Friday, August 11, 2017

Fired then rehired two weeks later creates an adverse employment action

I would say this is the most pro-plaintiff Title VII decision issued by the Court of Appeals this year. The Court holds for the first time that a plaintiff suffers an adverse employment action where the employer fires her (allegedly because of her pregnancy) but then rescinds the termination two weeks later. The Court also holds the plaintiff has made out an FMLA interference claim.

The case is Shultz v. Schearith, decided on August 10.  When plaintiff returned from her honeymoon on July 20, 2015, she was visibly pregnant. Management fired her the next day, stating her position was eliminated. The termination was effective August 14, 2015. After plaintiff's lawyer got involved, defendant sent plaintiff a letter on August 5, 2015 stating defendant had reinstated her position and she would not be terminated on August 14, 2015.

Here's the question: was plaintiff's limited termination an adverse employment action? The courts hold that not everything bad that happens at work is worth a lawsuit. Plaintiff has to allege an adverse action, which is part of the prima facie case of employment discrimination. What follows is the definition of adverse action:

A plaintiff sustains an adverse employment action if he or she endures a materially adverse change in the terms and conditions of employment. To be materially adverse a change in working conditions must be more disruptive than a mere inconvenience or an alteration of job responsibilities. A materially adverse change might be indicated by a termination of employment, a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices . . . unique to a particular situation.
Both sides have decent arguments on appeal. The Court of Appeals summarizes them:

Shultz argues that informing an employee that she has been fired is the quintessential adverse employment action, in that it terminates (even if prospectively) her employment, occasioning both the psychological anxiety of unemployment and the costs associated with beginning a search for employment (and, where the employee believes she has been fired for discriminatory reasons, the costs of finding and retaining counsel to pursue appropriate legal action). Defendants argue in response that the tangible adverse consequences of firing are imposed only when the job is actually lost; during the interim period before the firing becomes effective, the employee continues to work in the same position and receive the same pay and benefits. Each of those arguments has some intuitive appeal.

As Judge Lynch writes, "Our Court ... has not yet decided whether a notice of termination, which is rescinded before the termination is implemented, qualifies as an adverse employment action." So the Court of Appeals (Lynch, Cabranes and Matsumoto D.J.] draws from Supreme Court authority on when to calculate the statute of limitations in wrongful discharge claims. In Delaware State College v. Ricks, 449 US 250 (1980), the Court said the SOL starts to run when the plaintiff learns about his termination, i.e., when management notifies him about it, even if the termination actually takes effect down the road. Judge Lynch writes, "The Supreme Court’s conclusion that a discrimination claim accrues upon notice of termination, rather than upon the implementation of that decision, necessarily implies that the notification of termination qualifies as an adverse employment action."

The Court tells how this decision works in practice. The short termination period does give plaintiff a case, but it may result in limited damages, especially if she did not lose any money. Also, since plaintiffs must mitigate their damages, the Court of Appeals has held in the past that “[a]n employer may toll the running of back pay damages by making an unconditional offer to the plaintiff of a job substantially equivalent to the one he or she was denied, even without an offer of retroactive seniority.” Pierce v. F.R. Tripler & Co., 955 F.2d 820, 830 (2d Cir. 1992). The Court adds that, in some cases, a rescinded termination decision may not be an adverse action if the employer does it quickly, like the next day, rendering the termination a de minimus event. But for plaintiff in this case, it could be an adverse action because she "had ample time to experience the dislocation of losing her employment at a particularly vulnerable time, undertake the effort of retaining counsel, and inform the Congregation that she was going to file suit."

This reasoning also supports plaintiff's FMLA interference suit, which stems from the same facts. Employers cannot interfere with employee rights under that statute. "We see no reason to construe the FMLA differently from Title VII with respect to whether the rescission of a notice of termination given to a pregnant employee establishes as a matter of law that the notice may not constitute an
adverse employment action sufficient to deter or interfere with the employee’s exercise of FMLA rights."

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