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Employer Law Report

Sixth Circuit Decision Reminds Employers: Get Your Ducks in a Row at the EEOC Charge Stage and, for Goodness Sake, Know Your Own Policies

Posted in EEO, Employee Benefits/ERISA

Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it. In addition, all reasons for terminating an employee should be included in the termination meeting with the employee, or at the very least, at the EEOC charge stage, even if it might bruise the employee’s ego. Any change or supplementation to the original reason can make put the entire termination decision seem made up and send the employer to trial. It is also imperative that employers know what their policies say.

In 2008, Levin Group hired Joseph Gaglioti as a staff accountant. Gaglioti was hired with full benefits, though the company claimed Gaglioti was hired as a temporary employee and his work limited to immediate projects. As part of his hire paperwork, Gaglioti filled out a medical insurance form and disclosed his wife’s significant medical problems. The next year, Gaglioti filled out a new medical history form in connection with Levin Group’s medical insurance plan renewal like all full time, benefit-eligible employees, and again, disclosed his wife’s medical condition. While Gaglioti claimed he gave the form to the Comptroller’s assistant, the Comptroller and the President claimed they never saw it. The next month, Gaglioti was informed he was being terminated. The reason given to him —and confirmed in an email — was that he was a temporary employee, and there was no work for him. During litigation, the President would supplement this and testify that Gaglioti’s work was poor, and that he had decided to terminate Gaglioti in "early 2009". Notably, the record devoid and any evidence indicating that Gaglioti’s performance had ever been an issue.

Gaglioti sued Levin Group for age and disability discrimination under state and federal law. He also sued for ERISA interference, but that claim will not be discussed here. The district court granted summary judgment for the employer on all claims and dismissed the suit.

Gaglioti’s Age Discrimination Claims

The Sixth Circuit did not entirely agree with the district court. The court analyzed both claims under the McDonnell Douglas tri-partite burden shifting framework. With respect to his age discrimination claim, the court found that Gaglioti met his prima facie burden, which required that he show he was over the age of 40, discharged, qualified for the position, and replaced by or that his discharge permitted the retention of, a person outside the protected age class. Plaintiff easily met the first three elements. The more contentious element was the fourth as the evidence revealed that after Gaglioti’s termination, Levin Group retain two younger staff accountants in a permanent role. This was sufficient for Gaglioti to meet his burden on the fourth element and move the case forward.

Turning to the employer’s burden of persuasion, i.e., to identify a non-discriminatory reason for terminating Gaglioti, Levin Group offered three reasons: (1) Gaglioti’s position was always intended to be temporary, and Gaglioti was terminated when his temporary assignment was completed; (2) there was no work for Gaglioti to do, meaning his termination was essentially a downsizing; and (3) that Gaglioti’s performance was sub-standard.

To prove pretext, Gaglioti took issue with the all three reasons given by Levin Group. First, Gaglioti argued that each of Levin Group’s three reasons were, at one point, asserted as the Company’s sole reason for terminating him. His theory was that the Company had changed its reasons for firing him during the course of the litigation. The evidence demonstrated that at Gaglioti’s termination, the sole reason given to him for his termination was the temporary nature of his position. At the EEOC stage, however, Levin Group claimed Gaglioti was terminated because there was no future need for Gaglioti’s services — there was no mention of any performance issues. At the summary judgment stage during litigation, however, the Company argued that it was the combination of poor performance and temporary employment that caused it to terminate Plaintiff. The court found that the "moving-target nature of Levin Group’s explanation …, while perhaps casting a pall of suspicion over it actions" was not, by itself, enough to create an issue of fact because the Company’s story was one that was "supplemented" rather than changed.

What did the employer in was its failure to pay attention to its own policies. Levin Group’s employee manual defined "temporary employee" as one that did not get benefits, but Gaglioti did. With this, the court found that the evidence contradicted Levin Group’s claim that Gaglioti was a temporary employee, and noted that this, "coupled with the prima facie evidence" that the employer retained two younger employees after Gaglioti was terminated, could lead a reasonable jury to conclude that this "’temporary employee’ justification was crafted post hoc by [the Comptroller and the President] to cover an improper reason for firing him."

Other inconsistencies with Levin Group’s story were also no help. For example, Levin Group argued that there was no work for Gaglioti to do, but the accounting department was larger when Gaglioti was terminated than when he was hired. And let’s not forget, Levin Group hired two younger people on a full-time basis after it terminated Gaglioti. Then there’s the issue of Gaglioti’s performance … of which there was zero documentation and no mention of any performance issues until after litigation ensued. The court noted that while the fact that the employer did not raise the issue of Gaglioti’s performance until well into litigation "may not be enough to show a changing rationale, it would allow the jury to view the performance argument as a litigation strategy, as opposed to the real reason for the action." The court reasoned that this was "potentially enough for a jury to discount this argument." It also did not help that the Comptroller testified that Gaglioti’s work performance "didn’t have anything to do with why he was fired" since inconsistent reasons given by key decision-makers can provide evidence of pretext. With this, the Sixth Circuit reversed the trial court and remanded the case on Gaglioti’s age discrimination claims.

Gaglioti’s Disability Discrimination Claims

As for Gaglioti’s associational disability discrimination claims, the Sixth Circuit affirmed the trial court’s grant of summary judgment and found that Gaglioti’s could not meet his prima facie case because there was insufficient evidence that the termination occurred under circumstances that raised a reasonable inference that the disability of Gaglioti’s wife was a determining factor in the decision.

Gaglioti argued that Levin Group terminated him because it wanted to cut insurance costs and his wife was a high-risk beneficiary. The court reviewed the line of cases dealing with the "expense" theory of association discrimination, which all require some showing that the potential medical expenses of the fired employee were on the minds of the decision maker at the time of the termination, and found no evidence to make this required showing beyond Gaglioti’s self-serving assertions. The court affirmed the trial court’s grant of summary judgment on Gaglioti’s disability discrimination claim.

Takeaways: Gaglioti highlights the importance of employers to identify all reasons for terminating an employee at the beginning when the employer is getting ready to hand down the decision to the employee. If performance factors in as part of the reason, the employer’s need to use this as evidence in any later litigation likely outweighs the employer’s concern that it might bruise the employee’s ego. It also likely outweighs the employer’s attempt to be nice and keep performance issues out of the picture so the employee can easily collect unemployment. It also likely outweighs the employer’s attempt to be nice and keep performance issues out of the picture so the employee can easily collect unemployment. At the bare minimum, the reasons given by the employer to the EEOC should mirror the reasons argued at summary judgment. So employers, getting your ducks in a row by the charge stage is imperative. If an employer does not, it can come across as if it is changing its reasons for terminating the employee, which do nothing but help the employee meet its pretext burden.

Lastly, know your policies, and make sure that those involved in the hiring and firing decisions do too. If you have a policy that defines "temporary" versus "full-time" employees as employees who do not receive benefits, don’t give an employee benefits and try to later argue that the employee is temporary. With employers having mountain-size employee handbooks, this problem is not as uncommon as one would think.