Sixth Circuit Reminds Employees that Unfairness is not the Same as Discrimination

Last month, the Sixth Circuit affirmed the dismissal of Title VII discrimination and constructive discharge claims even though the plaintiff was treated unfairly because she could not show that she had been treated differently than a comparable male.  Gosbin v. Jefferson County Commissioners, No. 17-3441  (2/23/18).   The plaintiff had been publicly reprimanded and suspended for “insubordination” even though she had never been explicitly told to take a particular course of action.   The employer’s law firm had also been told to cease working with her or telling her why.  Realizing that she might be fired, she resigned and was replaced almost a year later by a male subordinate who lacked her qualifications.   While the Court agreed that she may have been treated unfairly, that unfairness was not discriminatory in the absence of evidence that she was treated differently than a comparable male.   Her efforts to compare herself to her male predecessor and successor were futile because the employer was unaware of the predecessor’s adoption of the challenged practice and he was paid more than her because he possessed additional professional licenses and responsibilities.  Her successor actually resolved the employer’s concerns taking bids for the hauling work and paying the lowest bidder.  Without a more favorable comparator, she could not prove her prima facie case.  In any event, while she may not have been technically insubordinate in the absence of a specific directive, the employer was still entitled to the honest belief defense because for two months she had continued a practice that they had informed her was legally inappropriate and needed to be corrected by placing the matter out for competitive bidding.

According to the Court’s opinion, the plaintiff had been promoted to department director in 2010 shortly after the long-time director retired.  A few years later, following a complaint and her investigation, the board of county commissioners learned that her predecessor had a verbal hand-shake deal with a local hauler to dump  septic waste at the sewage treatment plant at half-price in return for cleaning up emergency septic spills throughout the county.  While this might be acceptable in the private sector, public sector contracts must be bid so that everyone can compete for the business and opportunities.  She was directed to put the work and opportunities out for public bid.  While she took a few steps towards doing so, she did not discontinue the private arrangement or actually put the emergency septic work out for bid.  Upon learning this two months later, the Board explicitly directed her to cease permitting any haulers to dump until they had approved a policy.   She explained that she thought that they had merely directed her to put the arrangement out for bid, but until the bidding process was complete, that they current arrangement could continue.  Nonetheless, she terminated the arrangement the next day.   The Board then suspended her for 30 days for insubordination.  Following her suspension, her male subordinate took bids for the emergency septic work, and then paid the lowest bidder – the same company as before – for the work instead of letting him dump at half price.  The Board then directed its law firm to cease working with her and not tell her why.    The plaintiff resigned a few months later, was replaced by her male subordinate almost a year later, and brought suit for discrimination and constructive discharge.

The Court initially observed that the employee could not prove a prima facie case of discrimination because she could not identify any comparable male employees who were treated better than her.

In the end, whether deserved or not, there is no proof that the suspension was based on Plaintiff’s gender . . .  Plaintiff must show that the adverse action was not simply unfair, but a pretext for discrimination.  Absent any comparators, the only other evidence is [Commissioner] Gentile’s comment in early 2010 denying that he wanted Plaintiff out of management and his subsequent explanation that “it’s not because you’re a woman.”  But an isolated stray comment, three and one-half years before she was suspended, does not create an inference of discrimination. . . .

Even if Plaintiff had made out a prima facie case,  she has not shown that the Board’s reason for suspending her had no basis in fact, was not the actual reason, or was insufficient to explain the Board’s action.   . . .  Although the Commissioners did not issue a direct “cease and desist” order, they clearly asked Plaintiff to begin a public bidding process to replace the unbid hauling arrangement tout de suite; thus they had an “an honest belief” that Plaintiff did not follow their orders.

The Court also rejected the constructive discharge claim on the grounds that she could not prove any hostility was related to her gender and because the public reprimand and suspension were an insufficient basis for resigning.

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 Rejects Religious Objections to Sexual Stereotyping Claims

Earlier this month, the Sixth Circuit rejected an employer’s religious objections to complying with Title VII’s prohibitions against discrimination on the basis of sexual stereotypes.  EEOC v. Harris Funeral Homes, Inc., No. 16-2424.  In that case, the Court unsurprisingly (based on its prior opinions) held that it violated Title VII to terminate an employee who was preparing for sexual reassignment surgery by dressing and presenting as the opposite gender. “Discrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex.”   The Court rejected the employer’s argument that its gender-specific dress code requirements did not violate Title VII.  While not prohibiting outright sex-specific dress codes, the Court noted that the employer could not terminate the plaintiff for refusing to confirm to its “notion of her sex.”  The Court refused the invitation to overrule prior precedent and hold that Title VII covered sexual orientation discrimination.  Nonetheless, the Court ruled that the Religious Freedom Restoration Act did not exempt the employer from Title VII in this situation.  In particular, rejecting the employer’s argument that its grieving patrons would object to the plaintiff, the Court held that “a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA.”  The Court also held that toleration of gender identity is not the same as supporting it and mandating toleration is not a substantial burden on a religious practice.   Finally, the Court held that the EEOC had a compelling government interest in enforcing Title VII.

According to the Court’s opinion, the plaintiff had been born male and was hired as a funeral director in 2008.  The plaintiff was fired  in 2013 shortly after informing the defendant employer that he intended upon  returning from his upcoming vacation to transition to a female and begin presenting (and dressing) as a female at work for a year  before surgery.  The owner later testified that gender is a gift from God, that it would violate God’s natural order to change birth gender, and he did not want to be complicit in providing clothing or authorizing a man to dress as a woman while representing his company.   He explained to the plaintiff that the public would not accept his transition to a female.  During the subsequent EEOC investigation, the agency learned that the employer provided its male public facing employees with clothing that conformed to its dress code, but did not provide similar clothing or even an allowance to its public facing female employees.  It brought suit against the employer on behalf of the terminated employee and to challenge the clothing allowance policy.  Although noting that the plaintiff had been fired for failing to conform to gender stereotypes, the trial court granted summary judgment to the employer on both claims.

The employer immediately modified its clothing allowance policy when the lawsuit was filed to provide female employees with a comparable clothing stipend.  It had not had a female funeral director since the owner’s grandmother retired in the 1950’s and only one (unqualified) female applicant had applied for a director position since that time.  The plaintiff’s charge had not raised the clothing allowance issue in her Charge of Discrimination.  Nonetheless, the Court found that the EEOC could still bring a legal challenge to the policy in its lawsuit.

The employer argued that Title VII permits employers to utilize common gender specific dress codes.  Most employers have differing expectations for men and women based on pants, skirts, hair length, jewelry, etc.  However, the Court rejected the argument that Title VII permits gender specific dress codes and noted that the employer’s legal authority pre-dated the Supreme Court’s plurality Price-Waterhouse decision in 1989 which prohibited sex-based stereotyping (when that plaintiff had been passed over for partnership in part for not wearing make up like women are supposed to do).

We are not considering, in this case, whether the Funeral Home violated Title VII by requiring men to wear pant suits and women to wear skirt suits.  Our question is instead whether the Funeral Home could legally terminate Stephens, notwithstanding that she fully intended to comply with the company’s sex-specific dress code, simply because she refused to conform to the Funeral Home’s notion of her sex.

                 . . . .

In short, the Funeral Home’s sex-specific dress code does not preclude liability under Title VII.  Even if the Funeral Home’s dress code does not itself violate Title VII—an issue that is not before this court—the Funeral Home may not rely on its policy to combat the charge that it engaged in improper sex stereotyping when it fired Stephens for wishing to appear or behave in a manner that contradicts the Funeral Home’s perception of how she should appear or behave based on her sex.

The Court also rejected the defendant’s argument that “sex” under Title VII was a binary concept (“which classification arises in a person based on their chromosomally driven physiology and reproductive function”) that did not include transitioning from one to another. The defendant characterized transgender status as a “’a person’s self-assigned ‘gender identity’ rather than a person’s sex.”  “We also hold that discrimination on the basis of transgender and transitioning status violates Title VII.”

First, it is analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.  The Seventh Circuit’s method of “isolat[ing] the significance of the plaintiff’s sex to the employer’s decision” to determine whether Title VII has been triggered illustrates this point. . . . In Hively, the Seventh Circuit determined that Title VII prohibits discrimination on the basis of sexual orientation—a different question than the issue before this court—by asking whether the plaintiff, a self-described lesbian, would have been fired “if she had been a man married to a woman (or living with a woman, or dating a woman) and everything else had stayed the same.”  Id.  If the answer to that question is no, then the plaintiff has stated a “paradigmatic sex discrimination” claim.  See id.  Here, we ask whether Stephens would have been fired if Stephens had been a woman who sought to comply with the women’s dress code.  The answer quite obviously is no.  This, in and of itself, confirms that Stephens’s sex impermissibly affected Rost’s decision to fire Stephens.

                 . . . .

Thus, an employer cannot discriminate on the basis of transgender status without imposing its stereotypical notions of how sexual organs and gender identity ought to align.  There is no way to disaggregate discrimination on the basis of transgender status from discrimination on the basis of gender non-conformity, and we see no reason to try.

While Congressional intent in drafting Title VII may not have included this interpretation of Title VII, “to anticipate that Title VII would cover transgender status is of little interpretive value, because “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”  It similarly rejected the argument based on drafting differences that statutes “such as the Violence Against Women Act, expressly prohibit discrimination on the basis of “gender identity,” while Title VII does not.”

 The Court also rejected the argument that because both men and women can be transgendered, it cannot constitute discrimination to treat transgendered individuals the same.

Because an employer cannot discriminate against an employee for being transgender without considering that employee’s biological sex, discrimination on the basis of transgender status necessarily entails discrimination on the basis of sex—no matter what sex the employee was born or wishes to be.  By the same token, an employer need not discriminate based on a trait common to all men or women to violate Title VII.  After all, a subset of both women and men decline to wear dresses or makeup, but discrimination against any woman on this basis would constitute sex discrimination under Price Waterhouse.

While the employer’s owner is religious, the company is not affiliated with any religious organization, serves patrons of various faiths and hires employees of various (or even no) faiths.  While several amici had argued that the defendant was entitled to Title VII’s ministerial exception, the defendant and the Court agreed that it was not applicable in this situation.

The Court rejected the employer’s RFRA defense on the grounds that complying with Title VII was not a substantial burden on his religious exercise in administering to mourners and that enforcing Title VII in this case is the least restrictive means of furthering a compelling government interest.  The Court opted to treat religious objections in this situation as though they were similar to objections based on working with women or people of a different race.  It also concluded that he was not required to provide clothing to any of his employees and could eliminate that benefit on a non-discriminatory basis.  The employer “is not being forced to choose between providing [the plaintiff] with clothing or else leaving the business; this is a predicament of [his] own making.”

The Funeral Home’s first alleged burden—that [the plaintiff] will present a distraction that will obstruct [his] ability to serve grieving families—is premised on presumed biases. . . . The factual premises underlying this purported burden are wholly unsupported in the record.  [The owner] testified that he has never seen [the plaintiff] in anything other than a suit and tie and does not know how [the plaintiff] would have looked when presenting as a woman. . . . [His] assertion that he believes his clients would be disturbed by [her] appearance during and after her transition to the point that their healing from their loved ones’ deaths would be hindered. . . at the very least raises a material question of fact as to whether his clients would actually be distracted, which cannot be resolved in the Funeral Home’s favor at the summary-judgment stage. . . .

But more to the point, we hold as a matter of law that a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA.

                 . . . .

 . . .We could agree that courts should not credit customers’ prejudicial notions of what men and women can do when considering whether sex constitutes a “bona fide occupational qualification” for a given position while nonetheless recognizing that those same prejudices have practical effects that would substantially burden [his] religious practice (i.e., the operation of his business) in this case.  But the Ninth Circuit rejected similar reasoning in Fernandez, and we reject it here.

As for the burden on his religious practice by being required to employ the plaintiff as a public representative of his company, “simply permitting [the plaintiff] to wear attire that reflects a conception of gender that is at odds with [the owner’s] religious beliefs is not a substantial burden under RFRA. . . . . tolerating Stephens’s understanding of her sex and gender identity is not tantamount to supporting it.”  (emphasis added).

 The Court noted that it had required religious organizations to comply with the ObamaCare’s opt-out provisions on the grounds that they were not a substantial burden on their religious practices.

We view the Funeral Home’s compliance with antidiscrimination laws in much the same light.  Rost may sincerely believe that, by retaining Stephens as an employee, he is supporting and endorsing Stephens’s views regarding the mutability of sex.  But as a matter of law, bare compliance with Title VII—without actually assisting or facilitating Stephens’s transition efforts—does not amount to an endorsement of Stephens’s views. Similarly, here, requiring the Funeral Home to refrain from firing an employee with different religious views from Rost does not, as a matter of law, mean that Rost is endorsing or supporting those views. . . . .  Indeed, Rost’s own behavior suggests that he sees the difference between employment and endorsement, as he employs individuals of any or no faith, “permits employees to wear Jewish head coverings for Jewish services,” and “even testified that he is not endorsing his employee’s religious beliefs by employing them.”

At bottom, the fact that Rost sincerely believes that he is being compelled to make such an endorsement does not make it so.

The Court also found that the EEOC had a compelling government interest in preventing workplace discrimination.  “The Supreme Court has already determined that RFRA does not, in fact, “effectuate . . . the First Amendment’s guarantee of free exercise,” id., because it sweeps more broadly than the Constitution demands. . . . We therefore decline to hoist automatically Rost’s religious interests above other compelling governmental concerns.”

The Court also found that enforcing Title VII was the least restrictive means.  “Where an alternative option exists that furthers the government’s interest “equally well,”  . . ., the government “must use it.”    Indeed, “[t]he district court found that requiring the Funeral Home to adopt a gender-neutral dress code would constitute a less restrictive alternative to enforcing Title VII in this case, and granted the Funeral Home summary judgment on this ground.”

The district court’s suggestion, although appealing in its tidiness, is tenable only if we excise from the case evidence of sex stereotyping in areas other than attire.  Though Rost does repeatedly say that he terminated Stephens because she “wanted to dress as a woman” and “would no longer dress as a man,”  . . .the record also contains uncontroverted evidence that Rost’s reasons for terminating Stephens extended to other aspects of Stephens’s intended presentation.  For instance, Rost stated that he fired Stephens because Stephens “was no longer going to represent himself as a man,”  . . ., and Rost insisted that Stephens presenting as a female would disrupt clients’ healing process because female clients would have to “share a bathroom with a man dressed up as a woman,”  . . .  The record thus compels the finding that Rost’s concerns extended beyond Stephens’s attire and reached Stephens’s appearance and behavior more generally.

  . . .

The Funeral Home’s proposed alternative—to “permit businesses to allow the enforcement of sex-specific dress codes for employees who are public-facing representatives of their employer, so long as the dress code imposes equal burdens on the sexes and does not affect employee dress outside of work,”  . . .is equally flawed. . . . the EEOC does have a compelling interest in ensuring that the Funeral Home does not discriminate against its employees on the basis of their sex.  The Funeral Home’s proposed alternative sidelines this interest entirely.

 . . .
To start, the Supreme Court has previously acknowledged that “there may be instances in which a need for uniformity precludes the recognition of exceptions to generally applicable laws under RFRA.” . . .

The Court seemingly recognized Title VII’s ability to override RFRA in Hobby Lobby, as the majority opinion stated that its decision should not be read as providing a “shield” to those who seek to “cloak[] as religious practice” their efforts to engage in “discrimination in hiring, for example on the basis of race.”   . . .

While the Hobby Lobby Court permitted a RFRA exemption to ObamaCare’s contraception mandate, ObamaCare’s statute already provided an exemption mechanism, unlike Title VII’s prohibition on sex discrimination in this case.

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.

Ohio Appellate Court Finds Dismissal Without Cause of Probationary Civil Service Employee Violates Public Policy

Editor's Note:  This case was reversed by the Ohio Supreme Court on August 20, 2019.

Earlier this month the Franklin County Court of Appeals reversed the 12(B)(6) dismissal of the wrongful discharge claim of a civil service employee who was fired during his probationary period only six days after receiving a satisfactory performance evaluation allegedly because of the negative publicity that surrounded his hiring and prior employment.  Miracle v. Ohio Dept. of Veterans Servs., 2018-Ohio-819.  The Court found that the complaint stated a valid claim as a matter of law that it is illegal to terminate a civil service employee during his or her probationary period when the employee is performing his or her job duties satisfactorily.  In other words, the Court found a just-cause termination standard to be implied as a matter of public policy from the civil service statute during the initial probationary period even if the employee does not have the right to appeal to the applicable civil service commission.  Therefore, while civil service employees who successfully survive their probationary period can appeal only to the Board of Review or civil service commission, probationary employees can challenge their terminations in court.  That being said, this case illustrates one of my favorite practice pieces of advice: it is always risky to terminate an employee without a good reason following a satisfactory performance evaluation.

According to the Court’s opinion and based on the allegations of the complaint, the plaintiff allegedly explained during his job interview that he had been fired by another state agency following an investigation into an earlier prison escape where he formerly worked.    Assured that was not a problem for the current position, he was hired and received a satisfactory performance evaluation four months later.  Six days after that, he was terminated and refused any explanation because he was still a probationary employee.  He alleged that he was fired because an employee in the Governor’s office sought his dismissal to end negative publicity surrounding his hiring after his earlier termination by a different state agency.  There were apparently no allegations that anyone at the State benefitted personally from his termination or that it was in retaliation for engaging in protected conduct which a statute seeks to encourage.   The State moved to dismiss, which the Court of Claims did on the grounds that the complaint failed to state a claim upon which relief could be granted, even if the allegations were true.

In evaluating public policy wrongful discharge claims, “[t]he clarity and jeopardy elements, which involve relatively pure legal and policy questions, present questions of law” which are reviewed on a de novo basis.  The plaintiff alleged that:

"there exists a clear public policy in favor of retaining probationary employees who are satisfactorily performing their duties and against arbitrary termination of such employees."   . . .  In other words, [the plaintiff] derived from R.C. 124.27 a clear public policy against the discharge of civil service employees who provide satisfactory service during the probationary period.

The trial court had evaluated the allegation to preclude any termination of a probationary employee and found there to be no such public policy.  While the Court agreed that was true, it also found that the trial court misconstrued the alleged public policy, which – as an appellate court reviewing an issue of law de novo – it concluded did exist.  Therefore, it sustained the plaintiff’s claimed error and remanded the case to proceed with discovery. 

The civil service statute at issue – R.C. §124.27(B) -- provides in relevant part:

(B) All original and promotional appointments in the classified civil service, including appointments made pursuant to section 124.30 of the Revised Code, but not intermittent appointments, shall be for a probationary period, not less than sixty days nor more than one year, to be fixed by the rules of the director for appointments in the civil service of the state . . . . No appointment or promotion is final until the appointee has satisfactorily served the probationary period.   If the service of the probationary employee is unsatisfactory, the employee may be removed or reduced at any time during the probationary period.  If the appointing authority decides to remove a probationary employee in the service of the state, the appointing authority shall communicate the removal to the director. A probationary employee duly removed or reduced in position for unsatisfactory service does not have the right to appeal the removal or reduction under section 124.34 of the Revised Code.  (italics added for emphasis).

In a slightly different claim, the plaintiff alleged that Ohio public policy prohibits the abuse of power by officials, which the State conceded.  The Court then observed that the plaintiff would need to allege and prove that the alleged public policy was jeopardized by his discharge, but that the defendants had made a different argument in moving to dismiss.   Although the State argued that there was no private right of action under R.C. 124.56, the Court observed that this is whole point of public policy claims – to create a remedy where none otherwise exists when the public policy would be jeopardized.  Also, the complaint sufficiently alleged misconduct by the named defendants when they complied with the directions to resolve inconvenient “political optics.”  Finally, the fact that the defendants had the power and authority to dismiss probationary employees did not resolve the jeopardy question when it was alleged that their exercise of that power and authority violated the public policy against abuse of power.

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 FLSA Action Where Employer Paid Twice the Required Overtime Premium Under Fluctuating Work Week Method

This morning, the Sixth Circuit affirmed the dismissal of a collective FLSA action on the grounds that the employer’s fluctuating work week overtime payroll practices did not violate the Fair Labor Standards Act.   Hall v. Plastipak Holdings, Inc. No. 17-1694 (6^th Cir. 2-28-18).   First, the Court noted that the employer paid its employees at twice overtime rate that was legally required under the FLSA regulations.  The plaintiffs’ arguments were based on a misunderstanding of how the fluctuating work week method operates.   Further, it was “absurd” for the plaintiffs to argue that they were not paid a “fixed salary” when their vacation pay banks were docked as they took vacation because that would result in employees being paid twice as much for not working.  The Court also rejected their argument that they were prevented from conducting discovery as to whether the employer would dock their salary if they missed work after exhausting their vacation banks because the plaintiffs never raised this argument before the trial court and cannot raise arguments – even good ones – for the first time on appeal.

As explained by the Court:

Various methods can be used to calculate this overtime premium, depending on the particular employment circumstances.  One such method is the “Fluctuating Workweek” (“FWW”) method, described in 29 C.F.R. § 778.114(a).  Under this approach, employees receive a fixed salary as compensation for all hours worked, whether above or below forty hours, plus an overtime premium for each overtime hour.  Id.

             . . .. .

The FWW method can only be used if four requirements are met: (1) the employee’s hours fluctuate from week to week; (2) the employee receives a fixed salary that does not vary with the number of hours worked (excluding overtime premiums); (3) the fixed salary at least equals the minimum wage; and (4) the employer and employee share a “clear mutual understanding” that the employer will pay the fixed salary regardless of the number of hours worked.  29 C.F.R. § 778.114(a).

The plaintiffs disputed that they were paid a fixed salary or that they had agreed to this method of compensation.    However, the plaintiffs had each signed a detailed agreement specifying how their overtime would be calculated and they would be paid, including numeric examples.  They also accepted paychecks using this method for years without complaint or objection.

The Court observed that the employer paid its employees a higher overtime rate than required by the FWW regulations:

[T]he FWW method calculates overtime premiums according to the following formula:

            overtime premium = ½ x (salary/40 hours +overtime hours) x overtime hours

The parties agree that [the employer] did not use this formula.  Instead, [it] used a different one: 

            overtime premium = (salary/40 hours)          x overtime hours

When compared, these formulae show that [the employer’s] approach was more generous than the FWW’s approach in two ways.  First, [the employer] used a higher base salary rate: it divided base salary by 40 hours, whereas the FWW method divides base salary by the sum of 40 hours and overtime hours.  Second, [it] paid the full salary rate for overtime hours, whereas the FWW method requires only a minimum of half of the salary rate.  Taken together, these changes ensured that Plaintiffs were paid more than twice the minimum overtime premiums.  That was plainly permissible.  § 778.114(a)

The Court rejected as “absurd” the plaintiffs’ argument that they were not paid a “fixed salary” when their accrued vacation pay banks were “docked” after they requested and took time off work.

Reducing an employee’s bank  of vacation time is obviously appropriate in such circumstances.  See DOL Opinion Letter FLSA,   . . .  Indeed, it would be absurd to suggest that a vacationing employee should be paid twice for not working, once because the employee took paid vacation  and a second time because the employee is guaranteed a fixed salary.

The Court also rejected the plaintiff’s objection to being paid the same rate of pay for both overtime and regular 40 hours because they misunderstood the FWW method.  Hourly employees are not guaranteed a “fixed salary” regardless of how many hours they work.  If they work less than 40 hours, they are paid less than 40 hours, whereas  under the FWW, they receive the same pay every week whether they work more or less than forty hours.  So, hourly employees have not been paid at all for the hours worked over 40 in a week, which means that their overtime is time and a half.  In contrast, FWW employees have already been paid a fixed salary for all hours worked, even those over 40.  Because they have already been paid the “time” with the fixed salary, they only get “a half” for the overtime hours.   Nonetheless, the defendant employer in this case paid them twice that amount and gave them not just time and a half, but time and time again.  Still, the employees brought suit because they wanted time and time and a half.

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.

Ohio Court of Appeals Finds Public Policy Jeopardized by Discharge of Waitress for Objecting to Employer’s Payroll Tax Evasion

Earlier this month, the Ohio Court of Appeals recognized a public policy wrongful discharge claim when a waitress was fired for objecting to her employer’s failure to properly pay all unemployment taxes on her account.  House v. Iacovelli, 2018-Ohio-443. “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.

According to the Court’s opinion, 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 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 on the grounds that the statutes “fail to adequately protect society’s public policy interest in establishing and maintaining an unemployment compensation program.”

The Supreme Court of Ohio has explained that analyzing the jeopardy element of  a public policy wrongful termination action requires assessing whether prohibiting the action from going forward would compromise the objectives of the public policy in question.   . . .  Thus,“[a]n analysis of the jeopardy element necessarily involves inquiring into the existence of any alternative means of promoting the particular public policy to be vindicated by the common-law wrongful discharge claim.”   . . .  The public policy expressed in a statute is not jeopardized by the absence of a wrongful termination action when the aggrieved employee “has an alternate means of vindicating his or her statutory rights[,] [] thereby discouraging an employer from engaging in the unlawful conduct.”  Id.  “Wiles made clear that the method to determine whether a plaintiff can file statutory and public policy causes of action involves reviewing the adequacy of the remedy, not ensuring the aggrieved party receives the greatest recovery.”   . . .  “[A] remedy is not inadequate merely because it does not allow for all avenues of recovery.”  Coon at ¶ 22.

While society’s interests may be protected by the Attorney General’s intervention and the employee may have the right to file an administrative appeal to challenge unemployment benefits that are awarded, the statute fails to address any remedies for an employee when an employer refused to comply with the statute. “[W]e emphasized in Coon that “the purpose of a remedy in a  wrongful termination case is * * * to deter the employer from violating the law and to place the  employee in the position they would have been had the employer not violated the law.”  However,   the statute “does not contain any provision that would provide [the plaintiff] with a “meaningful opportunity” to return to the position she occupied prior to the adverse employment action.”    Therefore, the statutory remedies are inadequate and the plaintiff has satisfied the jeopardy element of a public policy wrongful discharge claim.

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.