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U.S SUPREME COURT ISSUES TWO "EMPLOYER FRIENDLY" DECISIONS

July 11, 2013

HOLDINGS

In University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013), 2013 WL 3155234 (June 24, 2013), the U.S. Supreme Court held that Title VII Retaliation claims must be proven by the higher "but for" causation standard, and not the lesser "motivating factor" test.

In Vance v. Ball State University, 570 U.S. ___ (2013), 2013 WL 3155228 (June 24, 2013), the Supreme Court limited the definition of "supervisor," holding that an employee is a supervisor for purposes of vicarious liability under Title VII if he or she is empowered by the employer to take "tangible employment actions" against the plaintiff. Tangible employment actions include "hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits."

I.

UNIVERSITY OF TEXAS SOUTHWESTERN MEDICAL CENTER v. NASSAR:

PLAINTIFFS IN TITLE VII RETALIATION CASES MUST SHOW "BUT FOR" CAUSATION

In University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ____, 2013 WL 3155234 (June 24, 2013), Dr. Nassar, a physician of middle eastern descent sued his employer for constructive wrongful discharge under Title VII of the Civil Rights Act of 1964 ("Title VII") (42 U.S.C. § 2000e, et seq.), alleging that because of racial and religious harassment by a superior, Dr. Levine, his employment as a faculty member and staff physician became so intolerable he was forced to resign. The physician further alleged retaliation on the grounds that the hospital withdrew its offer of a faculty position at an affiliated hospital because he complained of harassment.

At trial, the jury found for the physician on both claims, awarding him more than $400,000 in back pay and over $3,000,000 in compensatory damages. The District Court reduced the award of compensatory damages to the Title VII statutory limit of $300,000.

On appeal, the Fifth District Court of Appeals vacated the constructive discharge verdict, concluding that there was insufficient evidence to support the claim. The Court affirmed the retaliation claim on the theory that retaliation claims brought under 42 U.S.C. § 2000e-3(a) require the same showing as claims of status-based discrimination under Section 2000e-2(a) - namely, that retaliation was a motivating factor in the hospital's adverse employment action of withdrawing the offer to hire Dr. Nassar to the faculty position.

The Supreme Court reversed, holding that Title VII retaliation claims must be proven according to the traditional tort "but for"causation standard, and not the lesser "motivating" or "substantial factor" test. In reaching its decision, the Court reviewed traditional principles of tort law that require a plaintiff to show that the alleged harm would not have occurred in "the absence of" or "but for" the defendant's conduct. The Court analogized the burden of proof to be applied in Nassar to the Court's recent age discrimination decision, Gross v. FBL Financial Services, Inc. (2009) 557 U.S. 167, decided under the Age Discrimination in Employment Act of 1967 ("ADEA") Gross held that "but for" is the proper standard of proof in ADEA cases, the Court explained, due to the fact that the ADEA's statutory language states it is an unlawful employment practice, among other acts, to "refuse to hire" or "terminate" an employee "because of" age. The "but for" causation standard, the Court reasoned, is functionally equivalent to the ADEA's causation standard. Further comparing Title VII to the Americans with Disabilities Act of 1990 ("ADA"), the Court further explained that the ADA uses the terms "because" and "on account of" to prove retaliation under the ADA's express anti-retaliation provision. With these comparisons, the Court concluded that the "but for" causation standard is synonymous with the "because" and "on account of" language of both the ADEA and ADA. Adding that a lesser standard could contribute to the filing of frivolous claims, which would siphon resources from efforts by employers, administrative agencies, and courts to combat workplace harassment, the Court remanded the case for further proceedings consistent with it holding that the "but for" causation standard is the proper standard of proof in Title VII retaliation cases.

NASSAR'S IMPACT IN CALIFORNIA

Certainly Nassar is good news for employers across the nation. However, the ruling should have less of an impact in California than in other states, because in California, employees usually sue employers under the state's Fair Employment & Housing Act (Cal. Gov't Code § 12900, et seq.) ("FEHA"), specifically Sections 12940(a) (discrimination) and 12940(h) (retaliation). The FEHA causation standard, by statute, requires that a plaintiff in a retaliation case need only prove that "retaliatory animus was at least a 'substantial or motivating factor' in the adverse employment decision." (emphasis supplied.) (George v. Cal. Unemployment Ins. Appeals Bd. (2009) 179 Cal.App.4th 1475, 1492; Cf. Harris v. City of Santa Monica (2013) 56 Cal.4th 203 (substantial motivating factor test to be applied in pregnancy discrimination case).) Accordingly, the lesser "substantial" or "motivating" standard of proof will be applied when FEHA claims are brought in cases filed in California Superior Court or U.S. District Court.

II.

VANCE v. BALL STATE UNIVERSITY:

SUPREME COURT NARROWS THE DEFINITION OF "SUPERVISOR" IN TITLE VII ACTIONS, LIMITING EMPLOYER VICARIOUS LIABILITY

In Vance v. Ball State University, 570 U.S. ___ (2013), 2013 WL 3155228 (June 24, 2013), an African-American woman, Maetta Vance, sued her employer, Ball State University, alleging that a white employee, Saundra Davis, created a racially hostile work environment in violation of Title VII. The District Court granted summary judgment for the university employer on the grounds that Ball State was not vicariously liable for the actions of Davis, because Davis, who could not take tangible employment actions against Vance, was not a supervisor. The Court of Appeals for the Seventh Circuit affirmed.

The California Supreme Court decided the question: Who qualifies as a "supervisor" in a Title VII claim for workplace harassment? It traced Title VII's prohibition of a hostile work environment so pervasive that it alters an employee's terms and conditions of employment. The Court reiterated the rule that an employer will be held strictly liable where the hostile work environment is caused by the employee's supervisor because it is agency relationship that aids the harasser's tortious misconduct, and that an employer that negligently fails to rid the workplace of unlawful discrimination - whether the harasser is a supervisor or co-worker - will always be liable.[1] The Court rejected the broad definition of "supervisor" proffered by Vance and used by some lower courts that a supervisor is an employee who has the power to "direct" another's work, even though he or she lacks the power to make tangible employment decisions. The Court contrasted co-workers who can inflict psychological injuries by creating a hostile environment but cannot dock pay or demote a worker with an employee - a supervisor - who has the power to cause direct economic harm against another employee. From this distinction, the Court announced its narrow definition of a supervisor: An employee is a "supervisor" for purposes of vicarious liability under Title VII if he or she is empowered by the employer to take "tangible employment actions" against the plaintiff. Such tangible employment actions constitute the power to significantly alter an employee's employment status and include "hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits."

VANCE'S IMPACT

Vance clarifies the definition of "supervisor" under Title VII federal anti-discrimination cases and narrows the situations in which employers will be vicariously (and strictly) liable for a hostile work environment. The decision should also make summary judgment somewhat easier to obtain for employers in Title VII actions. However, the definition of "supervisor" is more expansive under the FEHA than in Vance. The FEHA, at California Government Code § 12926(s), includes in its definition of supervisor the "responsibility to direct [employees]"[2] in addition to the criteria announced in Vance. This broader definition, which was expressly rejected by the Supreme Court inVance is authorized by statute in California, and should serve to limit the impact of Vance in this state.

III.

WHAT EMPLOYERS SHOULD DO

First, following the noteworthy decisions in Nassar and Vance, employers should review workplace policies and job descriptions to bring them within the parameters of the rulings. As noted, because the FEHA provides a more expansive definition of "supervisor" than Vance, amending job descriptions to comport with the Vance decision will not protect against lawsuits brought under the FEHA. However, it is always good practice to review policies in light of important changes in the law.

Second, timely and accurate documentation of improper workplace conduct (such as harassment) can help defend against workplace lawsuits. The documentation should accurately set forth the facts of the occurrence(s) and all employer reason(s) for discipline.

Note: Employment Discrimination, Retaliation, Wrongful Termination Litigation and the institution of applicable workplace policies is complicated. This Alert is designed to provide a summary of two new U.S. Supreme Court decisions with analysis by Kenneth J. Sargoy, Esq. It does not offer solutions to individual problems. Employers with specific questions concerning employment discrimination, retaliation, and wrongful termination issues and questions should consult legal counsel.

Kenneth J. Sargoy, Esq. provides counseling and representation in connection with employment matters. Questions about employment litigation as well as other employment matters may be directed to Kenneth J. Sargoy, telephone 310-472-7113 or 310-775-2456 or to his e-mail, ken@sargoylaw.com.

THIS EMPLOYMENT ALERT IS CLASSIFIED A NEWSLETTER AND CONSTITUTES ADVERTISING MATERIAL UNDER APPLICABLE RULES OF PROFESSIONAL CONDUCT.

[1] This blog does not address an employer's affirmative defense to strict (vicarious) liability for the acts of a supervisor, because Vancefocused on the factors that would elevate an employee to the status of supervisor. "[I]f no tangible employment action is taken, the employer may escape liability by establishing, as an affirmative defense, that (1) the employer exercised reasonable care to prevent and correct any harassing behavior and (2) that the plaintiff unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided."

[2] The FEHA, at California Government Code § 12926(s), sets forth the definition of a "supervisor":

"'Supervisor' means any individual having the authority, in the interest of the employer, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the authority to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment." (emphasis supplied.)

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