397 (6^th Cir. 10-18-19).  The plaintiff alleged simply that she had been a good and long-time employee and that she had been unfairly fired when younger employees had not been.  While this allegation asserts the basic elements of an ADEA claim, it did not contain any facts showing the differences in ages, behavior or treatment that are necessary to survive a motion to dismiss under Civil Rule 12(b)(6).  A court must only accept as true factual allegations and need not defer to mere legal conclusions.  Accordingly, the case was dismissed before the plaintiff was permitted to conduct any discovery.

According to the Court’s opinion, the complaint in its entirety provided:

Plaintiff was a longtime employee of [Wrigley] and its predecessor company.  Despite Plaintiff’s good record with [Wrigley], [Wrigley] discharged the employment of Plaintiff on or about March 3, 2016.  This discharge was largely based upon the pretext of alleged misconduct when the real motivation was age discrimination in violation of 29 U.S.C. § Sections [sic] 621 to 634.  Plaintiff is and was over 40 years of age at the time of discharge.  The conduct of [Wrigley] in discharging Plaintiff was inconsistent with the way Plaintiff was treated in her many years of service with [Wrigley] and its predecessors, and inconsistent with the way other employees similarly situated, who were younger, were treated.  Plaintiff was qualified for her position and had been so during her many years of service.  [Wrigley] did not object to Plaintiff drawing unemployment.  Plaintiff before being terminated always gave [Wrigley] her best effort as she had always done for years.  Younger employees that were performing on a par with Plaintiff were still working with [Wrigley] after Plaintiff’s discharge.

The Court found that dismissal prior to discovery was appropriate because the complaint had failed to allege facts from which any court could “draw a reasonable inference of discrimination.   . . . . In the absence of facts regarding the ages or positions of the younger,  similarly-situated employees, or any example of how those employees were treated differently, the court could not do so.”

Though [the plaintiff] mentioned that younger employees who were “performing on a  par” with her were still employed when she was fired, she offered no names, ages, or qualifications for the younger employees who were treated differently, or any examples of how their treatment differed.  Without additional facts, the court cannot infer that [the employer] fired [the plaintiff] because of her age.

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 be changed or 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. 

Suspicious Internal Investigation Report Will Not Support Application of Honest Belief Rule in the Sixth Circuit

Last week, a per curiam panel of the Sixth Circuit reversed an employer’s summary judgment decision on an ADEA claim and criticized the trial court’s application of the honest belief rule.   Stewart v. Kettering Health Network, No. 13-4080 (6^th Cir. 8-13-14).  In that case, the plaintiff police officer had been terminated following an investigation for using excessive force against a psychiatric patient by kicking him in the head after he had been subdued.  He denied the allegation and pointed out that a younger officer – who had not reported the incident -- had punched the patient and broken his nose, but had not been disciplined.  The plaintiff’s alleged excessive force had not been mentioned in the physicians’ contemporaneous notes of the situation, were not the subject of a patient complaint, and were not reflected in the patient’s injuries, but was the focus of a subsequent investigation by the allegedly biased supervisor.  The plaintiff presented evidence of his supervisor making ageist comments and jokes and discouraging him from seeking a promotion on account of his age.  His supervisor also only seemed to hire young officers.  Based on this evidence, the Court refused to credit or apply the honest belief rule to the supervisor’s investigation of the plaintiff’s alleged misconduct which supposedly justified his termination.

The Sixth Circuit panel noted that it applies a modified version of the honest belief rule:

 . . . for an employer to avoid a finding that its claimed nondiscriminatory reason was pretextual, “the employer must be able to establish its reasonable reliance on the particularized facts that were before it at the time the decision was made.” . . . . Even when the employer makes such a showing, “the protection afforded by the rule is not automatic. . . . [O]nce the employer is able to point to the particularized facts that motivated its decision, the employee has the opportunity to produce ‘proof to the contrary.’”

 . . . the key inquiry is whether the employer made a reasonably informed and considered decision before taking an adverse employment action.” . . . . “[w]hen the employee is able to produce sufficient evidence to establish  that the employer failed to make a reasonably informed and considered decision before taking its adverse employment action, thereby making its decisional process ‘unworthy of credence,’ then any reliance placed by the employer in such a process cannot be said to be honestly held.”

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: City Can Force Mandatory Retirement at Age 65 Because of Budget Deficit

This morning, a unanimous Sixth Circuit Court of Appeals affirmed summary judgment in favor of a defendant city employer concerning claims under the Age Discrimination in Employment Act and the Ohio Civil Rights Act where the plaintiffs had been forced to retire upon reaching the age of 65.   Sadie v. City of Cleveland, No.12-3143 (6^th Cir. 6-11-13). In that case, the City had adopted an ordinance requiring police officers and firefighters to retire at the age of 65 unless the Chief requested a year-to-year exemption which was supported by an independent medical examination.   After a budget cut in 2010 required the layoffs of 67, and demotions of 28, police officers, the Police Chief refused to request any more exemptions of the mandatory requirement ordinance.  This lawsuit followed alleging violation of the ADEA, the OCRA and the Equal Protection Clause of the 14^th Amendment.  The Court found that § 623(j) of the ADEA authorized the mandatory retirement ordinance and the plaintiffs failed to show that the ordinance or denial of exemptions was merely subterfuge intended to avoid the purpose of the ADEA.    In addition, the city proved that it had a legitimate budget concern in denying exemptions (because of the layoffs and demotions) which, again, showed the lack of subterfuge and disproved any denial of equal protection of the law.

The defendant city first adopted a mandatory retirement ordinance in 1960, but the version at issue in the lawsuit was adopted in 2009.  Section 623(j) of the ADEA provides as follows in relevant part:

(j) Employment as firefighter or law enforcement officer

It shall not be unlawful for an employer which is a State, a political subdivision of a State, an agency or instrumentality of a State or a political subdivision of a State, or an interstate agency to fail or refuse to hire or to discharge any individual because of such individual’s age if such action is taken—

(1) with respect to the employment of an individual as a firefighter or as a law enforcement officer, the employer has complied with section 3(d)(2) of the Age Discrimination in Employment Amendments of 1996 if the individual was discharged after the date described in such section, and the individual has attained—

(A) the age of hiring or retirement, respectively, in effect under applicable State or local law on March 3, 1983; or

(B)

(i) if the individual was not hired, the age of hiring in effect on the date of such failure or refusal to hire under applicable State or local law enacted after September 30, 1996; or

(ii) if applicable State or local law was enacted after September 30, 1996, and the individual was discharged, the higher of—

(I)               the age of retirement in effect on the date of such discharge under such law; and

(II)         age 55; and

(2) pursuant to a bona fide hiring or retirement plan that is not a subterfuge to evade the purposes of this chapter.

The Court described this provision as follows: “Section 623(j) applies if the firefighter or law enforcement officer is over fifty-five years old and is discharged pursuant to a retirement plan “that is not a subterfuge to evade the purposes” of the Act.” The Court decided to construe Ohio and federal law as the same.

 The primary dispute concerned whether the “subterfuge” provision in the exemption was an affirmative defense (where the City bore the burden of proof) or part of the claim (where the plaintiffs bore the burden of proof).  The district court held that the plaintiffs failed to bear their burden of proving subterfuge.  The Sixth Circuit concluded that it did not matter who bore the burden of proof because not only did the plaintiffs fail to show subterfuge, but the City produced enough evidence of their financial justification to disprove any claim of subterfuge.  

The retirees argue that the City enforced its mandatory-retirement ordinance because certain City officials expressed a preference for younger officers. Essentially, the retirees argue that the City was not concerned with the efficiency of the Police Department, but that it forced the retirees into retirement due to discriminatory animus toward older police officers. The problem with the retirees’ argument is that it ignores the fact that the Act explicitly allows for the termination of police officers on the basis of age. The First, Second, and Seventh Circuits have all rejected an interpretation of “subterfuge” that would nullify the exemption for the mandatory retirement of police and fire officers.

As for the plaintiffs’ Equal Protection Clause argument,

In a case such as this, where no suspect class or fundamental right is implicated, we apply the rational-basis test and sustain the government action in question “unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that [the court] can only conclude that the [government’s] actions were irrational.” . . .

The retirees argue that Chief McGrath’s decision to deny all requests for extension of service amounted to a violation of the Equal Protection Clause because the Fire Chief decided to grant requests for extensions to all firefighters that passed the independent medical exam. The district court held that the police department’s decision not to extend the service of its officers over sixty-five years old was rationally related to the legitimate purpose of addressing budget concerns. We agree with the district court’s determination. Faced with budget concerns, the Police Department laid off sixty seven patrol officers and demoted twenty-eight promoted police officers. As a result of that decision, Chief McGrath decided that, when faced with the choice of bringing back and re-promoting those officers or extending the service of its officers over sixty-five, he would bring back the most-needed officers in order to help maintain the vitality of the department. Chief McGrath’s decision was rationally related to the legitimate purpose of addressing the Department’s budget concerns.

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 Issues Final Rule on ADEA’s “Reasonable Factor Other than Age”

This morning, the EEOC published in the Federal Register its final rule on the ADEA standard for discriminating based on a “reasonable factor other than age” in 29 CFR 1625.7. “ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, unless the employer can show that the policy or practice is based on a reasonable factor other than age” (RFOA). The Rule addresses issues which arose after the Supreme Court ruled in 2008 “that disparate-impact claims are cognizable under the Age Discrimination in Employment Act (“ADEA”) but that liability is precluded when the impact is attributable to a reasonable factor other than age.” The new Rule takes effect on April 30, 2012.
Among the notable changes:

• The plaintiff bears the burden of isolating and identifying the employment practice that has an unlawful impact on individuals within the protected age group.


• The employer bears the burden of proof on the RFOA defense (i.e., it is an affirmative defense).


• A RFOA “is a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances. Whether a differentiation is based on reasonable factors other than age must be decided on the basis of all the particular facts and circumstances surrounding each individual situation. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.”


• The Rule provides a number of factors to consider.
  

The new Rule provides as follows:

(b) When an employment practice uses age as a limiting criterion, the defense that the practice is justified by a reasonable factor other than age is unavailable.
(c) Any employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a “reasonable factor other than age.” An individual challenging the allegedly unlawful practice is responsible for isolating and identifying the specific employment practice that allegedly causes any observed statistical disparities.
(d) Whenever the “reasonable factors other than age” defense is raised, the employer bears the burdens of production and persuasion to demonstrate the defense. The “reasonable factors other than age” provision is not available as a defense to a claim of disparate treatment.
(e)(1) A reasonable factor other than age is a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances. Whether a differentiation is based on reasonable factors other than age must be decided on the basis of all the particular facts and circumstances surrounding each individual situation. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.
(2) Considerations that are relevant to whether a practice is based on a reasonable factor other than age include, but are not limited to:
(i) The extent to which the factor is related to the employer's stated business purpose;

(ii) The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;
(iii) The extent to which the employer limited supervisors' discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;
(iv) The extent to which the employer assessed the adverse impact of its employment practice on older workers; and
(v) The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
(3) No specific consideration or combination of considerations need be present for a differentiation to be based on reasonable factors other than age. Nor does the
presence of one of these considerations automatically establish the defense.

The old rule provided only that:

(a) Section 4(f)(1) of the Act provides that * * * it shall not be unlawful for an employer, employment agency, or labor organization * * * to take any action otherwise prohibited under paragraphs (a), (b), (c), or (e) of this section * * * where the differentiation is based on reasonable factors other than age * * *.
(b) No precise and unequivocal determination can be made as to the scope of the phrase “differentiation based on reasonable factors other than age.” Whether such differentiations exist must be decided on the basis of all the particular facts and circumstances surrounding each individual situation.

(c) When an employment practice uses age as a limiting criterion, the defense that
the practice is justified by a reasonable factor other than age is unavailable.
(d) When an employment practice, including a test, is claimed as a basis for different treatment of employees or applicants for employment on the grounds that it is a “factor other than” age, and such a practice has an adverse impact on individuals within the protected age group, it can only be justified as a business necessity. Tests which are asserted as “reasonable factors other than age” will be scrutinized in accordance with the standards set forth at part 1607 of this title.
(e) When the exception of “a reasonable factor other than age” is raised against an individual claim of discriminatory treatment, the employer bears the burden of showing that the “reasonable factor other than age” exists factually.
(f) A differentiation based on the average cost of employing older employees as a group is unlawful except with respect to employee benefit plans which qualify for the section 4(f)(2) exception to the Act.

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 Proposes New ADEA Rule to Address “Reasonable Factor Other Than Age”

Last week, the EEOC began soliciting comments on a proposed rule defining the “reasonable factor other than age” defense available to employers under the Age Discrimination in Employment Act. Both the ADEA and Title VII contain a “business necessity” defense, but only the ADEA also has a defense for RFOA. Interestingly, the Equal Pay Act also has a defense for “factor other than sex,” but does not limit the defense to “reasonable” factors. In addition, even though Congress narrowed the “business necessity” defense in Title VII in 1991 following the Wards Cove Packing v. Atonia, 490 U.S. 692 (1989) decision, it did not similarly amend the ADEA (probably because there had been an open question whether disparate impact liability even existed before 2005). The EEOC concluded that a new rule was necessary following the Supreme Court decision in Smith v. City of Jackson, 544 U.S. 228 (2005), which found that the scope of an employer’s potential “disparate-impact liability under the ADEA is narrower than under Title VII'' because of the additional RFOA defense. In particular, the Court found that the employer could legitimately adopt a pay plan which did not benefit older employees to the same extent as younger employees if the employer had a reasonable basis – such as recruitment and retention of employees -- for doing so which was not based on the age of the employees. Moreover, the Supreme Court also held that employers bear both the burden of production and persuasion under the RFOA affirmative defense. Meacham v. Knolls Atomic Power Lab, 128 S. Ct. 2395 (2008).

The new rule will be located at 29 CFR §1625.7(b) and will provide as follows:

Whether a differentiation is based on reasonable factors other than age (``RFOA'') must be decided on the basis of all the particular facts and circumstances surrounding each individual situation.
(1) Reasonable. A reasonable factor is one that is objectively reasonable when viewed from the position of a reasonable employer (i.e., a prudent employer mindful of its responsibilities under the ADEA) under like circumstances. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer. Factors relevant to determining whether an employment practice is reasonable include but are not limited to, the following:
(i) Whether the employment practice and the manner of its implementation are common business practices;
(ii) The extent to which the factor is related to the employer's stated business goal;
(iii) The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
(iv) The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
(v) The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
(vi) Whether other options were available and the reasons the employer selected the option it did.\1\
------

\1\ This does not mean that an employer must adopt an employment practice that has the least severe impact on members of the protected age group. ``Unlike the business necessity test, which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class,
the reasonableness inquiry includes no such requirement.'' Smith v. City of Jackson, 544 U.S. 228, 243 (2005). Instead, this simply means that the availability of other options is one of the factors relevant to whether the practice was a reasonable one. ``If the actor can advance or protect his interest as adequately by other conduct which involves less risk of harm to others, the risk contained in his conduct is clearly unreasonable.'' Restatement (Second) of Torts 292, cmt. c (1965).
-------------------------------------------------------

(2) Factors Other Than Age. When an employment practice has a significant disparate impact on older individuals, the RFOA defense applies only if the practice is not based on age. In the typical disparate impact case, the practice is based on an objective non-age factor and the only question is whether the practice is reasonable. When disparate impact results from giving supervisors unchecked discretion to engage in subjective decision making, however, the impact may, in fact, be based on age because the supervisors to whom decision making was delegated may have acted on the bases of conscious or unconscious age-based stereotypes. Factors relevant to determining whether a factor is ``other than age'' include, but are not limited to, the following:
(i) The extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
(ii) The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
(iii) The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.

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 Obtains $4.5M Settlement Based on ADEA Disparate Impact Claim When Insurance Company Adopted Year-Long Hiring Freeze

On Friday, the EEOC announced “a major settlement of an age discrimination class lawsuit against Allstate Insurance Company, one of the nation’s largest insurers, for $4,500,000 to be paid to approximately 90 older former employees, in addition to significant remedial relief.”

The EEOC filed a lawsuit under the ADEA against Allstate in October 2004alleging “that in the year 2000 Allstate adopted a hiring moratorium for a period of one year, or while severance benefits were being received, that applied to all its employee-sales agents who were part of its Preparing For The Future Reorganization Program. The program was part of Allstate’s reorganization from employee agents to what the company considered independent contractors. The EEOC alleged that the policy had a disproportionate impact on Allstate’s employees over the age of 40 because more than 90 percent of the agents subjected to the hiring moratorium were 40 years of age or older. Allstate denies that its hiring moratorium violated the ADEA.” Disparate impact claims were recognized by the Supreme Court’s 2005 decision in Smith v. City of Jackson.

The terms of the settlement, which is “pending approval by U.S. District Judge E. Richard Webber in U.S. District Court for the Eastern District of Missouri (Civil Action No. 4:04CV01359 ERW), Allstate will pay former employees who sought employment -- or would have sought employment with the company in the absence of its policy -- a total of $4.5 million to be divided among the class via a settlement fund. The order, in effect for three years, also provides for discrimination prevention training, posting of notices, reporting and monitoring, and other relief designed to educate Allstate managers in order to prevent future violations of the ADEA.” A 2007 settlement for $250,000 of disparate treatment claims under ADEA brought by two individual employees is not part of this larger settlement agreement.

Insomniacs can read the full press release at http://www.eeoc.gov/press/9-11-09a.html.

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.

Supreme Court: ADEA Does Not Allow Mixed Motive Theory; Plaintiff Must Prove Age Was “But For” Reason for Adverse Action.

This morning, a 5-4 Supreme Court ruled that the Age Discrimination in Employment Act (ADEA) is different from Title VII in another important respect: While Title VII permits a plaintiff to prove that illegal discrimination was a motivating factor (albeit not the sole factor) in his or her adverse employment action, ADEA requires the plaintiff to prove that s/he would not have suffered the adverse action “but for” his or her age. Gross v. FBL Financial Services, Inc., No. 08-441 (6/18/09).

In Gross, the plaintiff alleged that he was demoted primarily because of his age, although he admitted that his age was not the only factor. This is often known as a mixed-motive case and is a theory that was established in the plurality opinion of the Price-Waterhouse v. Hopkins case. The trial court instructed the jury that it must rule for the employee if he proved that “his age was a motivating factor in the demotion decision,” and “that age was a motivating factor if it played a part in the demotion.” The trial court also instructed the jury to return a verdict for the employer “if it proved that it would have demoted Gross regardless of age.” In other words, the employer bore the burden of proving that age was not the primary motivating factor even if it was a small factor. The jury returned a verdict for Gross, awarding him$46,945 in lost compensation. The employer appealed and the Court of Appeals reversed.

Justice Thomas began his opinion by noting that ‘[t]he question presented by the [employee] in this case is whether a plaintiff must present direct evidence of age discrimination [as opposed to circumstantial evidence] in order to obtain a mixed-motives jury instruction in a suit brought under the” ADEA. However, the Court never needed to reach that question because it held that “such a jury instruction is never proper in an ADEA case.”

“

Unlike Title VII, the ADEA’s text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor. Moreover, Congress neglected to add such a provision to the ADEA when it amended Title VII to add §§2000e–2(m) and 2000e–5(g)(2)(B), even though it contemporaneously amended the ADEA in several ways, see Civil Rights Act of 1991 . . . We cannot ignore Congress’ decision to amend Title VII’s relevant provisions but not make similar changes to the ADEA. When Congress amends one statutory provision but not another, it is presumed to have acted intentionally.”

“The ADEA provides, in relevant part, that ‘[i]t shall be unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.’ 29 U. S. C. §623(a)(1) (emphasis added). . . . To establish a disparate treatment claim under the plain language of the ADEA, therefore, a plaintiff must prove that age was the “but-for” cause of the employer’s adverse decision.”

“[Nothing in the statute’s text indicates that Congress has carved out an exception to that rule for a subset of ADEA cases. Where the statutory text is ‘silent on the allocation of the burden of persuasion,’ we “begin with the ordinary default rule that plaintiffs bear the risk of failing to prove their claims.”

Moreover, “the burden of persuasion necessary to establish employer liability is the same in alleged mixed-motives cases as in any other ADEA disparate-treatment action. A plaintiff must prove by a preponderance of the evidence (which may be direct or circumstantial), that age was the “but-for” cause of the challenged employer decision.”

Insomniacs can read the full decision at http://www.supremecourtus.gov/opinions/08pdf/08-441.pdf.

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.

Despite Union Conflict of Interest Supreme Court Enforces Arbitration of Employees’ ADEA Claims Based on CBA’s Reference to ADEA in Arbitration Clause

Today, the United States Supreme Court (in a 5-4 decision) reversed the Second Circuit Court of Appeals’ refusal to enforce the arbitration clause and held that a “a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate claims arising under the Age Discrimination in Employment Act of 1967 (ADEA) . . . is enforceable.” 14 Penn Plaza LLC v. Pyett, No. 07-581. The plaintiffs were members of the SEIU and their collective bargaining agreement provided, among other things that age, race, sex discrimination was prohibited and that “[a]ll such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination." The Court held that this “clear and unmistakable” waiver of their statutory ADEA right to a jury trial was enforceable because the union was the authorized bargaining representative for the plaintiff employees and “the collective-bargaining agreement's arbitration provision expressly covers both statutory and contractual discrimination claims.” The Court brushed off the inherent conflict of interest between the union and its members’ discriminate claims, finding that those issues could be better resolved through the political process, and through breach of fair representation and discrimination claims brought against the union by the employees.

According to the Court’s opinion, one of the joint-employers owed an office building which engaged the other joint employer (a maintenance and cleaning service). The plaintiffs were employed as night watchmen. With the union’s consent, the building management replaced the other joint employer with a unionized security firm (affiliated with the joint employer) which could supply licensed security guards. Thus replaced, the plaintiffs were then reassigned to positions as night porters and light duty cleaners. They objected and filed a grievance under the CBA that the reassignments constituted, among other things, age discrimination and that they were denied seniority benefits and overtime.

The grievances proceeded to arbitration. However,

“[a]fter the initial arbitration hearing, the Union withdrew the first set of . . . grievances--the age-discrimination claims--from arbitration. Because it had consented to the contract for new security personnel [at the office building], the Union believed that it could not legitimately object to respondents' reassignments as discriminatory.”

The plaintiffs then filed Charges with the EEOC alleging that their transfers had violated ADEA, but the EEOC dismissed the Charges as lacking substantiating evidence. With their right-to-sue letters in hand, the plaintiffs then filed suit in federal court and the employers moved to compel arbitration of their claims under the Federal Arbitration Act. The District Court refused to compel arbitration on the grounds that a union cannot waive the individual statutory rights of employees to pursue ADEA claims in a collective bargaining agreement. The Second Circuit Court of Appeals affirmed, stating that “it could not compel arbitration of the dispute because Gardner-Denver, which ‘remains good law,’ held ‘that a collective bargaining agreement could not waive covered workers' rights to a judicial forum for causes of action created by Congress.’”

The Court’s majority found that the union and employers

“collectively bargained in good faith and agreed that employment-related discrimination claims, including claims brought under the ADEA, would be resolved in arbitration. This freely negotiated term between the Union and the RAB easily qualifies as a ‘conditio[n] of employment’ that is subject to mandatory bargaining. . . . The decision to fashion a CBA to require arbitration of employment-discrimination claims is no different from the many other decisions made by parties in designing grievance machinery.”

Rejecting the argument that the union is not authorized to bargain away the employees’ statutory rights,

“[a]s in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employer. Courts generally may not interfere in this bargained-for exchange. ‘Judicial nullification of contractual concessions ... is contrary to what the Court has recognized as one of the fundamental policies of the National Labor Relations Act--freedom of contract.’"

In that the ADEA does not preclude the arbitration of ADEA claims, there is nothing in the NLRA which precludes unions from negotiating that the employees’ future ADEA claims are subject to the grievance and arbitration provisions of the CBA.

“Examination of the two federal statutes at issue in this case, therefore, yields a straightforward answer to the question presented: The NLRA provided the Union and the [employers] with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA. Accordingly, there is no legal basis for the Court to strike down the arbitration clause in this CBA, which was freely negotiated by the Union and the [employers], and which clearly and unmistakably requires [plaintiffs] to arbitrate the age-discrimination claims at issue in this appeal. Congress has chosen to allow arbitration of ADEA claims. The Judiciary must respect that choice.”

In reaching this decision, the Court brushed off contrary language from Gardner-Denver, which indicated that union arbitrations – while suitable for contractual claims -- were not an appropriate forum for resolving discrimination claims and questioned the competence of arbitrators to decide federal statutory claims.

The Court also dismissed its earlier concerns in Gardner-Denver about the inherent conflict of interest between a union and its individual members.

“[I]n arbitration, as in the collective-bargaining process, a union may subordinate the interests of an individual employee to the collective interests of all employees in the bargaining unit. . . . ‘The union's interests and those of the individual employee are not always identical or even compatible. As a result, the union may present the employee's grievance less vigorously, or make different strategic choices, than would the employee.’”

Nonetheless, the Court found that “there is ‘no reason to color the lens through which the arbitration clause is read’ simply because of an alleged conflict of interest between a union and its members.. . . . . This is a ‘battl[e] that should be fought among the political branches and the industry. Those parties should not seek to amend the statute by appeal to the Judicial Branch.’”

Moreover,

"‘[t]he conflict-of-interest argument also proves too much. Labor unions certainly balance the economic interests of some employees against the needs of the larger work force as they negotiate collective-bargain agreements and implement them on a daily basis. But this attribute of organized labor does not justify singling out an arbitration provision for disfavored treatment. This ‘principle of majority rule’ to which [the plaintiffs now] object is in fact the central premise of the NLRA. . . . In establishing a regime of majority rule, Congress sought to secure to all members of the unit the benefits of their collective strength and bargaining power, in full awareness that the superior strength of some individuals or groups might be subordinated to the interest of the majority." . . . It was Congress' verdict that the benefits of organized labor outweigh the sacrifice of individual liberty that this system necessarily demands. [The plaintiffs’] argument that they were deprived of the right to pursue their ADEA claims in federal court by a labor union with a conflict of interest is therefore unsustainable; it amounts to a collateral attack on the NLRA.”

In any event, the union members may sue the union directly for failing in their duty of fair representation or for its own age discrimination.

The ”NLRA has been interpreted to impose a "duty of fair representation" on labor unions, which a union breaches "when its conduct toward a member of the bargaining unit is arbitrary, discriminatory, or in bad faith. . . . This duty extends to "challenges leveled not only at a union's contract administration and enforcement efforts but at its negotiation activities as well. . . . Thus, a union is subject to liability under the NLRA if it illegally discriminates against older workers in either the formation or governance of the collective-bargaining agreement, such as by deciding not to pursue a grievance on behalf of one of its members for discriminatory reasons. In this case, the plaintiffs also had “brought a fair representation suit against the Union based on its withdrawal of support for their age-discrimination claims. . . . Given this avenue that Congress has made available to redress a union's violation of its duty to its members, it is particularly inappropriate to ask this Court to impose an artificial limitation on the collective-bargaining process.”

Insomniacs can read the full court opinion at http://

Senate Passes Ledbetter Fair Pay Act of 2009

Yesterday, by a vote of 61-39, the Senate passed the Ledbetter Fair Pay Act of 2009 in order to reverse the 2007 Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, which held that the statute of limitations under Title VII begins to run when a discriminatory pay decision is announced and/or implemented is not renewed with each subsequent paycheck. (The FLSA and companion Equal Pay Act already run with each illegal paycheck). The Act was already passed by the House of Representatives earlier in January and President Obama is expected to sign it. [Editor's Note: The White House blog confirms that he expects to sign the Senate version of the Ledbetter Act. http://www.whitehouse.gov/now-comes-lilly-ledbetter/]

The Ledbetter Act provides as follows:
• Nothing in the Act “is intended to change current law treatment of when pension distributions are considered paid.”
• An unlawful discriminatory compensation practice occurs under Title VII, the Americans With Disabilities Act (“ADA”), the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act (“ADEA”) “when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits or other compensation is paid, resulting in whole or in part from such a decision or other practice.
• In addition to relief provided by Title VII and 42 U.S.C. § 1981a [i.e., compensatory and punitive damages], an aggrieved person may obtain relief, including recovery of back pay for up to two years preceding the filing of the Charge of Discrimination when the unlawful employment practices that have occurred during the charge filing period are similar to or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.

Interestingly, the Act provides that it should take effect as if enacted on May 28, 2007 – the day before the Supreme Court’s 2007 Ledbetter decision -- and apply to all claims of discrimination in compensation under Title VII, the ADEA, the ADA and the Rehabilitation Act which are pending on or after that date. In that this provision would impose retroactive liability on defendants in lawsuits (which may no longer be pending) where the defendants were not otherwise liable under then-existing laws, there may be a constitutional challenge made to any retroactive application. In other words, Congress is attempting to substitute itself for the judicial branch and impose liability on Goodyear and other employers which the Supreme Court and other courts already dismissed more than 17 months ago.

Insomniacs may read the legislation in full at http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00014

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 Dismisses ADEA Claims by Employees Who Claimed They Were Terminated For Budget Reasons Rather than For Violating Confidentiality Policy.

Today, the Sixth Circuit affirmed the dismissal of claims by two employees who alleged that they had been terminated on account of their age because the new CEO had sought to increase turnover among (more expensive) employees with more seniority so that he could hire less expensive, newer employees. Allen v. Highlands Hospital Corp., No. 07-6414 (10/21/08). The plaintiffs admitted to the conduct which the hospital explained motivated it to terminate their employment, but the plaintiffs denied their conduct was the actual reason for their termination. Indeed, the court was sympathetic that the plaintiffs had not actually violated patient confidentiality as alleged, but still gave more weight to the hospital’s argument that it held an honest belief that the plaintiffs had violated its HIPAA policy based on a thorough investigation by the human resources department. In any event, the court found that there was no evidence that the hospital’s business strategy to reduce its budget for employee compensation had a disparate impact on older employees and did not constitute direct evidence of age discrimination.

The plaintiffs were terminated for violating the hospital’s HIPAA policy when one of the plaintiffs obtained the x-rays of her own granddaughter (at the parent’s request) from the other plaintiff without having a signed authorization from the parent of the granddaughter. The grandmother plaintiff had been told by another employee that the parent’s signature was mandatory, but there was no written policy governing the situation. Moreover, the plaintiff grandparent then forged the parent’s signature on the authorization form, back-dated the form and placed it in the medical record (which may have shown knowledge of her own guilt in violating an unwritten policy). Both employees were terminated for violation of the HIPAA policy, which the hospital considered to be a major offense.

The Court acknowledged that the hospital’s actions in this case were unduly harsh: “the facts of this case are not a “textbook example” of a privacy violation for which a hospital would usually take such serious action against its long-time employees. The record shows that [plaintiff] was not only the biological grandmother of the patient, but also was involved in her care and guardianship (although [plaintiff] was admittedly not [the granddaughter’s] legal guardian). Moreover, [the hospital] does not dispute that [the mother], as [the granddaughter’s] mother and legal guardian, in fact gave [plaintiff] verbal authorization to retrieve the x-rays. The plaintiffs have thus undoubtedly pointed to a weakness in the Hospital’s policy, if for no other reason than that this case highlights the potential ambiguity caused by the lack of detail in the employee manual’s prohibition against an unauthorized release. But the fact that the Hospital would benefit from developing a more detailed policy on this issue does not mean that [the plaintiffs] have succeeded in creating a genuine issue of material fact about whether HHC’s stated reason for terminating them was a pretext designed to hide age-based discrimination. We thus agree with the Hospital that, in determining if the plaintiffs have raised a genuine issue of material fact as to pretext, we should consider not whether [the plaintiffs] actually breached patient confidentiality, but rather whether the Hospital had an honestly held belief that they had committed a Group I offense.”

To support their age discrimination claims, the plaintiffs produced evidence that the hospital’s new CEO sought to increase employee turnover among more senior (and presumably more expensive) employees. According to the court, the hospital’s budget manager testified “one of [the CEO’s] strategies was to terminate employees based on seniority to facilitate the hiring of new, less costly employees. In fact, [the CEO] increased the annual turnover rate from 2% to 28%. [The budget manager] did not know whether the cost-cutting measures had a disproportionate effect on older employees, but she said that [the CEO’s] focus was at all times on improving HHC’s financial situation.” In any event, the Court of Appeals found that this testimony did not constitute direct evidence of age discrimination.

“Indeed, the Supreme Court in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), has specifically held that the strategies discussed by [the budget manager] are permissible methods for employers to cut costs: When the employer’s decision is wholly motivated by factors other than age, the problem of inaccurate and stigmatizing stereotypes disappears. This is true even if the motivating factor is correlated with age . . . . On average, an older employee has had more years in the work force than a younger employee, and thus may well have accumulated more years of service with a particular employer. Yet an employee’s age is analytically distinct from his years of service. An employee who is younger than 40, and therefore outside the class of older workers as defined by the ADEA, see 29 U.S.C. § 631(a), may have worked for a particular employer his entire career, while an older worker may have been newly hired. Because age and years of service are analytically distinct, an employer can take account of one while ignoring the other, and thus it is incorrect to say that a decision based on years of service is necessarily ‘age based.’”

Moreover, the court found insufficient evidence that the CEO’s budget practice had a disparate impact on older workers either. The hospital’s expert produced evidence that the hospital’s increased turnover did not result in a disproportionate reduction in the number of employees over the age of 40. “ Nor is the plaintiffs’ disparate-impact claim salvaged by the allegation that the number of terminations of those over 40 years of age increased from 14.3% to 62.5% of all terminations between 2002 and 2003. As the district court noted, this data is not statistically significant because the pools from which those percentages were drawn were very small—i.e., there were only 21 terminations in 2002 and 16 terminations in 2003.”

Finally, “[t]he plaintiffs, however, have failed to satisfy their burden of isolating and identifying a specific employment practice that disproportionately impacts employees who are at least 40 years old. As we have already explained, the plaintiffs have at best alleged that HHC desired to reduce costs associated with its highly paid workforce, including those costs associated with employees with greater seniority. But the plaintiffs have not established that this corporate desire evolved into an identifiable practice that disproportionately harms workers who are at least 40 years old. Because Allen and Slone have simply “point[ed] to a generalized policy,” as opposed to specific practice, they have therefore failed to raise a genuine question of material fact with respect to their disparate impact claim.”

The plaintiffs also produced evidence that a the supervisor of a hospital contractor told one of its employees that the employee should start looking for another job because it looked as though all of the older employees would be let go. The court also rejected this as direct evidence that the plaintiffs were terminated on account of their age because the solitary statement was not made by their supervisors and was, instead, made in connection with another employer.

Insomniacs can read the full decision at http://www.ca6.uscourts.gov/opinions.pdf/08a0381p-06.pdf.


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.