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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.

WHO IS A SUPERVISOR UNDER TITLE VII?

In its 1998 opinions in Faragher v. Boca Raton and Burlington Industries v. Ellerth, the Supreme Court held that harassment by a supervisor can result in liability against an employer, but that an employer would only be liable for harassment by a non-supervisory employee if it knew or should have known of the harassment and was negligent in failing to correct it. It has remained unclear, however, exactly who is a supervisor for purposes of vicarious harassment liability under Title VII. The First, Seventh and Eighth Circuits have held that an individual is a supervisor for purposes of harassment liability only if he/she has been given the authority to take tangible employment actions – to hire, fire, demote, transfer or discipline – against the victim of harassment. The Second, Fourth and Ninth Circuits have adopted the definition set forth by the EEOC in its Enforcement Guidance where it defines supervisory status by the ability to exercise significant direction of an employee’s work activities irrespective of the power to take substantial or tangible employment actions. The Supreme Court’s opinion this week in Vance v. Ball State University resolves that split by making clear that Title VII imposes vicarious liability on the employer only for the harassment by a member of management who has been given the power by the employer to significantly impact the employment of a subordinate victim.

In Vance, Plaintiff Maetta Vance complained on a number of occasions to the University that she had been subjected to racial harassment by Saundra Davis, who she claimed was her supervisor, as well as by a number of co-workers and other supervisors. The University investigated each complaint and imposed discipline when it found the complaint had merit. Nevertheless, Vance filed charges with the EEOC and ultimately initiated a Title VII action for race harassment and hostile environment discrimination in the United States District Court for the Southern District of Indiana. The district court granted the employer’s motion for summary judgment based on its finding that the University was not strictly liable for the alleged harassment by Davis because Davis was not Vance’s supervisor, and that the University was not liable under a negligence theory because it acted promptly to investigate and resolve the complaints filed by Vance.

The Seventh Circuit Court of Appeals affirmed. The Appeals Court determined that summary judgment was warranted in part because Vance had failed to establish a basis to impose liability against the employer. In this respect, the court found that Davis was not a supervisor under Title VII because she did not have the power to take tangible employment actions, i.e., Davis had no authority to hire, fire, promote, demote or discipline Vance. The court rejected the argument by Vance that Davis was a supervisor merely because she told Vance what to do and refused to adopt the definition of supervisor advanced by the EEOC that it was sufficient under Title VII if the supervisor directed the day-to-day activities of an employee even without authority to take significant or tangible employment actions.

In a 5-4 decision written by Justice Samuel Alito, the Supreme Court affirmed. The Court resolved the split among the circuits by refusing to defer to the expertise of the EEOC, and by rejecting the Agency’s vague and “nebulous” definition of supervisor in favor of a bright line standard which could easily be applied by the parties and courts to establish the status of an alleged harasser. The majority determined that it was appropriate to focus on the framework established in Faragher and Ellerth – that employers will be vicariously and strictly liable for harassment by a supervisor which results in a tangible adverse action such as a significant change in the victim’s employment status – in order to understand and determine the proper definition of a supervisor in the context of a claim for harassment under Title VII. Applying the Faragher and Ellerth analysis, the Court found that the defining characteristic of a supervisor in such a case is the power to cause “direct economic harm” by virtue of “the authority to effect a tangible change in a victim’s terms and conditions of employment.” Accordingly, the Court held that to be a supervisor for purposes of imposing vicarious liability in a Title VII harassment case, a person must have the power to make a “significant change” in the working status of the alleged victim, such as the ability to hire, fire, promote, demote, discipline or impose “significantly different responsibilities” on the employee.

The dissent, written by Justice Ruth Bader Ginsburg, argued that the majority opinion ignores the workplace reality where the power to control work assignments – no less than the power to fire or discipline – is used as an intimidating factor to aid in the harassment of a subordinate. Justice Ginsburg would have deferred to the informed expertise of the EEOC, and suggested that the majority opinion will allow employers to escape liability for the harassment of their employees and undermine the effort “to stamp out discrimination in the workplace.”

The Vance opinion will not only have a significant impact on how harassment cases are approached in litigation, but will also promote the use of internal complaint procedures by forcing employees to report incidents of harassment by co-workers, and by encouraging employers to investigate and resolve such complaints in order to avoid liability in court. Not surprisingly, the opinion has been lauded by defense counsel for bringing clarity to a significant issue of importance and as a victory for employers. The General Counsel of the EEOC, however, has expressed his disappointment in the ruling and in the Court’s failure to defer to the Agency’s long standing interpretation of the law, and employee organizations have parroted the concern expressed in the dissenting opinion that the standard adopted by the Court will make it harder for victims to hold their employers accountable for harassment in the workplace. However, as noted by Justice Alito, there has been no indication from any of the 14 states which comprise the First, Seventh and Eighth Circuits – which have long applied the test adopted by the Court – to support that fear.

EEOC Warns Employers Against Domestic Violence Discrimination

In its recent guidance titled “Questions and Answers: The Application of Title VII and the ADA to Applicants or Employees Who Experience Domestic or Dating Violence, Sexual Assault, or Stalking,” the EEOC cautions employers against unwittingly violating Title VII and the ADA in addressing employment-related issues involving victims of domestic violence.

The EEOC reminds employers that while Federal law does not expressly protect domestic violence victims from employment discrimination, such victims may still be entitled to protection under federal employment discrimination laws.

In its guidance, the EEOC provides examples of situations where employers may violate Title VII by engaging in disparate treatment, or applying sex-based stereotypes to victims of domestic violence. For example, an employer that terminates an employee victimized by domestic violence due to fear of the potential “drama battered women bring to the workplace” may engage in discrimination based on sex in violation of federal law.

The EEOC further warns employers to exercise caution before transferring or discharging domestic violence victims based on general concerns that they may pose greater workplace safety risks. Instead, employers should seek alternate resolutions before taking adverse action, such as paying for workplace security or getting a temporary restraining order. Even if such options are not effective, an employer should take adverse action against an employee only based on specific and concrete facts showing that the employee poses a threat to other employees.

Further, the EEOC guidance highlights situations in which an employer may violate the Americans with Disabilities Act (“ADA”) in treating employees and applicants adversely based on actual or perceived impairments resulting from domestic or dating violence. An example of this includes refusing to hire a domestic violence victim “based on a concern that she may require future time off for continuing symptoms or further treatment of depression.” The ADA may also require an employer to provide employees reasonable accommodations; such as where a victim of sexual assault requests unpaid leave to get treatment for depression and anxiety, but has no accrued sick leave and is not covered by the Family and Medical Leave Act. In certain situations the employer may have to modify its leave and attendance policies to accommodate the leave request, or risk violating the employee’s rights under the ADA.

Many of the scenarios discussed in the EEOC’s Q&A’s are straightforward and may surprise few employers. Yet the guidance highlights the agency’s interest in protecting victims of domestic violence, and signals to employers that the EEOC will be paying close attention to these issues. Finally, while Federal law offers limited protection to domestic violence victims, a handful of States have specific laws either directly protecting victims of domestic violence from employment discrimination, or requiring employers to give employees time off to attend court proceedings, obtain protective orders and/or seek services for the effects of domestic violence. Employers are well advised to consult the laws of their individual States and otherwise tread lightly when dealing with victims of domestic violence.

Management and Human Resources Personnel May Not Find Protection Under Title VII’s Anti-Retaliation Provisions

On January 21, 2013, the U.S. Supreme Court denied a request for appeal filed by a former loss prevention specialist who claimed that she had been unlawfully terminated in retaliation under Title VII of the Civil Rights Act of 1964 because she had opposed her employer’s handling of a sexual harassment investigation. Brush v. Sears Holding Corp., 466 Fed. App’x 781, 2012 WL 987543 (11th Cir. March 26, 2012), cert. denied, 2013 WL 215521 (U.S. Jan. 21, 2013) (No. 12-268). The appellant specifically challenged the Eleventh Circuit Court of Appeals’ reliance on the “manager rule” when it affirmed the dismissal of her claim. A majority of circuit courts have adopted some form of the “manager rule,” which has significant impact on the application of Title VII and other claims against employers by management and other personnel charged with performing internal investigations or ensuring compliance with state and federal law.

Under Title VII, employers are prohibited from retaliating against employees who have opposed an unlawful employment practice or because they have participated in an investigation of discrimination. In order to establish a prima facie claim of Title VII retaliation, it is necessary that a plaintiff establish that he or she engaged in such “protected activity.”

Under the so-called “manager rule,” an employee is not considered to have engaged in “protected activity” under Title VII’s anti-retaliation provisions if they disagree with or oppose the actions of an employer in the course of his or her normal job duties. In other words, if it is the employee’s job to investigate claims of discrimination or ensure legal compliance, they are not afforded protection from discharge or other adverse actions for conduct that is within the scope of their employment. For example, a Human Resources employee who disagrees with a corrective action taken pursuant to a discrimination investigation and is later discharged for “insubordination” will not be protected by Title VII’s anti-retaliation provisions. As the name suggests, in most instances, the rule is commonly applied to management employees, but it is also applied frequently to compliance officers and human resources employees.

In order for such an employee to be found to have engaged in a “protected activity,” they must cross the line from being an employee performing their job to an employee making a personal complaint or otherwise opposing an unlawful action, such as by assisting another employee in filing a charge with the EEOC or refusing to carry-out a discriminatory employment action. Merely challenging the method, manner, or adequacy of an employer’s internal investigation or making an internal report of a potential statutory or retaliatory violation is not a protected activity.

An understanding of the “manager rule” is valuable for all employers since it has been accepted by a significant number of circuit courts (the Fifth, Sixth, Eighth, Tenth, Eleventh, and arguably the Ninth) and district courts. Further, its application is not limited to Title VII. In addition to Title VII retaliation claims, the “manager rule” has been applied to claims under the Fair Labor Standards Act, the Americans with Disabilities Act, the Uniformed Services Employment and Reemployment Rights Act, the Family Medical Leave Act, the Sarbanes Oxley Act, and Title IX. In fact, the rule originates from the Tenth Circuit’s decision in McKenzie v. Renberg’s, Inc., 94 F.3d 1478, 1486 (10th Cir. 1996), a FLSA retaliation case.

While the “manager rule” is a useful tool for employers dealing with complaints of retaliation by management or human resources personnel, employers should remember that these employees are still covered by Title VII’s anti-retaliation provisions. Though it is doubtful that such an employee could bring a retaliation claim under Title VII’s participation clause, a management or human resources employee may still have a claim if they complain about an unlawful action in a manner that is not consistent with the scope of their employment, such as by making their own complaint of discrimination or opposing an action that they reasonably believe to be based on unlawful discrimination.

U.S. Supreme Court to Define Who is a Supervisor Under Title VII

In a development that could have far reaching implications for employers, the U.S. Supreme Court has agreed to hear a case, Vance v. Ball State University, in which the central issue is the definition of “supervisor” for purposes of determining an employer’s liability for harassment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”). Under Title VII, if the alleged harasser is a supervisor, liability is generally imputed to the employer (unless the employer can show they it had an effective anti-harassment policy that the plaintiff unreasonably failed to utilize). On the other hand, if a hostile work environment is created by co-workers, not supervisors, the employer is liable only if the plaintiff proves that the employer failed to take reasonable measures to stop the harassment, a considerably more difficult standard for plaintiffs.

Although determining whether an employee is a “supervisor” is important in many cases, neither Title VII nor Supreme Court case law specifically defines the term. However, various circuit courts have crafted their own definitions of “supervisor” and two primary definitions have emerged. The First, Seventh and Eighth Circuits define a “supervisor” as an employee who possesses the power to make “consequential employment decisions” such as decisions about hiring and firing, promotions and demotions, and disciplinary actions. In contrast, the Second, Fourth, and Ninth Circuits (as well as the Equal Employment Opportunity Commission) have adopted a broader definition, holding that an individual qualifies as an employee’s supervisor if the individual: (1) has authority to undertake or recommend tangible employment decisions affecting the employee; or (2) has authority to direct the employee’s daily work activities. Under this broader definition, far more employees are “supervisors” and, as a result, may potentially subject their employers to vicarious liability.

In Vance, the plaintiff worked in Ball State University’s catering department. She alleged that another employee, Davis, subjected her to racially discriminatory remarks. According to the plaintiff, Davis directed her work and was, therefore, a “supervisor.” The district court granted summary judgment to Ball State, holding that Davis was not a supervisor because she did not have the power to hire, fire, or discipline Vance. The Seventh Circuit affirmed.

Whether the Supreme Court, in deciding Vance and resolving the split among the circuit courts, adopts a narrow or expansive definition of “supervisor” will have a significant effect on employer exposure in harassment suits. If the Supreme Court adopts a broader definition, the pool of employees who can potentially subject their employers to vicarious liability will be significantly greater, likely resulting in more suits against employers. Moreover, it will be more difficult for employers to prevail at the summary judgment stage of litigation, because a more fact-based inquiry will be needed to determine whether someone is a supervisor. While it is relatively straightforward to show whether an employee is responsible for hiring, firing, promotions and the like, the broader standard requires a more detailed examination of the employee’s role.

Oral argument is scheduled for November and a decision is expected early next year.

Are Partners Protected by the Provisions of FEHA and/or Title VII?

According to the California Court of Appeal, a partner in a partnership is protected under the provisions of the California Fair Employment Housing Act (“FEHA”) if the partner complains that the partnership is retaliating against the partner because the partner complained about unlawful discrimination or harassment by the partnership against employees of the partnership. In Fitzsimons v. California Emergency Physicians Medical Group, the California Court of Appeal drew a distinction between a partner alleging discrimination, harassment or retaliation by the partnership against the partner versus the partner complaining that the partnership is retaliating against the partner because the partner complained about unlawful discrimination or harassment by the partnership against employees of the partnership. Say that again?

Here’s what happened in the Fitzsimons case. The plaintiff (a woman partner in the medical practice) claimed that she was retaliated against for reporting that certain male officers and agents of the partnership had sexually harassed female employees. So, the issue was not whether the plaintiff could sue the partnership for sexual harassment against herself as an employee, but whether plaintiff could sue the partnership as a non-employee based on retaliation for complaining that employees of the partnership were sexually harassed. The Court held that under the FEHA, the partner can maintain such an action, even though the partner is not deemed an employee of the partnership.

The Court drew a distinction between the provisions of Title VII and the FEHA by highlighting that Title VII and the FEHA differ significantly. The Court explained that Title VII prohibits employers from retaliating against employees or applicants for employment, whereas the FEHA prohibits employers from retaliating against any person who opposes or challenges unlawful employment practices, such as discrimination or harassment. In Fitzsimons, the plaintiff was regarded as “any person” who opposed harassment of female employees by the officers and agents of the partnership.

Moral of the story: just because a partner is not regarded as an employee of the partnership, the partner still can sue the partnership for retaliation under the FEHA. The case is attached here: Fitzsimons v. California Emergency Physicians Medical Group.