Worker’s Compensation Retaliatory Discharge: Termination vs. Layoff vs. Suspension

A recent Illinois worker’s compensation retaliation case demonstrates a subtle, but important distinction for employers, especially those that use seasonal employees, or lay off workers while keeping them subject to recall.

The facts of the case, which originated out of Illinois’s 3rd District in Peoria, are a little confusing. Plaintiff was a registered nurse working in a rehabilitation unit in a medical center. She injured her knee, which required surgery to repair the damage and resulted in her having a 20 pound lifting restriction, which ultimately became permanent. This limitation disqualified the employee from her RN position; the company HR representative then mistakenly advised the employee that she was going to be terminated within 30 days if she could not find work within the medical facility. The company ultimately issued plaintiff a letter indicating she was terminated on June 18, 2008 (yes, it took 5 years for this case to make its way to just a first level appeal) and the plaintiff henceforth acted as if that was the date she was fired. In the meantime, the company attempted to rescind its termination by notifying Plaintiff that she could return to work, but by then the plaintiff had moved and taken another position with another employer.

Plaintiff sued for retaliatory discharge, under the Illinois Worker’s Compensation Act, claiming that she was fired in retaliation for filing a worker’s compensation claim. She ultimately amended this to allege not a retaliatory discharge, but rather a retaliatory failure to recall to work. Based on plaintiff’s admissions in her pleadings that she was terminated on June 18, 2008, the trial court granted summary judgment for the employer, and the Appellate Court affirmed.

The Appellate Court’s opinion raises an interesting point of law on retaliatory discharge claims with respect to worker’s compensation. Specifically, an employee who has been fired by her employer can generally only sue for retaliatory discharge. She may not sue for failure to rehire or failure to recall, which are expressly reserved, under Illinois law, for claims by seasonal employees (failure to rehire when seasonal hiring begins) or regular employees on leave or temporary layoff (failure to recall). In other words, in Illinois, a terminated employee gets only a retaliatory discharge claim. The Appellate Court noted that it would not allow a claim for failure to rehire or recall for a terminated employee because Illinois courts will not force an ongoing employment relationship between hostile parties when it can use monetary damages to compensate the unfairly terminated employee.

The vast majority of retaliation claims under workers compensation will be for retaliatory discharges, while failure to rehire/recall will be reserved for those rare circumstances where there are seasonal employees in play, or layoffs and leaves of absences occurring and the employment relationship is ongoing. Here, the plaintiff’s failure to recognize that she could not assert a retaliatory failure to rehire/recall claim since she had admitted she was terminated, worked as an effective bar to her lawsuit.

Is It Your Job To Evaluate Compliance with Corporate EEO Policies? Then You Might Not Be Able to File a Retaliation Claim

Looking through recent Supreme Court denials of certiorari (I have no life), I came across this case, which relates to an uncommon, but important aspect of employment retaliation law. The so-called “manager’s rule” is an key aspect of retaliation practice of which companies should be aware. It’s not found within the anti-retaliation language of the employment laws themselves, but is a result of interpretation by a number of federal circuit courts.  The rule holds that employees are not considered to have engaged in protected activity (a basic requirement for any retaliation case) if they express a disagreement with or oppose the actions of an employer that they consider to be discriminatory, if the opposition occurs as part of their normal job duties. More simply, if the employee’s job is to investigate claims of discrimination or ensure EEO compliance, she is not engaging in protected activity when she disagrees with a management decision or opposes a management action relating to application of EEO that is within the normal scope of her duties.

Typically, these cases arise with management employees in the human resources field, or with managers acting in some type of compliance capacity. For example, a manager who investigates a discrimination claim is not engaging in protected activity for retaliation purposes when she disagrees with the corporate response to her investigation, or challenges the conclusions reached by her supervisors as a result of her investigation, even though she believes that the decision is the result of illegal discrimination.

The manager’s rule bar for these specific types of employees is not absolute, of course. The employee can raise a claim of discrimination on his own behalf, or oppose some type of alleged discriminatory action in which he was not involved, and this would constitute protected activity. But employers should note that manager’s rule bar applies not only to EEO retaliation claims, but also FLSA, USERRA, FMLA, and Sarbanes-Oxley claims. Keep that in mind the next time you face such a complaint from someone who is charged with managing or overseeing employment law compliance in the organization.

How Much, Causation, Gets You Retaliation?

This is kind of a snappy little jingle if you recite it in the correct pentameter. The story behind it is fairly significant, however. The Supreme Court has agreed to hear a Title VII retaliation case in order to determine the standard of proof for retaliation claims.

Retaliation cases are typically much easier to prove than the underlying discrimination allegations that form the basis of a retaliation claim. As I've noted before, it's not uncommon to have juries reject claims of illegal discrimination, but find that an employer retaliated against an employee for making such a claim.

The Court agreed to examine the fundamental issue in a retaliation claim: how much proof is required to show that an employee's protected activity, e.g. filing a claim of discrimination or participating in an EEOC discrimination investigation, actually caused the employer to take an adverse employment action against her? The stricter standard, and the one favored by employers generally, is the so-called "but-for" standard, under which an employee has to show that the protected activity was the cause of the adverse action. In other words, a "but-for" standard requires the plaintiff to show that without the protected activity, the employer doesn't make the adverse employment decision. A much lower standard is the so-called "mixed motive" standard, which simply requires that the protected activity be a factor in the adverse employment decision.

Obviously the mixed motive standard is a nightmare for most employers. Invariably, a management decision maker will be aware that her employee has either filed a charge of discrimination or complained about discrimination in the past. Juries are quick to find that this knowledge of past protected activity means that it was considered in any kind of subsequent adverse action decision. Accordingly, it's very easy for juries to find retaliation under a mixed motive standard.

This particular case is on appeal from the federal Fifth Circuit Court of Appeals, which reversed the plaintiff medical school professor's basic discrimination claim on appeal, but upheld the retaliation claim using the mixed motive standard. The stakes are high for the employer community on this one, so I'll be watching closely for reports on the oral argument and, ultimately, the decision.

California Employers Beware

Every so often I get a decision crossing my desk that is so breathtakingly silly that I have to mention it. Sometimes, those silly decisions have significant ramifications for employers. And, it seems, a decision that meets both criteria is, nine times out of ten, coming from California.

I don't know what it is about California, but you would think the place with an economy approaching the status of Greece would have judges a little more sensitive to the business implications of their decisions. Not so. A relatively recent decision out of a Northern California appellate court sets a new standard for oddball analysis and pernicious result.

Here's the situation: a partner in a partnership complains to the other partners about allegations of sexual harassment by members of the partnership against partnership employees. Sometime after that, the partnership  reduces the partner's responsibilities and job title. She sues under California state employment discrimination law, claiming that the partnership is retaliating against her for raising the allegations of sexual harassment.

The thing is, a partner in a partnership is not an employee of the partnership, she's a member of the company ownership and management. She can't sue the partnership directly for employment discrimination, because that would be the functional equivalent of an employer suing itself for its own conduct. In fact, the California Supreme Court determined that a partnership is not the employer of its partners, and can't be liable to them for employment discrimination claims. Presumably this included retaliation claims, at least until this latest demonstration of California judicial reasoning.

The appellate court found that the partner could sue the partnership for retaliation, based on the fact that although the statute specifically exempted nonemployer entities (i.e., partnerships) from its coverage, this exclusion did not apply to non-employees (i.e. partners) who were acting to protect the status of partnership employees. Thus, a nonemployer could be sued by its nonemployee if the nonemployee complained about the nonemployer's actions with respect to actual employees.

This gobbledygook rationale creates all kinds of troubling scenarios for employers in the state. For example, if a delivery driver (a nonemployee) reports to one of his customers that he observes a customer manager mistreating a customer employee, and the customer then tells the delivery service that it does not want that particular driver to show up anymore, the nonemployer customer is liable to the nonemployee delivery driver for some type of improper retaliation (my thanks to my friend and LA partner John Barber for crafting this enlightening example).

Such a possibility makes absolutely no sense whatsoever.

It will be pure entertainment to see if other appellate courts follow this rationale, or if this decision gets unceremoniously dumped on appeal.  Until it does, however, the floodgates of retaliatory discharge are now wide open on the West Coast.

No Remedy for FLSA Retaliation?

 I can usually count on the Fourth Circuit Court of Appeals come through for employers on close cases. A recent retaliation decision by an applicant who filed FLSA wage claims against a previous employer bears this out. Whether it will survive further review is something that will bear watching over the next 12 months.

In this case, the Fourth Circuit was confronted with a situation where a job applicant was turned down by a perspective employer after the company learned she filed an FLSA lawsuit against her previous boss. The applicant alleged that the company's refusal to hire her violated the FLSA's anti-retaliation provision, a not unreasonable claim given that most employment statutes protect job applicants in the same way as they protect current or former employees. Denial of a job opportunity for an improper reason is just as much as an adverse employment action as demoting or terminating a current employee.

Unfortunately the FLSA specifically defines employee as "any individual employed  by an employer" (emphasis added). The Fourth Circuit, following the logic of the district court, interpreted this language literally in finding that there is no protection under the statute for someone who is not "employed".

There was a strong dissent filed in this case, and the US Department of Labor has petitioned for a rehearing. My guess is that this case may ultimately end up before the Supreme Court if it is not reversed following the rehearing. There is string of strong anti-retaliation decisions from the Supremes that have significantly broadened the scope of retaliation claims over the past few years. This case might be one that provides the Court with some opportunity to limit those opinions given the plain language of the FLSA.

This sounds fishy--a case of retaliation?

It sure looks like it, even with the relatively lousy batting performance of the union rep.  A company contemplating action against a poorly performing employee should always consider whether that employee has engaged in recent "protected activity", such as reporting sexual harassment, or exercising rights under a collective bargaining agreement.  Here, the Florida Marlins took action against not one, but two players-- Logan Morrison and Wes Helms, who is a union representative--after Helms told Morrision it was okay to skip a pre-game team function with some season ticket holders after an earlier autograph signing session ran long.
The club promptly (as in less than 12 hours later) demoted Morrison (second on the club in home runs, third in RBIs) to AAA, and released Helms. 
While the timing of an adverse employment action is seldom enough to demonstrate conclusively that the employer was retaliating illegally, when the timing is close enough to the protected activity (like here), courts will usually allow the issue to reach a jury.  Or an arbitrator. 
I suspect that the club was trying to send a message, and is willing to deal with the negative consequences in any arbitration down the road.  This is simply too heavy handed to be anything but a deliberate bean ball by the Marlins management.