William R. Horwitz, Author at Laborsphere

Reducing Discretionary Bonus May Constitute Adverse Employment Action

According to the U.S. Court of Appeals for the Second Circuit, a District Court erred when it held that reducing an employee’s discretionary bonus cannot constitute an “adverse employment action” – a necessary element of a discrimination claim. The Second Circuit issued its decision last week in Davis v. New York City Dep’t of Educ., 2015 WL 6118183 (2d Cir. Oct. 19, 2015). In Davis, the District Court had relied on Seventh Circuit precedents in reaching its holding, but the Second Circuit clarified that those precedents “are not the law in this circuit.” Although Davis is a disability discrimination case, the Second Circuit signaled that the same principle applies to other types of discrimination cases as well.

The Law

The Americans With Disabilities Act (the “ADA”) prohibits an employer from discriminating “against a qualified individual on the basis of a disability in regard to … employee compensation … and other terms, conditions, and privileges of employment.” 42 U.S.C. § 12112(a).

The Facts

In December 1998, plaintiff Catherine Davis began her employment with defendant New York City Department of Education (the “DOE”). She began as a substitute teacher and later worked as a health teacher. From 2002 to 2009, she worked at a New York City junior high school. Under a collective bargaining agreement between the DOE and Davis’s labor union, the school had the discretion to award bonuses to teachers from money the school received from the DOE for high student achievement.

In October 2008, Davis was injured in a car accident and took an unpaid medical leave of absence for several months. When the school later awarded bonuses to teachers for student achievement, a union representative indicated that Davis’s award would be divided between Davis and the substitute teacher who covered her classes during her leave. Davis received a $1,000 bonus, while other teachers received $3,000 bonuses. Davis filed a charge with the Equal Employment Opportunity Commission (“EEOC”) alleging disability discrimination. The EEOC issued a Right to Sue Letter and Davis filed a lawsuit in the U.S. District Court for the Eastern District of New York.

The District Court

In her lawsuit, Davis alleged that the DOE violated the ADA by reducing her bonus because of her disability. The DOE filed a Motion for Summary Judgment, seeking dismissal of the lawsuit. The DOE argued that reducing Davis’s bonus was appropriate in light of her absence and the fact that the substitute teacher deserved a share of the bonus. The District Court granted the motion and dismissed the lawsuit. According to the District Court, reducing the bonus from $3,000 to $1,000 did not constitute an adverse employment action under the ADA, because the DOE had the discretion to decide the amount of the award. Davis appealed.

The Second Circuit

The Second Circuit explained that, in order to establish a claim under the ADA, a plaintiff must establish that: (1) the ADA applies to the employer; (2) the plaintiff has a disability or is perceived to have a disability; (3) the plaintiff was otherwise qualified to perform the essential functions of the job with or without reasonable accommodation; (4) the plaintiff suffered an adverse employment action; and (5) the employer took the adverse employment action because of the plaintiff’s disability. In order to establish the last element, a plaintiff must demonstrate that the adverse employment action occurred under circumstances that give rise to an inference of discrimination.

The Second Circuit further explained that Courts consider ADA claims under a burden shifting analysis. Under this approach, if a plaintiff can produce “minimal evidentiary support for the claim of discriminatory motivation,” the burden shifts to the employer “to articulate a non-discriminatory reason for the adverse employment action.” If the employer can articulate this justification, the burden shifts back to the plaintiff to demonstrate that the employer was motivated, at least in part, by discrimination.

The Second Circuit observed that courts have not developed a “bright-line rule” for identifying whether an employment action is an adverse employment action sufficient to provide a basis for a discrimination claim. Generally speaking, according to the Second Circuit, in order to constitute an adverse employment action, the employer’s conduct toward a plaintiff must be “materially adverse” with regard to the terms and conditions of the plaintiff’s employment. It must be more than an inconvenience or a modification of job duties.

The Second Circuit rejected the District Court’s conclusion that reducing non-discretionary bonuses cannot constitute an adverse employment action. The Second Circuit likewise rejected the Seventh Circuit caselaw upon which the District Court had relied. The Second Circuit explained, “[t]he fact that the employer has discretion whether to grant bonuses or raises does not support the conclusion that an employer may freely allocate them on the basis of racial or religious bias, or disability discrimination.” The Second Circuit observed that, in the context of at-will employment, most terms and conditions of employment are subject to the employer’s discretion. The Court listed the following examples of employment actions falling within the discretion of the employer: “[d]eciding which applicant to hire, which employee-at-will to promote, which one should receive additional responsibilities or which one should be fired.” The Second Circuit explained, “[t]he fact that the employer had the right to allocate a bonus on any ground that does not violate the law does not mean that the employer had the right to allocate it on a ground that did violate the law.”

Notwithstanding the District Court’s error, the Second Circuit concluded that the District Court had properly dismissed the lawsuit because, even though Davis could have established that she experienced an adverse employment action, she could not have established that discrimination was a motivating factor in the DOE’s bonus decision. The Second Circuit emphasized the following undisputed facts: (1) Davis missed work for several months; (2) while Davis was absent, she did not contribute to the success that earned bonuses for the teachers; (3) the school needed a substitute teacher during Davis’s absence; and (4) the substitute teacher contributed significantly to the school earning the bonus. Thus, the Second Circuit concluded that plaintiff could not demonstrate that discrimination was a motivating factor in the DOE’s failure to pay Davis a higher bonus. The Second Circuit affirmed the dismissal of the lawsuit.

Conclusion

In Davis, the Second Circuit joined another Circuit, the U.S. Court of Appeals for the District of Columbia Circuit, in holding that the reduction of a discretionary bonus may constitute an adverse employment action. Although Davis was a disability discrimination lawsuit, the Second Circuit will clearly apply the same principle in other types of discrimination cases. It is unclear whether the Seventh Circuit precedents with which the Second Circuit disagreed will remain good law. Regardless, to minimize risk, prudent employers in the Seventh Circuit and elsewhere should ensure that they can justify even discretionary decisions with legitimate, non-discriminatory reasons.

The NLRB Expands the Definition of “Joint Employer”

Yesterday, the National Labor Relations Board (the “NLRB” or “Board”) issued a decision greatly expanding the standard for determining whether a company may be deemed a “joint employer.” The Board’s decision, in Browning-Ferris Industries of California, Inc., overturned the narrower standard that the Board had been applying for 30 years. The impact on companies that rely on staffing agencies and contractors is likely to be significant and the effects may ripple into the world of franchised business.

The Previous Joint Employer Standard

The National Labor Relations Act (“NLRA”) imposes numerous obligations on employers, including the duty to bargain with a union that workers select as their designated representative. These obligations can extend to a company that does not directly employ the workers in a traditional sense, if the company is deemed to be a joint employer.

For decades, to determine whether a company constituted a joint employer, the Board relied on a test set forth in NLRB v. Browning-Ferris Industries of Pennsylvania, Inc., 691 F.2d 1117 (3d Cir. 1982), and refined in two subsequent Board decisions – TLI, Inc., 271 NLRB 798 (1994), and Laerco Transportation, 269 NLRB 324 (1984). Under the Third Circuit’s test in Browning-Ferris Industries of Pennsylvania, two or more companies could be considered joint employers of the same group of employees if they “share[d] or codetermine[d] those matters governing the essential terms and conditions of employment.” In TLI and Laerco, the Board imposed additional limitations on the test, requiring that, to be considered a joint employer, a company must actually exercise control – not merely possess the authority to exercise control. Moreover, the control had to be direct and immediate, not limited and routine.

The Facts

Browning-Ferris Industries of California, Inc. (“BFI”) owned and operated the Newby Island Recyclery (“Newby Island”), where workers sorted mixed waste and recyclable materials into separate commodities that were sold to other business. BFI employed 60 employees at Newby Island, who were represented by the International Brotherhood of Teamsters (the “Union”). BFI entered into a temporary labor services agreement (the “Agreement”) with Leadpoint Business Services (“Leadpoint”) under which Leadpoint provided employees to sort the recyclables on Newby Island’s conveyor belts, clean the screens on the sorting equipment and provide housekeeping services.

BFI and Leadpoint maintained separate management teams and human resources functions. Although BFI managers were not directly involved in hiring Leadpoint’s employees, under the Agreement, BFI required Leadpoint to ensure that any personnel assigned to Newby Island met certain BFI-set qualifications, including drug testing and certification and training requirements. The Agreement provided that Leadpoint retained sole authority to counsel, discipline, and terminate its employees. However, the Agreement also granted BFI the authority to reject any personnel provided by Leadpoint and to “discontinue the use of any personnel for any or no reason.” As to wages, Leadpoint was responsible for paying the employees who worked at Newby Island. Yet, under the Agreement, Leadpoint could not, without BFI’s approval, pay a higher rate than BFI to Leadpoint employees who performed similar tasks to BFI’s own employees. As to hours and scheduling, while Leadpoint decided what employees to schedule for which shifts, BFI retained sole control over the shifts and operating hours of the facility. Moreover, BFI – not Leadpoint – decided how many employees to assign to specific conveyor lines. BFI also set productivity standards and retained the sole authority to set the pace of the material streams. As to training and safety, although Leadpoint conducted its own training, BFI occasionally supplemented the training, and Leadpoint employees were required to comply with BFI’s safety policies and procedures. The Agreement expressly provided that Leadpoint was the sole employer of its personnel and that nothing in the Agreement should be construed as creating a joint employer relationship.

The Union petitioned to represent Leadpoint’s sorters, screen cleaners, and housekeepers. The Union wanted to bargain with BFI on behalf of these workers, arguing that BFI was the joint employer. Applying TLI/Laerco, the Board’s Regional Director disagreed, finding that BFI was not a joint employer and, therefore, BFI had no duty to bargain. In arriving at this decision, the Regional Director focused on the fact that, under the Agreement and in practice, Leadpoint retained primary and direct control over its employees supplied to Newby Island.

The Union requested that the Board review the decision. Among its arguments, the Union contended that the Board should revisit its joint employer standard.

The Board’s Decision

After reviewing the history of its joint employer jurisprudence, the Board concluded that the test originally set forth by the Third Circuit in Browning-Ferris Industries of Pennsylvania had been severely distorted in subsequent NLRB decisions, including TLI and Laerco. The Board noted the increasing prevalence of employers procuring workers through staffing and subcontracting arrangements. In its view, the existing, narrow, joint employer test was out-of-date in light of the changing realities of industrial life.

A “New” Joint Employer Test

After criticizing the long line of Board decisions that had narrowed the joint employer designation, the Board declared that it was returning to the original test announced by the Third Circuit. The Board articulated this “new” test as follows:

The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms or conditions of employment.

Relevant facts to consider under this test include the roles that companies play with regard to: hiring, firing, discipline, supervision and direction; wages and hours; scheduling, seniority and overtime; assigning work; and determining the manner and method of work performance. The Board explicitly overruled TCI, Laerco, and their progeny, stressing that a company may be a joint employer by virtue of its authority to exercise control, irrespective of whether the company actually exercises that control. The Board rejected the requirement that a joint employer’s control is necessarily exercised directly and immediately. Now, control exercised indirectly may establish joint employer status.

The Board stressed that a putative joint employer’s “bare rights to dictate the results of contracted services or to control or protect its own property” would not be determinative. However, it made clear that:

[w]here … [a] user firm owns and controls the premises, dictates the essential nature of the job, and imposes the broad, operational contours of the work, and the supplier firm, pursuant to the user’s guidance, makes specific personnel decisions and administers job performance on a day-to-day basis, employees’ working conditions are a byproduct of two layers of control.

In such situations, the Board suggested that both the supplier and user of the contingent or temporary workforce would constitute joint employers.

The Board Reverses The Regional Director’s Determination

Applying its revived joint employer standard, the Board found that BFI constituted a joint employer. Even though BFI was not directly responsible, it exercised “significant control” over hiring, firing and discipline by virtue of the parties’ Agreement. Moreover, the Board noted that, by virtue of its unilateral control over the operation of its facilities, it also had control over the supervision, direction and hours of work of Leadpoint’s employees. Likewise, by virtue of the agreed-upon wage ceiling, the Board found that BFI exercised control over Leadpoint’s employees’ wages.

Take Aways From And Potential Impact Of Browning-Ferris

It is unknown whether the Browning-Ferris decision will be appealed. However, unless and until it is potentially narrowed or overturned by the Supreme Court, the case may have significant consequences for companies that rely on staffing agencies or contractors. When a company reserves significant authority with regard to the workers of a staffing agency or contractor, the company risks being deemed a joint employer of those workers. The company would then have a duty to bargain with a union representing those workers and could be subject to unfair labor practice charges for alleged NLRA violations. The Browning-Ferris decision could also have implications for franchisors if they retain significant control over their franchisees (and franchisee employees).

For now, the Browning-Ferris decision only has implications for an employer’s obligations and exposures under the NLRA. It does not have the force of law in other contexts, such as wage and hour disputes and claims of discrimination under other state and federal laws. However, it is conceivable that some courts may find the decision persuasive and appropriate for application in other legal contexts. In that event, every company that has labor supplied through subcontractors could now face vastly expanded liability under those other laws.

In light of the Browning-Ferris decision, companies that rely on supplemental workforces and franchise agreements should examine their current arrangements carefully.

Worth the Fight: Conditional Certification of FLSA Collective Actions is Not Automatic

Conventional wisdom holds that courts reflexively grant motions for conditional certification in Fair Labor Standards Act (“FLSA”) collective actions. As a result, some employers do not even oppose these motions. They are making a mistake. As two recent decisions demonstrate, an employer that opposes these motions has a chance to defeat them or, at least, narrow the scope of the collective.

The Allegations

Earlier this month, judges in the U.S. District Courts for the Southern and Eastern Districts of New York issued decisions on motions for conditional certification in Mata v. Foodbridge LLC, 2015 WL 3457293 (S.D.N.Y. June 1, 2015), and Anjum v. J.C. Penney Co., 2015 WL 3603973 (E.D.N.Y. June 5, 2015). The plaintiffs in both cases were non-exempt employees asserting claims for violations of the FLSA and New York Labor Law, alleging (among other things) that their employers failed to pay them overtime when they worked over 40 hours per week. In Mata, the defendants operated two restaurants and the plaintiff was a pizza counter worker. In Anjum, the defendants operated numerous department stores and the plaintiffs were former sales associates in a store in Staten Island.

The Standard

In order to obtain conditional certification, plaintiffs must establish that they and the putative collective action members are “similarly situated” with respect to an alleged violation of the FLSA. In both Mata and Anjum, the courts discussed the “lenient standard” that courts apply to this analysis, indicating that it requires only a “modest factual showing.”

The Mata Conditional Certification Motion

In Mata, the plaintiff filed a motion to conditionally certify a collective action of all non-exempt employees working at the defendants’ restaurants including “cooks, line-cooks, dishwashers, food preparers, cashiers, delivery persons, and counter persons.” In support of the motion, the plaintiff only submitted his own declaration, in which he described his employment and compensation at the defendants’ restaurants and further alleged that, “through observations of and conversations with other employees, he learned that they were subject to similar violations.”

In deciding the motion, the Mata court acknowledged that a single declaration may provide enough evidence for a court to grant a motion for conditional certification. In this case, however, the court determined that “the declaration actually submitted by Plaintiff in support of his motion does not suffice.” According to the court, the plaintiff attested that he observed other employees working, but provided “no actual support demonstrating knowledge of a common scheme impacting the diverse array of employees” he sought to include. Nor did the plaintiff include sufficiently detailed descriptions of his observations of and discussions with co-workers. Thus, the court concluded that “conditional certification would be inappropriate at this juncture.”

The Anjum Conditional Certification Motion

In Anjum, the plaintiffs filed a motion to conditionally certify a collective action of sales associates in all 47 of defendants’ New York State department stores. In support of the motion, the four plaintiffs and five additional opt-ins submitted declarations detailing their experiences working off-the-clock.

With regard to the declarations, the Anjum court explained that “each of the four Named Plaintiffs has personally attested to the violations they claim occurred during their employment as Sales Associates at the Staten Island Store, and they have identified by name similarly situated employees at both the Staten Island Store and the Manhattan Store, at least some of whom have since opted-in to the collective action.” The court concluded that the plaintiffs satisfied their burden to demonstrate that sales associates in the Staten Island and Manhattan stores were similarly situated. However, according to the court, the plaintiffs presented “no firsthand evidence” of violations at any other stores, relying instead on hearsay and their “belief” that the thousands of employees in the defendants’ other New York stores were subject to the same unlawful policies. Therefore, the court certified the collective action, but limited its scope to sales associates working in the Staten Island and Manhattan stores, excluding thousands of employees working in the employer’s other 45 locations.

Conclusion

Courts plainly grant more FLSA motions for conditional certification than they deny. Nonetheless, this first step in the two-step procedure that plaintiffs must follow in FLSA cases is not automatic. As courts often state, the plaintiff’s burden of proof at this stage is low, but “it is not non-existent.” Accordingly, employers should rarely, if ever, consent to conditional certification. As the Mata and Anjum cases demonstrate, employers have a real opportunity to defeat these motions or narrow the scope of the collective.

Obligations for Employers Before, During and After a Storm

As cleanup from the Nor’easter that pummeled the East Coast last week continues, and the prospect of more snow looms, we hope that you and your families, as well as your businesses and employees, are safe and warm and that the lights are on. As this has been one of the more problematic winters in recent memory, we wanted to remind employers of some of their obligations before, during and after a storm.

Temporary Closings

Unless your agreements or policies provide otherwise, you are generally not required to pay non-exempt employees when they are not working. Therefore, if your business is closed and your employees do not report to work, you are not obligated to pay non-exempt employees. However, make sure that these employees are not checking work e-mails, communicating with supervisors about work-related issues or otherwise working from home, because non-exempt employees are entitled to receive pay for these activities even if they do not physically report to work.

Note that some states require an employer to pay employees for reporting to work, even if the business closes and the employer sends them home. For example, a New Jersey employer must pay employees who report to work at least one hour of pay. A New York employer must pay employees who report to work at least four hours of pay (or the number of hours in the scheduled shift if it is less than four hours). With regard to exempt employees, they are generally entitled to receive their full salaries, even if the business is closed – at least if the shutdown lasts for less than a week. If a business is closed for an entire week and an exempt employee performs absolutely no work during that time, the employer is generally not required to pay the employee for the week.

When a business is temporarily closed, the employer can require exempt employees to use accrued vacation time for the time off, but this requirement should be set forth clearly in the Employee Handbook and any employment contracts.

Cleanup

After a storm passes, employees whose homes remain without power, who are repairing damage to their property or whose children’s schools remain closed, may seek additional time off from work. While an employer that can afford to do so may allow additional flexibility to these employees in order to give them peace of mind and boost their loyalty and morale, these requests may otherwise be handled pursuant to the employer’s contracts and policies.

Other Issues

In addition to the above general points, employers should also be aware of state laws that affect certain employees and certain industries. For instance, in New York and New Jersey, the prohibition against mandatory overtime for health care personnel includes an exception for a declared state of emergency. New Jersey also provides protections for employees who miss work because of their responsibilities as volunteer first responders.

Conclusion

Extreme weather and natural disasters that disrupt business create big headaches for employers and employees. We recommend clear and consistent communication with your employees to avoid confusion about your expectations. Also, maintaining sound employment policies and consulting with counsel when issues arise is critical for avoiding additional headaches resulting from ensuing workplace legal liability.

In the Second Circuit, Unpaid Overtime Claims Must Allege Specifics

Earlier this month, the United States Court of Appeals for the Second Circuit, in Dejesus v. HF Management Services, 2013 U.S.App.LEXIS 16105 (2d Cir. August 5, 2013), held that plaintiffs cannot rely solely on vague allegations in asserting claims for unpaid overtime. In this case, the plaintiff alleged that her former employer had failed to pay her overtime, but her Complaint lacked details such as the amount of overtime she had allegedly worked. Instead, it simply parroted the language of the Fair Labor Standards Act (“FLSA”). Affirming dismissal of the Complaint, the Second Circuit agreed with the district court that the allegations failed to state a claim. This decision makes it more difficult for plaintiffs who lack a basis for an unpaid overtime claim to file a lawsuit in the hope of finding one during discovery.

Ramona Dejesus (“Dejesus”) worked for HF Management Services, LLC (“Healthfirst”), a company providing administrative and support services to healthcare organizations. Dejesus alleged that she had worked more than forty hours per week for “some or all weeks” of her employment, but that Healthfirst had failed to pay her time and a half for the hours she worked over forty. The Complaint did not indicate the number of overtime hours Dejesus had worked, her rate of pay or an estimate of the unpaid wages.

Dejesus filed the lawsuit in the United States District Court for the Eastern District of New York, alleging violations of the FLSA and the New York Labor Law (“NYLL”). Both the FLSA and NYLL require an employer to pay non-exempt employees at an hourly rate of at least one and a half times their regular rate for each hour that the employees work in excess of forty hours in a workweek. Healthfirst filed a Motion to Dismiss the Complaint arguing, among other things, that the vague allegations in the Complaint failed to state a claim for unpaid overtime. The district court granted the motion. Dejesus appealed and the Second Circuit affirmed.

In reaching its decision, the Second Circuit quoted the U.S. Supreme Court, which stated in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), that, in order to state a claim, a Complaint must contain more than “‘[t]hreadbare recitals of the elements of a cause of action … supported by mere conclusory statements.’” According to the Second Circuit, a plaintiff asserting an overtime claim must allege that he or she worked more than forty hours in a week without receiving the required compensation. The Court indicated that “an approximation of overtime hours” is helpful, but not necessarily required in every case. The Court further indicated that courts should consider the allegations in context and on a case by case basis to determine if they are sufficient.

The Second Circuit concluded that the allegations in Dejesus’ Complaint “did not plausibly allege that she worked overtime without proper compensation.” The Court observed that Dejesus “did not estimate her hours in any or all weeks or provide any other factual context or content.” The Court further observed that her Complaint “was devoid of any numbers to consider beyond those plucked from the [FLSA].” According to the Court, Dejesus “was required to do more than repeat the language of the statute.” The Court explained that the Complaint “tracked the statutory language of the FLSA, lifting its numbers and rehashing its formulation, but alleging no particular facts sufficient to raise a plausible inference of an FLSA overtime violation.”

The Court emphasized that plaintiffs are not required to “keep careful records and plead their hours with mathematical precision.” However, the Court explained, plaintiffs must “draw on” their “memories and experience” in order to provide “complaints with sufficiently developed factual allegations.” The Court affirmed the dismissal of Dejesus’ Complaint.

In recent years, employers have faced a wave of wage and hour lawsuits. In many instances, it seems that plaintiffs pursue these actions – particularly class or collective actions – without any real knowledge of wage and hour violations but in the hope of finding them during the litigation. The Dejesus decision is a welcome development for employers in the Second Circuit, because it requires plaintiffs, before filing a lawsuit, to at least come up with factual allegations supporting their claims.

Supreme Court Applies Tougher “But For” Standard to Title VII Retaliation Claims

In University of Texas Southwestern Medical Center v. Nassar, decided June 24, 2013, the United States Supreme Court held that a plaintiff can no longer establish a retaliation claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”), merely by demonstrating that retaliation was a “motivating factor” in the employer’s decision to fire, demote or otherwise take adverse action. Instead, plaintiffs must demonstrate that retaliation was the “but for” reason for the employer’s adverse action. In other words, plaintiffs must show that the adverse employment action would not have happened absent the employer’s unlawful retaliatory motive. This holding makes it more difficult for plaintiffs to prevail on Title VII retaliation claims.

Defendant University of Texas Southwestern Medical Center (the “University”) and Parkland Memorial Hospital (the “Hospital”) entered into an “affiliation agreement” requiring all Hospital staff physicians to be employed by the University. Plaintiff Naiel Nassar, a medical doctor, worked as a faculty member for the University and a staff physician for the Hospital. Dr. Beth Levine was a supervisor. During his employment, Nassar complained to Levine’s supervisor, Dr. Gregory Fitz, that Levine discriminated against Nassar on the basis of his ethnic heritage and religion.

Nassar ultimately resigned from the University and, in a letter to Fitz and others, accused Levine of harassing him because he was Arab and Muslim. Although the Hospital had offered to continue employing him as a staff physician, it withdrew the offer when Fitz – unhappy about Nassar’s accusations against Levine – objected that employing a physician who was not employed by the University was inconsistent with the affiliation agreement.

Nassar filed a lawsuit in federal court in Texas asserting Title VII claims for race and religious discrimination, and retaliation. After Nassar received a jury verdict in his favor on both counts, the University appealed. With regard to the retaliation claim, the U.S. Court of Appeals for the Fifth Circuit affirmed. In reaching its decision, the Fifth Circuit held that Nassar had established that retaliation was a “motivating factor” in Fitz’s objection to the Hospital hiring Nassar.

In a 5-4 decision, the Supreme Court reversed, rejecting the “motivating factor” standard. According to the Court, “proof that the defendant’s conduct did in fact cause the plaintiff’s injury … is a standard requirement of any tort claim.” Referring to this concept as a “default” rule, the Court explained that the rule applies “absent an indication to the contrary” in a statute.

Against this backdrop, the Court observed that Title VII prohibits employers from discriminating on the basis of two different categories: (1) “personal characteristics,” which are race, color, religion, sex and national origin; and (2) “protected employee conduct,” which is opposing or complaining about workplace discrimination. Title VII addresses these two different categories in two separate statutory sections, 42 U.S.C. § 2000e-2 (personal characteristics) and 42 U.S.C. § 2000e-3(a) (protected employee conduct).

According to the Court, in the personal characteristics section of Title VII, Congress clearly indicated that the motivating factor standard applies. Indeed, the statute includes the phrase “motivating factor” and states that discrimination is prohibited “even though other factors also motivated the practice.” Thus, the Court explained, Congress plainly indicated its intent that the motivating factor analysis applies to claims under this section.

In contrast, in the protected employee conduct section of Title VII, Congress did not use this language. Instead, the section prohibits an employer from retaliating “because of” protected employee activity – language that the Court, when analyzing other statutes, has interpreted as meaning that the “but for” standard applies.

In reaching its decision, the Court declined to give deference to the guidance manual published by the Equal Employment Opportunity Commission, which reflected the agency’s view that the “lessened causation standard” applies to Title VII retaliation claims. According to the Court, the EEOC’s reasoning “lack[ed] … persuasive force” and was “circular.”

The Court concluded that a plaintiff asserting a claim for retaliation under Title VII must present “proof that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer.” The Court vacated the Fifth Circuit’s judgment and remanded the case for further proceedings.

For employers, the Nassar decision is good news. As the Court noted, “claims of retaliation are being made with ever-increasing frequency” and applying the “motivating factor” standard advocated by Nassar could have “contribute[d] to the filing of frivolous claims.” However, this decision only applies to retaliation claims under Title VII. The decision does not alter the standard of proof for retaliation claims under other statutes – particularly state statutes – and employers should continue to exercise caution when taking action against an employer who has engaged in protected activity.