Special Report on Retaliation Claims: An Overview for EPL Claims Managers and Underwriters

January 23, 2008

Introduction

In the last decade, the number of charges filed with the Equal Employment Opportunity Commission ("EEOC") alleging employment retaliation has continued to grow, increasing from 18,198 in 1997 to 22,555 in 2007. Retaliation claims now represent around 30 percent of all charges filed with the EEOC.

Retaliation claims are popular for several reasons. First, many federal and state statutory schemes protect employees from retaliation in the employment context. Second, many statutes do not strictly define the type of conduct that constitutes protected activity. Third, many employees realize they can sue their employers while still working for them. Thus, there is less risk of lost earnings - simply sue your boss from the comfort of your desk. Finally, because of the nature of retaliation claims, juries tend to return substantial awards to plaintiffs.

Large jury awards and out-of-court settlements illustrate the potential exposure employers face from retaliation lawsuits. A California jury awarded $19.1 million in damages to a female college basketball coach who claimed she was discriminated against because of her gender and that her employer retaliated when she complained about the discrimination.¹Similarly, a jury in New Jersey awarded over $9 million to a female human resource professional who proved she was denied a promotion because of her gender and later terminated in retaliation for bringing a discrimination lawsuit.²In New York, a female employee at a financial services company was awarded $2.54 million by a jury even though the jury found the employer was not liable for discrimination; instead, the jury awarded damages on the plaintiff's retaliation claim.³In yet another case, a health insurance company in Florida paid $1.8 million to settle EEOC charges alleging that a male employee was sexually harassed by a male supervisor and then disciplined and denied stock options and other benefits in retaliation for reporting the harassment.⁴

Legal Grounds for Retaliation

Numerous federal statutes provide employees with protection against workplace retaliation. In addition, many states recognize a "public policy" exception to employment-at-will and allow wrongful discharge claims, as well as claims for retaliation under workers' compensation statutes.

Federal Employment Statutes Expressly Prohibit Retaliation

Potential plaintiffs have a broad array of federal statutes to support claims of actual - or perceived - retaliation. For example, retaliation against employees who oppose unlawful employment discrimination is expressly prohibited by Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act. In addition, the Fair Labor Standards Act prohibits retaliation against employees who file claims for unpaid wages; the Occupational Safety and Health Act prohibits reprisals against employees who exercise rights under the statute; the Family and Medical Leave Act prohibits employers from interfering with an employee's exercise of rights under the Act; and the National Labor Relations Act prohibits retaliation against employees for engaging in union organizing efforts and other concerted activities. Indeed, most federal statutes establishing employee workplace rights also make actionable employer retaliation or discrimination against employees for exercising those rights.

...And State Laws Get into the Act, Too

In some states, employees enjoy protection from retaliation for reporting an employer's alleged violation of "public policy." Employer conduct violating public policy may involve an allegedly illegal act, violation of safety regulations, an environmental hazard, or violation of internal corporate procedures. For example, New Jersey law protects employees who report to a supervisor or public body "any violation involving deception of, or misrepresentation to, any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity."⁵

The Sleeping Giant: Retaliation in Workers' Compensation Claims

Employees may also assert retaliation claims based upon their participation in workers' compensation proceedings. Where jury trials are permitted, workers' compensation retaliation cases often result in substantial monetary damages. For example, a Florida jury awarded $6 million to a former employee who claimed he was fired in retaliation for filing a workers' compensation claim.⁶

Elements of an Actionable Claim of Retaliation

Under Title VII, the ADA and the ADEA, there are two types of retaliation claims:

• "Opposition" claims are brought by individuals who claim they were retaliated against because they opposed an unlawful practice. An employee does not need to file a formal complaint to receive this type of protection.
• "Participation" claims are brought by individuals claiming retaliation for filing a charge of discrimination, testifying, assisting or participating in any manner in an investigation, proceeding or hearing under an applicable statute.

In both types of claims, the plaintiff must prove that he or she suffered an "adverse employment action" because of his or her protected activity.

What is Protected Activity Under an "Opposition Claim"?

A broad range of circumstances have been held to constitute "protected activity" sufficient to support opposition claims:

1. Threatening to file a charge or other formal complaint alleging discrimination;
2. Complaining to anyone about alleged discrimination against oneself or others;
3. Refusing to obey an order because of a reasonable belief that it is discriminatory; and
4. Requesting reasonable accommodation for disability or religious belief.

However, the "opposition" must be based upon a reasonable and good-faith belief discrimination actually occurred. In addition, some courts have held that third-parties, such as a friend or relative of the person who engaged in protected activity, can assert a retaliation claim.⁷The majority of courts, however, do not permit third-party retaliation claims.⁸

What is Protected Activity Under a "Participation Claim"?

An employee who actually brings a claim under one of the statutes mentioned above-or participates in a proceeding where someone else brought such a claim- is protected against retaliation even if the allegations in the complaint are invalid or unreasonable. It is important to note that the individual claiming retaliation does not have to be the person who directly challenged an employer's practices in a statutory proceeding. For instance, the EEOC sued a railroad company for retaliating against an employee who testified in a national origin case brought by another employee.⁹

What Constitutes an "Adverse Employment Action"?

In 2006, the United States Supreme Court loosened the standard for determining "adverse action" in retaliation claims under Title VII of the Civil Rights Act of 1964.  According to the Court, employees who bring retaliation claims under Title VII no longer must prove they suffered an "ultimate employment decision" or "materially adverse change in the terms and conditions of employment," such as a discharge, demotion, or loss of pay, in order to state a claim.  Rather, the Supreme Court ruled that Title VII prohibits more subtle forms of retaliation, which can include, depending on the factual circumstances, a change in schedule or even the failure to invite an employee to lunch. Under this new standard, unlawful retaliation includes conduct that "might have dissuaded a reasonable worker from making or supporting a charge or discrimination."¹⁰ 

The Court gave two examples to shed light on the new standard, one involving a schedule change, and the other a refusal to invite an employee to lunch.  A schedule change might not matter to most employees, the Court explained, but it "may matter enormously to a young mother with school age children."  Likewise, a supervisor's refusal to invite an employee to lunch is "normally trivial, a nonactionable petty slight."  However, excluding an employee from a "weekly training lunch that contributes significantly to the employee's professional advancement" might well deter a reasonable employee from complaining.  Thus, depending on the circumstances, a reasonable employee might consider these actions materially adverse. The Court did say, however, that "trivial harms" or "petty slights" would not give rise to retaliation claims.

While the Supreme Court's decision directly applies only to retaliation claims under Title VII, other federal courts and administrative agencies are guided by the Court's analysis in considering retaliation claims under other statutes. For example, a court in Arizona has used the broad "reasonable employee" retaliation standard in considering a claim for retaliation under the Family and Medical Leave Act.¹¹The plaintiff, a university senior director of assessment, alleged that after he took FMLA leave in 2004, the company placed him on a paid administrative leave, relieved him of all job responsibilities, and prohibited him from coming to the workplace. Applying the "reasonable employee" standard, the Arizona court held the employer's actions were "materially adverse."

Although the Supreme Court's decision would appear to make it easier for plaintiffs to bring retaliation claims, some recent decisions indicate this may not be the case. An appeals court in St. Louis has ruled that alleged supervisory reprimands, denial of sales assistance of doubtful value, and an employer's asserted reluctance to discuss the employee's past harassment claims, even if true, would result only in "trivial harm" and not provide a basis for Title VII retaliation claims.¹²In another case, the same court ruled that "transfers" from one employment location to another do not constitute a materially adverse action when the there is no change in benefits, job duties, job responsibilities or job prestige.  The appeals court also found the plaintiff's complaints about being given the cold shoulder by her supervisor and being deprived of mentoring given to other new lawyers to be trivial.¹³

The Wages of Sin: Remedies for Retaliation

Both compensatory and punitive damages are available under Title VII and the ADA, subject to a statutory limit. Compensatory damages are awarded to compensate plaintiffs for the damage they actually suffered, whereas punitive damages are awarded to punish the defendant in cases where the defendant's behavior is particularly egregious. While compensatory and punitive damages are not available under the Equal Pay Act and ADEA, employees can recover "liquidated" damages (a doubling of wage/economic losses) if they establish a "willful" violation of their statutory rights. In some states, employees may recover unlimited punitive damage awards if they are retaliated against after complaining about an employer's violation of state human rights laws or public policy.

Defenses available to employers in retaliation lawsuits

There are four principal defenses available to employers involved in retaliation lawsuits:

• There is no evidence any adverse action resulted from the employee's opposition or participation.
• The employer was unaware of the employee's protected activities.
• The employer would have taken the adverse action in any event, for a wholly legitimate reason.
• The employee's claim does not state a cause of action for retaliation.

Prevention of Retaliation Claims:

... When the Individual is Not Already Pursuing Formal Proceedings Against the Employer

Employers should create a working environment where employees feel they can alert management to potential problems and participate in investigations without fear of retaliation. Ensuring consistent administration of policies and responding appropriately and promptly once a complaint is made are the best ways to prevent retaliation claims. Management should reassure the employee lodging the complaint or participating in the investigation that he or she will suffer no retaliation as a result.

Thus, to reduce the likelihood that an employee or former employee will have grounds to assert a retaliation claim for opposing an allegedly discriminatory practice or participating in an agency proceeding or court case, employers should be encouraged to:

• Have a credible complaint procedure and promptly and thoroughly investigate all complaints. Assure the employee the complaint is being taken seriously and all efforts will be made to conduct the investigation promptly and discreetly.
• Be sensitive and thank the employee for the information provided. Remind the employee of the company's commitment to equal employment opportunity, and let the employee know he or she has done the right thing in coming forward.
• Assure employees that retaliation will not be tolerated. Ask the employee to report any further experiences or events resulting from the complaint or participation in the investigation.
• Put yourself in the employee's shoes. Bear in mind the employee may be more sensitive after lodging a complaint or participating in an investigation. Incidents of little consequence may appear retaliatory. Therefore, develop sensitivity to subtle nuances and make a conscious effort to keep the employee involved in the everyday business of the workplace.

...And When the Individual in Question Has Initiated Formal Proceedings Against the Company

To avoid the perception of retaliation, the employer must monitor all of its actions with respect to an individual who has initiated or participated in formal proceedings to ensure they are nondiscriminatory and consistent with past practices. This is particularly true when preparing to settle a lawsuit or resolve an agency charge, as the employer is in an especially vulnerable position with regard to even the most routine matters of personnel administration, such as distribution of assignments, staff scheduling, approval of requests for time off, and conducting performance and salary reviews.

Despite these and other precautions, the timing of a disciplinary action or an unsatisfactory performance review may appear to support a retaliation claim, especially if the underlying behavior has not been fully documented. In those instances, human resource professionals should confer with employment law counsel regarding the best way to proceed.

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Employers should review their policies to ensure that they prohibit not only discrimination and harassment, but also retaliation.  Before taking any potentially adverse action against employees who may have complained about discrimination, supervisors should engage their human resources experts and counsel regarding that decision.