EMPLOYMENT LAW ALERT

U.S. SUPREME COURT RULES ON EMPLOYER LIABILITY FOR DISCRIMINATION

On Tuesday, March 1, 2011, the United States Supreme Court published its unanimous opinion in the case of Staub v. Proctor Hospital, No. 09-400, U.S. Supreme Court (Mar. 1, 2011) (available at http://www.supremecourt.gov/opinions/10pdf/09-400.pdf), holding that an employer illegally discriminates when a manager with discriminatory intent initiates a chain of events resulting in termination of employment, even where the ultimate decision-maker did not know of, or share, the lower manager's discriminatory intent.

Background Facts

Plaintiff, Vincent Staub, worked as a hospital technician and was a member of the U.S. Army Reserve, requiring service one weekend per month and two to three weeks per year. At trial, evidence showed that both of his immediate supervisors were hostile to his military service. His supervisor wrote him up for improperly leaving his workstation, which plaintiff argued was not actually a work rule. Three months later, a co-worker, who evidence showed was also hostile to plaintiff's military service, complained to senior management about plaintiff's regular "unavailability." Human Resources terminated employment, referring back to the prior "corrective action" in the personnel file. Plaintiff complained in an internal grievance proceeding, but the human resources director ratified her own termination decision without investigating the allegation of discrimination.

Plaintiff sued for wrongful termination in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994, ("USERRA"), 38 U.S.C. § 4301, et seq., under which it is illegal to deny any member of the uniformed services any benefit of employment based on such military service. A jury found that plaintiff's military service was "a motivating factor of the employer's action", and awarded damages. The employer appealed to the United States Court of Appeals for the Seventh Circuit, which reversed the jury verdict, holding that there was no evidence that the actual decision maker, the human resources director, held any discriminatory intent or was even aware of the lower manager's discriminatory intent.

The U.S. Supreme Court reversed the Court of Appeals.

Legal Analysis of the Supreme Court

Writing the unanimous decision of the Court, Justice Scalia identified the issue on appeal as whether "an employer may be held liable for employment discrimination based on the discriminatory animus of an employee who influenced, but did not make, the ultimate employment decision." This is often referred to as a "cat's paw" theory of a discrimination case. The Staub opinion squarely holds that, yes, such employer may be liable under federal employment laws.

In reaching its decision, the Supreme Court needed to address the language "motivating factor in the employer's action" as appears in the USERRA statute's prohibition against discrimination. The Court noted the similarity to the statutory language of Title VII, prohibiting discrimination "because of…race, color, religion, sex, or national origin."

The Supreme Court ruled that federal anti-discrimination statutes are written by Congress mindful of principles of "tort law" and "agency", under which the actions of an agent can be held against the corporate entity itself.

The Court held that "if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA."

Employer Impact

This case again reminds employers that they must maintain anti-discrimination policies demanding that discrimination be reported, and anti-retaliation policies promising to reasonably investigate. More important, if discrimination is reported, it must actually be investigated. A significant factor in the Staub decision was the human resources director's failure to investigate the allegation of discrimination in the plaintiff's internal grievance. Managers should receive regular training on anti-discrimination laws.

Unfortunately, whether the act from the discriminatory supervisor "proximately causes" a later termination is not always clear, for an employer, or later for a judge or jury. As written by Justice Alito in his concurring opinion, the Staub decision "is almost certain to lead to confusion…and will impose liability unfairly on employers who make every effort to comply with the law. In addition, by leaving open the possibility that an employer may be held liable if it innocently takes into account adverse information provided, not by a supervisor, but by a low level employee, the Court increases the confusion that its decision is likely to produce."

Additional Information

We at McNair Law Firm have a number of highly experienced attorneys who focus on aspects of employment and labor law. If you have any questions, please contact the McNair attorney with whom you work or any of the attorneys included in our Labor & Employment Practice Group on our website.

This Supreme Court Alert provides an overview of certain aspects of a specific court decision. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.