Two Supreme Court Decisions Expand Retaliation Claims

Posted on June 10, 2008 by Jaime Powell

On March 27, 2008, the Supreme Court released two opinions addressing discriminatory retaliation in the workplace. In the pair of opinions, the Court broadened the scope of potential claims for retaliatory conduct by holding that: (1) employees may bring a private action for discriminatory retaliation under §1981; and (2) the Age Discrimination in Employment Act (ADEA) prohibits retaliation against federal employees who complain of age discrimination.

In CBOCS West, Inc. v. Humphries, the Supreme Court held 7-2 that under 42 U.S.C. §1981, retaliation itself is a form of prohibited discrimination when contractual rights are at stake, even though §1981 does not include the word “retaliation.” Although this particular issue had been addressed by several appellate courts, the Supreme Court had never addressed the question squarely.

As background, §1981 gives “all persons…the same right…to make and enforce contracts…as is enjoyed by white citizens” and applies in the employment context because the employment relationship is often considered contractual in nature. The plaintiff in this case, Hendrick Humphries, claimed that he was fired because he complained to managers that a co-employee was dismissed for race-based reasons. In its appeal brief, the defendant framed the question before the Court simply as: “Is a race retaliation claim cognizable under 42 U.S.C Sec. 1981?” The answer to that question, according to the Supreme Court, is yes. As a result of this decision, employers should be aware that employees now have one more potential claim in their arsenal when it comes to discriminatory or retaliatory treatment. It’s also important to note that retaliation claims under §1981 likely will not be subject to the filing deadlines and limits on damages imposed by Title VII.;

Likewise, in Gomez-Perez v. Potter, the Court held 6-3 that the ADEA prohibits retaliation against a federal employee who complains of age discrimination. The case involved a 45-year-old postal worker who claimed that she was subjected to various forms of retaliation, including a drastic reduction in hours, after she filed an administrative ADEA complaint. Section 633a(a) of the ADEA requires that “all personnel actions affecting [federal] employees…at least 40 years of age…be made free from any discrimination based on age.”

Relying on a rationale similar to that in CBOCS West, the Court settled a split among the circuits by holding that, despite no mention of “retaliation” in the statute’s prohibition of discrimination against federal employees based on age, such retaliation is prohibited. Notably, the Court acknowledged, but ultimately was not persuaded by, the “negative implication” argument – i.e., that §623(d) of the ADEA contains a specific prohibition on retaliation against ADEA complainants in the private sector but §633(a) contains no such provision for federal employees. In response to this argument, the Court noted that the two provisions were neither considered nor enacted simultaneously, thereby greatly diminishing the impact of that argument.

As in CBOCS West, the Court stressed that private rights of action for discrimination encompass rights of action for retaliation as well. Although this decision obviously has the most impact on claims by federal employees, it is further evidence of the Court’s willingness to expand the rights and potential claims of employees in the area of discrimination. 
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Supreme Court declines to hear retiree benefits case

Posted on March 26, 2008 by Jamie LaPlante

This is an update to my prior post on January 2, 2008 regarding retiree healthcare benefits.

A legal battle dating back to 2000 regarding retiree benefits came to a close recently.  In 2000, the Third Circuit ruled that treating Medicare-eligible retirees differently than younger retirees violated the Age Discrimination in Employment Act (ADEA).  This prompted the EEOC to issue an exemption to the ADEA allowing employers to reduce or eliminate retiree healthcare benefits for Medicare-eligible retirees, while providing higher levels of benefits for those retirees who are not Medicare-eligible.  The American Association of Retired Persons (AARP) challenged the EEOC's authority to issue this rule.  The district court and Third Circuit rejected AARP's challenge. 

Recently, the U.S. Supreme Court, as anticipated, declined to hear AARP's appeal on this issue.  This means that, absent Congressional action amending the ADEA, employers can now provide retiree healthcare benefits and coordinate those benefits with Medicare without fear of violating the ADEA.

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Supreme Court Considers Weighing In On Key FMLA Waiver Issue

Posted on January 17, 2008 by Jamie LaPlante

In July 2007, the Fourth Circuit Court of Appeals held in Progress Energy v. Taylor, 493 F.3d 454 (4th Cir. 2007), that, under the Department of Labor’s (DOL’s) regulations and the Family and Medical Leave Act (FMLA), employees cannot waive their rights under the FMLA in a private agreement, such as a severance agreement.  To waive FMLA rights, the Fourth Circuit held that the agreement must first be court- or DOL-approved.  Progress Energy, supported by several other business groups, appealed the decision to the U.S. Supreme Court, citing a split between the Fourth and Fifth Circuits.  On January 14, 2008, the Supreme Court asked the DOL to submit its view on the issue.  This type of request is often a signal that the Supreme Court will review the decision. 

The background of the case is relatively simple.  Taylor, the employee, was terminated by Progress Energy as part of a reduction in force in which past performance evaluations were used to determine which employees to terminate.  Taylor received poor performance evaluations after several health-related absences that Progress Energy determined were not FMLA protected.  Although Taylor tried to have the evaluations changed, she was unsuccessful.  Upon her termination, Taylor and Progress Energy entered into a severance agreement where Taylor received $12,000 in exchange for waiving all rights to litigate.  The agreement did not specifically mention Taylor’s rights under FMLA, but it referenced rights under “other federal laws.”

Despite the agreement, Taylor sued in federal court, claiming retaliation for exercising her FMLA rights.  The district court found that her suit was barred by the waiver in the severance agreement, but the Fourth Circuit reversed.  In the Fourth Circuit’s view, the FMLA’s enforcement provisions were designed by both Congress and the DOL to mirror those of the Fair Labor Standards Act (FLSA).  For its part, the FLSA requires that both retrospective and prospective waivers have court or DOL approval.

Ironically, when the case was before the Fourth Circuit, the DOL filed an amicus (or friend-of-the-court) brief that sided with the employer.  In that brief, the DOL argued that only prospective waivers require court or DOL approval and that the applicable regulations permit settling disputed FMLA claims retrospectively or after the fact.  The DOL further asserted that its interpretation of the FMLA regulations should be given deference. I n interpreting the regulations in this way, the DOL argued that the FLSA is not similar to the FMLA because the FLSA, dealing with minimum wage and overtime issues, is designed to protect workers with the least bargaining power at the bottom of the pay scale.  The FMLA, in contrast, protects all workers and is similar to other employment statutes that allow retrospective settlements.

In light of the DOL’s position before the Fourth Circuit, the Supreme Court’s request for input from the department gives employers a reason to be optimistic that the Court will accept the appeal and issue an employer-friendly ruling.  Should the Supreme Court refuse to hear the case, as Taylor’s attorney has urged, the enforceability of FMLA releases in Ohio will be open to question – at least until the Sixth Circuit weighs in.    With any luck, the Supreme Court will make Sixth Circuit review unnecessary. 
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