CHAPTER 3 —
EMPLOYMENT DISCRIMINATION LAW:
A BASIC OVERVIEW

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§ 3.1

I. RECENT TRENDS & DEVELOPMENTS

Congress enacted Title VII almost 40 years ago, the Age Discrimination in Employment Act 36 years ago, and the Americans with Disabilities Act 14 years ago. Since the enactment of these laws, federal courts have considered a number of issues connected with the employment relationship, ranging from the application process to terms and conditions of employment, such as salary inequities, benefits issues, promotions, demotions, discipline, and discharges. The courts have analyzed whether any of the federal civil rights laws have been implicated and violated.

In the 1960's and 1970's, courts often considered whether educational qualifications, such as requiring a high school education for an unskilled laborer job, adversely affected the employment opportunities of minority applicants. Gender issues, such as dress and appearance codes and whether different standards could apply to men versus women were also hotly litigated. For example, employer policies requiring men, but not women, to have short hair. In the 1980's, affirmative action issues abounded, and in the 1990's, controversies arose over how the equal employment opportunity laws applied to undocumented aliens and whether English-only policies resulted in national origin discrimination. Retaliation lawsuits increased, with innumerable decisions concluding that while no evidence of discrimination existed, the employers' responses resulted in unlawful retaliation.

We have now entered the 21st century, and certainly the federal courts will continue to grapple with future legislation, further regulating the employer-employee relationship, as well as new issues arising in the continually changing American workplace.

§ 3.1.1

A. RACE DISCRIMINATION DEVELOPMENTS

2004 marked a year filled with numerous sizable settlements for racial discrimination claims, some involving high-profile companies. For example, Abercrombie & Fitch Stores, Inc. settled three lawsuits for some $50 million alleging that the company had discriminated against minorities and females in its hiring practices.¹ Similarly, in October, a federal judge in Illinois gave preliminary approval to a $15 million settlement between R.R. Donnelley & Sons and a group of former employees who had alleged race discrimination.² The latter suit had previously made its way to the United States Supreme Court, where the Court ruled that the federal four-year statute of limitations should be applied to claims brought under the Civil Rights Act of 1866 (42 U.S.C. section 1981).³ In the public sector, a New York district court approved a settlement establishing a $20 million compensation fund for New York City Police Department Latino and African-American police officers who had alleged racial discrimination by the NYPD.⁴

Job "testers" exposed racial discrimination in the American workplace. The Discrimination Research Center, the nonprofit research arm of the Berkeley-based Impact Fund, conducted a study that sent pairs of black and white job applicants to temporary employment agencies in Los Angeles and San Francisco.⁵ The results were alarming. The "tested" agencies favored white applicants by a ratio of 4-to-1 in Los Angeles and 2-to-1 in San Francisco. In February 2004, panelists at an Equal Employment Opportunity Commission suggested the increased use of job testers to expose race bias in company hiring practices.⁶

In Reese v. Ice Cream Specialties, Inc., an employee discovered in 2000 that he had not been awarded a raise he was supposed to receive in 1997.⁷ The employee alleged that he had not been given the higher pay rate because he was African-American. The Seventh Circuit Court of Appeals reversed the district court's ruling that the plaintiff's claim was untimely because he had waited until years after he was denied the raise to file a charge of discrimination. The court held that each new paycheck was a separate wrong, and thus, the plaintiff's claim was timely under the continuing violation theory. Checks for pay periods before the 300-day limit were time-barred, but those falling within the 300-day limit could form the basis of a claim.

Race discrimination in the workplace does not always manifest itself in the form of a termination or failure to hire. In Tart v. Illinois Power Co., two African-American employees had complained to their employer about harassing treatment from a coworker, and were subsequently transferred away from jobs they enjoyed, in addition to losing their computers, independence, customer contact, and skilled job duties. The Seventh Circuit held that they had suffered a material adverse employment action.⁸ In arriving at this holding, the court noted three categories of cases where the employer's actions would constitute an adverse employment action: (1) cases in which the employee's compensation, benefits, or other financial terms of employment are diminished, including termination; (2) cases in which a nominally lateral transfer without a change in financial terms significantly reduces the employee's career prospects by preventing him from using the skills in which he is trained and experienced; and (3) cases in which the employer does not move the employee to a different job or alter the skill requirements of the job, but changes the working conditions in a way that subjects him to humiliating, degrading, unsafe, unhealthful, or a significantly negative alteration in his workplace environment.

In contrast to the decision reached in Tart, the Fourth Circuit has held that an employee's mere dissatisfaction with one or more aspects of his work does not rise to the level of an actionable adverse employment action. In James v. Booz-Allen & Hamilton, Inc., an African-American employee, alleged that he had been denied opportunities for promotion and professional development, received a downgrade in his performance evaluation, and was constructively discharged.⁹ The court rejected the plaintiff's claims, noting his reassignment, downgrade in performance evaluation, and other slights did not constitute an adverse employment action. Similarly, in Jones v. Reliant Energy, an employer's alleged failure to offer the employee a severance package rather than relocate her was held not to constitute an adverse employment action.10¹⁰ In a Title VII race discrimination action alleging unequal treatment, failure to promote and retaliation, the court found that a plaintiff cannot sue for a Title VII violation where the employer corrects the violation prior to suit being filed.¹¹

§ 3.1.2

B.NATIONAL ORIGIN DISCRIMINATION UPDATE

In DiCarolo v. Potter, the Sixth Circuit held that an Italian-American former employee had presented direct evidence of national origin discrimination where his supervisor called him a "dirty wop" and complained about there being too many "dirty wops" working at the facility.¹² In reaching this holding, the court emphasized that it was the employee's supervisor and a decisionmaker who made such statements, and that the hate speech occurred three weeks prior to the employee's termination.

§ 3.1.3

C. AGE DISCRIMINATION - RECENT CASES

Recently, the U.S. Supreme Court addressed an issue that had divided the circuit courts of appeal, namely, whether the Age Discrimination in Employment Act (ADEA) prohibits preference for older employees over younger employees.¹³ In Cline, General Dynamics had eliminated its policy of providing health benefits to retiring employees, except for then current workers 50 years of age or older. The plaintiffs, employees from 40 to 49 years of age, objected to the elimination of benefits for retirees over 50, and brought suit against the company claiming violations of the ADEA and related state statutes. The Supreme Court held that the ADEA does not prohibit preference for the old over the young, concluding that "the text, structure, and history of the ADEA, along with its relationship to other federal statutes, show[s] that the [ADEA] does not mean to stop an employer from favoring an older employee over a younger one."¹⁴ Employers should be mindful, however, that the Court's holding is peculiar to the ADEA, and certain state antidiscrimination laws recognize reverse age discrimination.¹⁵ The Supreme Court has also decided to address another issue over which the circuit courts have been split, that being whether adverse impact claims may be brought under the ADEA. Recently, the Supreme Court granted certiorari in Smith v. City of Jackson to resolve this split of authority.¹⁶

Adverse impact occurs when a company's neutral policy has a harsher or adverse effect upon a protected group. The First, Third, Fifth, Seventh, Tenth and Eleventh Circuits have held that a disparate impact theory is not cognizable under the ADEA.¹⁷ The Second, Eighth and Ninth Circuits have held that that it is.¹⁸ In Grosjean v. First Energy Corp., a 54-year-old employee brought an age discrimination action against his employer under the ADEA alleging that his supervisory duties were taken over by an individual who was six years younger. The Sixth Circuit held that a six-year age gap between an employee and a replacement was not significant and, therefore, there was no violation.¹⁹ This decision was denied certiorari by the Supreme Court.

§ 3.1.3(a)

Age-Related Comments

While isolated comments unrelated to the challenged action are insufficient to show discriminatory animus in termination decisions and other age discrimination claims, a plaintiff can show such animus by demonstrating a nexus between the allegedly discriminatory statement and the defendant's decision to terminate.²⁰

In Rowan v. Lockheed Martin Energy, the Sixth Circuit held that management personnel's comments regarding a need to lower the average age in the workforce were insufficient to allow a jury to reasonably conclude that employees terminated in a reduction-in-force had been subjected to age discrimination.²¹ While recognizing that such statements may establish a prima facie case of discrimination, the court found Lockheed's explanations, that the industry was having a high percentage of its most highly-skilled workers retire soon, was "a far cry from being motivated by 'inaccurate and stigmatizing stereotypes.' "²²

§ 3.1.3(b)

Promotions

In Brown v. Packaging Corp. of America, an employee brought an age discrimination claim against his employer after he was denied a promotion. In doing so, plaintiff relied on evidence that his area manager told him he was not getting the promised promotion because the employer's vice president wanted younger people. The court determined that this comment was not direct evidence of age discrimination under the ADEA because the manager had no involvement in the decision not to promote the employee and did not reveal the basis for his alleged insight into the vice president's thought process. Under the circumstances, age-related comments by nondecisionmakers were not material in showing that an employer's action was based on age discrimination.²³

§ 3.1.3(c)

Retirement Benefits

The Second Circuit recently held that a collective bargaining agreement which provided that teachers who met certain age and service criteria could choose between retiring early and receiving a $20,000 payment or continuing to work in exchange for a $7,000 a year bonus over three years violated the ADEA.²⁴ Under the collective bargaining agreement, teachers over the age of 55 who did not elect the $20,000 were forever barred from receiving the $20,000 benefit. Because age, and not years of service, served as the trigger for eligibility under this option, the court determined that the plaintiffs had demonstrated a prima facie case of age discrimination.

§ 3.1.3(d)

Terminations

In Appelbaum v. Milwaukee Metro Sewage District, the court held that, for purposes of determining whether an employer committed a willful violation of the ADEA by discharging a 60-year-old employee, the supervisor, rather than the examiner that conducted the employer's internal grievance hearing, was the pertinent decisionmaker. The court recognized that the examiner issued a written decision sustaining the discharge, but noted that the examiner deferred to the supervisor's judgment. It was the supervisor who investigated the alleged breach of department confidentiality, determined that the employee had committed the breach, and determined that the employee would be terminated.²⁵

In Rachid v. Jack in the Box, Inc., a 52-year-old employee sued his former employer for allegedly terminating him because of his age.²⁶ The court held that the employee had established a prima facie case of age discrimination by presenting evidence that his supervisor repeatedly made ageist comments to and about him such as stating that his "absence from a meeting was due to the fact that 'he's probably in bed or he's sleeping by [now] because of his age.'" The employee had voiced concerns to human resources that the supervisor was going to fire him because of his age, and the employee's replacement was five years younger.²⁷

§ 3.1.4

D. RELIGIOUS DISCRIMINATION – RECENT CASES

In Endres v. Indiana State Police, a state police officer was terminated for insubordination because he refused to work an assigned position as a gaming commission agent at a casino.²⁸ The police officer, a Baptist, asserted that he must neither gamble nor help others to do so because such behavior was sinful according to his religious beliefs. He did not allege, however, that he was assigned this position because of his religious beliefs, but conceded that he had been selected by lot. The Seventh Circuit Court of Appeals held that Title VII does not require an employer to provide an accommodation that would cause more than a minimal hardship to the employer, and the officer's request for accommodation exceeded this threshold. In so holding, the court reasoned that "juggling assignments to make each compatible with the varying religious beliefs of a heterogeneous police force would be daunting to managers and difficult for other officers who would be called on to fill in for the objectors."²⁹

In Peterson v. Hewlett-Packard, Co., a self-proclaimed "devout Christian" employee posted Biblical scriptures condemning homosexuality on an overhead bin in his work cubicle in response to Hewlett-Packard's posting of "diversity posters" in the workplace.³⁰ The employee was terminated after he advised management that he would continue to oppose homosexuality as long as the company condoned it and refused to remove the scriptures. In affirming the district court's dismissal of the employee's claims for religious discrimination, the Ninth Circuit Court of Appeals held that he had been terminated not because of his religious beliefs, but because he violated the company's harassment policy and because he was insubordinate in refusing to remove the scriptures despite the company's repeated requests to do so. Further, the company demonstrated that no reasonable accommodation was possible because the only acceptable accommodation for the plaintiff was the removal of the company's diversity posters, which would infringe upon the company's right to promote diversity and encourage tolerance in its workplace.

§ 3.1.5

E. CONSTRUCTIVE DISCHARGE UPDATE

In 2004, the U.S. Supreme Court clarified the application of the Faragher/Ellerth affirmative defense to constructive discharge cases in its 2004 decision of Pennsylvania State Police v. Suders.³¹ In short, the Court held that where the "quit" precipitating a constructive discharge claim does not follow an employer-sanctioned adverse employment action, an employer may defend a subsequent hostile environment harassment lawsuit by proving that it had a readily accessible and effective policy for reporting and resolving claims of unlawful harassment and that the plaintiff unreasonably failed to avail himself of the reporting/resolution mechanism made available by the employer. However, where the quit follows an official employer sanctioned adverse action of a supervisor, the Faragher/Ellerth affirmative defense is not available to the employer.

§ 3.1.6

F. RETALIATION DEVELOPMENTS

An employer's decision not to rehire a female construction worker for seasonal employment was not causally connected to her discrimination complaints. The court noted that the employer took her complaints of discrimination seriously and provided her with a report of its findings. The decision not to rehire her came almost nine months after the complaint. Moreover, the supervisor's comment that complaints "really burned [him] up" could be a product of being subject to a series of baseless comments, not as evidence of an intent to retaliate.³²

An employee, who was an Albino African-American male and legally blind, asserted that the defendant purposefully discriminated and retaliated against him for filing a previous employment discrimination action. The employee also asserted a failure to promote claim under 42 U.S.C. section 1983. The court of appeals found that the temporal proximity of the letters from the employee's attorney regarding settlement of the prior discrimination action and the denial of the promotion was quite close. Whether the proximity was close enough to establish retaliation was for the district court to consider on remand.³³

At the district court level in Sullivan-Obst v. Powell, a 53 year-old Caucasian female asserted that her employer purposefully discriminated and retaliated against her for filing various EEO complaints. The U.S. District Court for the District of Columbia found that the one-month period between the filing of her most recent EEO complaint and her termination was sufficient to satisfy her prima facie burden. However, the court went on to grant the employer's motion to dismiss, holding that although this short period was sufficient to satisfy the prima facie case, it was not sufficient to prove causation, particularly where the record showed a lack of corroborating evidence.³⁴

§ 3.1.7

G. AFFIRMATIVE ACTION – RECENT CASES

In 2003, the United States Supreme Court issued an opinion addressing affirmative action in the context of law school applications. While this opinion does not address affirmative action programs with respect to employment practices, its rationale has been recently applied in the employment context.

In Grutter v. Bollinger,³⁵ a law school applicant sued the University of Michigan, university regents, and university officials claiming race discrimination in the law school's admission policy. Rather than imposing quotas, the law school admissions program focused on academic ability and a flexible assessment of applicants' talents, experiences, and potential contribution to the learning of those around them. It did not define diversity solely in terms of race and ethnicity, but considered these as "plus" factors affecting diversity.

The trial court concluded that the policy of considering race and ethnicity "plus" factors was unlawful and granted an injunction. The United States Court of Appeals for the Sixth Circuit reversed the judgment and vacated the injunction. The United States Supreme Court found that the Equal Protection Clause did not prohibit this narrowly tailored use of race in admissions decisions to further the school's compelling interest in obtaining educational benefits that flow from diversity. The goal of obtaining a "critical mass" of underrepresented minority students did not transform the program into a quota. Because the law school engaged in a highly individualized, holistic review of each applicant, giving serious consideration to all the ways the applicant might contribute to a diverse educational environment, the Court found that the law school insured that all factors that could contribute to diversity were meaningfully considered alongside race.

In Petit v. City of Chicago,³⁶ the Seventh Circuit followed the Supreme Court's rationale in Grutter to find that the Chicago Police Department had a compelling interest in establishing diversity among its sergeants through the use of a standardization process applied to its promotional exam scores. The promotions to sergeant were to be based on rank order; however, the subjective results of the examination showed a disparity in scoring between minority officers and white officers. The City found that the process of creating the exam tended to reflect the views of white sergeants because 70% of the sergeants who participated in the process were white. For that reason, the City standardized the scores based on race. The court upheld the City's standardization procedure, stating that "as with the University of Michigan, the Chicago Police Department had a compelling interest in diversity. Specifically, the CPD had a compelling interest in a diverse population at the rank of sergeant in order to set the proper tone in the department and to earn the trust of the community, which in turn increases police effectiveness in protecting the city."³⁷

§ 3.2

II.OVERVIEW OF EMPLOYMENT DISCRIMINATION LAW

§ 3.2.1

A. STATUTORY OVERVIEW

Employers are faced with a myriad of laws regulating the equal employment opportunity impact of their employment decisions, and these laws affect decisions ranging from the placement of a want-ad to the value of pension benefits. This chapter summarizes the equal employment opportunity laws that apply to most employers. However, city, state, and federal equal employment opportunity laws apply equally and simultaneously to covered employers. Thus, the fact that an employer may be in compliance with state law will not protect it from liability under federal law. Employers must be careful to comply with all applicable laws.

There are several major sources of federal legislation that impose equal employment opportunity obligations on employers, including: (1) Title VII of the Civil Rights Act;³⁸ (2) the Americans with Disabilities Act;³⁹ (3) the Age Discrimination in Employment Act;⁴⁰ (4) the Equal Pay Act;⁴¹ (5) the Civil Rights Acts of 1866 and 1871;⁴² and (6) the Civil Rights Act of 1991.

§ 3.2.1(a)

Title VII of the Civil Rights Act

Title VII of the Civil Rights Act, as amended, prohibits an employer from discriminating against an individual on the basis of race, color, sex, national origin, or religion with respect to hiring, discharge, compensation, promotion, classification, training, apprenticeship, referral for employment, or other terms, conditions, and privileges of employment.⁴³ The Act includes in its definition of sex discrimination employment decisions made because of, or on the basis of, pregnancy, childbirth, or related medical conditions. Title VII applies to both private and public employers with 15 or more employees, labor organizations, and employment agencies, but not to bona fide private membership clubs exempt from taxation under the Internal Revenue Code.⁴⁴ Congress established the Equal Employment Opportunity Commission (EEOC) to enforce the Act. Title VII also applies to United States citizens working abroad for American-owned or -controlled companies.

The Supreme Court interpreted the requirement that an employer must employ fifteen or more employees for Title VII to apply to the employer in Walters v. Metropolitan Education Enterprises, Inc.⁴⁵ The Court rejected the argument that employees should only be counted for days on which they actually worked or were on some form of paid leave. The Court instead ruled that if an employer has 15 or more employees who appeared on its payroll, the employer is covered by Title VII.

In Kang v. U. Lim America, Inc., Soo Cheol Kang, a U.S. citizen of Korean national origin, worked for U. Lim America, a California corporation owned by a person of Korean national origin.⁴⁶ The company employed only six persons, all of whom shared Korean heritage. Although Title VII does not normally apply to a company with less than 15 employees, Kang alleged that his supervisor believed Koreans were better workers than Americans and Mexicans, and, when Kang refused to perform up to his expectations, including working required overtime, Kang was terminated because of his national origin in violation of Title VII. In determining whether U. Lim America was an employer under Title VII, and, consequently, whether Kang could even bring an action against the company under Title VII, the court looked at the fact that U. Lim de Mexico also operated at the same facility, employing approximately 50 to 150 citizens of Mexico. The court applied the "integrated enterprise" test, and found the companies constituted an integrated enterprise. The majority did not interpret Title VII as prohibiting the counting of foreign employees of a U.S.-controlled corporation for purposes of determining Title VII coverage.

§ 3.2.1(b)

The Civil Rights Act of 1991

The Civil Rights Act (CRA),⁴⁷ amended Title VII, section 1981, the Rehabilitation Act, the ADA, and the ADEA. The CRA allows for compensatory and punitive damages, as well as jury trials under Title VII, the ADA, and the Rehabilitation Act; overturns seven Supreme Court decisions; and establishes a glass-ceiling commission. The CRA also amends Title VII and the ADA to provide that both laws apply to United States citizens working abroad for American-owned or -controlled companies.

§ 3.2.1(c)

The Americans with Disabilities Act

Title I of the Americans with Disabilities Act (ADA), prohibits both public and private employers from discriminating in employment against persons with physical or mental disabilities (which may include "intellectual" impairments).⁴⁸ The EEOC and the Department of Justice enforce the ADA. The ADA requires employers to make reasonable accommodation to the needs of disabled applicants and employees, as long as such accommodation does not result in undue hardship to the employer's operations. The ADA also applies to United States citizens working abroad. (For a complete discussion of the Americans with Disabilities Act, see Chapter 5 of THE NATIONAL EMPLOYER®.)

§ 3.2.1(d)

The Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA), prohibits discrimination on the basis of age against employees aged 40 or older. The Act applies to employers employing 20 or more employees, as well as to labor organizations, employment agencies, apprenticeship programs, and training programs. It prohibits an employer from discriminating on the basis of age with regard to hiring, discharge, compensation, or other terms of employment. The Act provides an exception for highly paid executives who may be retired at age 65 as long as they receive at least $44,000 in annual retirement income. The EEOC enforces the ADEA. The ADEA also applies to United States citizens working abroad for American-owned or American-controlled companies.

§ 3.2.1(e)

The Equal Pay Act

The Equal Pay Act is part of the Fair Labor Standards Act, as amended.⁴⁹ The Act provides for equal pay for equal work performed by both sexes working in the same establishment. The Act prohibits discrimination on the basis of sex with respect to wages paid for equal work on jobs that require equal skill, effort, and responsibility, performed under similar working conditions. The Act allows unequal pay, however, where the disparity results pursuant to a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a differential based on any factor other than sex. (For a more complete discussion of the Equal Pay Act, see Chapter 21 of THE NATIONAL EMPLOYER®.)

§ 3.2.1(f)

The Civil Rights Act of 1866 & 1871

The Civil Rights Acts of 1866 and 1871, were adopted following the Civil War to help effectuate the purposes of the Thirteenth Amendment to the Constitution.⁵⁰ Section 1981 provides that all persons shall have the same right to make and enforce contracts as is enjoyed by white citizens. The Civil Rights Act clarified that section 1981 applies to all aspects of contractual relationships, including "the making, performance, modification, and termination of contracts and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship."⁵¹ Because an employment relationship is contractual in nature, the fact that the relationship is one of employment at will under state law is irrelevant to the applicability of Section 1981.⁵² Section 1983 provides that individuals who deprive others of their civil rights may be sued and held personally liable for the harm caused by such deprivation.⁵³ While the Acts cover racial discrimination, courts have applied the Acts to prohibit national origin discrimination as well.

§ 3.2.1(g)

Discrimination Laws Applicable to Federal Contractors

Employers who have a contractual relationship with the United States government, or who perform services for or provide goods to a federal contractor (i.e., a subcontractor), which goods or services are necessary to the performance of a federal contract, have special obligations with respect to equal employment opportunity. The following three laws govern these additional obligations:

Executive Order No. 11246

Executive Order No. 11246, as amended, requires that every federal contractor and subcontractor agree not to discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin, and to take affirmative action to ensure all applicants and employees are employed without regard to those classifications. Contractors and subcontractors having 50 or more employees and a contract or subcontract of $50,000 or more must develop written affirmative action plans, which must contain such sections as: an analysis of the contractor's workforce by race and sex, an analysis of the labor force by race and sex, a determination of whether the contractor is underutilizing minorities or women in any job categories, and an establishment of goals and timetables for correcting such underutilization.

The Office of Federal Contract Compliance Programs (OFCCP) enforces the obligations of federal contractors and subcontractors under Executive Order No. 11246. Alleged violations of the equal employment opportunity and affirmative action commitments are adjudicated by formal administrative proceedings before the OFCCP. If the OFCCP finds that a federal contractor or subcontractor has violated its commitments, the OFCCP can order, among other things, that the contractor or subcontractor be barred from any future federal contracts until it is in compliance with the Executive Order.

The Rehabilitation Act

Sections 503 and 504 of the Rehabilitation Act prohibit federal contractors and subcontractors, as well as recipients of federal financial assistance, from discriminating against disabled individuals.⁵⁴

Employment of Disabled & Vietnam Era Veterans

Federal contractors and subcontractors are required to take affirmative action to employ and promote disabled and Vietnam Era veterans.⁵⁵

§ 3.2.1(h)

Application of Federal Discrimination Laws to Foreign Employers & U.S. Employers Operating Overseas

Questions often arise as to how U.S. law applies or is enforced against U.S. employers operating overseas and U.S. citizens working in foreign countries. The Equal Employment Opportunity Commission (EEOC) has issued a guidance memorandum regarding the extraterritorial application of these laws, Enforcement Guidance on Application of Title VII and the Americans with Disabilities Act to Conduct Overseas and to Foreign Employers Discriminating in the United States.⁵⁶ In assessing the nationality of an employer, the EEOC will consider factors such as the place of incorporation, the company's principal place of business, the nationality of dominant shareholders and/or those holding control, and the nationality and location of officers and directors. To assess whether an American employer controls a foreign corporation, factors that are to be considered are: (1) the interrelation of operations, (2) the common management, (3) the centralized control of labor relations, and (4) the common ownership or financial control of the employer and the foreign corporation. The guidance memorandum also discusses the foreign laws defense, which allows an employer to engage in conduct that would otherwise be prohibited under Title VII or the ADA, if compliance would cause it to violate the law of the foreign country in which the workplace is located.

The Third Circuit Court of Appeals held that the extraterritorial provisions of the ADEA do not extend to U.S. employees seeking promotions to positions outside the U.S. with the foreign parent of their employer.⁵⁷ Because the promotion decisions were to be made by executives with the foreign parent company regarding positions in foreign locations, the ADEA did not apply.

§ 3.2.2

B. PROVING & DEFENDING AGAINST EMPLOYMENT DISCRIMINATION CHARGES

§ 3.2.2(a)

How Does an Individual Prove Discrimination?

The laws prohibiting discrimination in employment do not prohibit all employment decisions that an applicant or employee may consider unfair. Discrimination because of a nonprohibited factor does not constitute a violation of law. For example, Title VII does not prohibit an employer from discriminating against an individual on the basis of merit, initiative, or performance.

To demonstrate discrimination, an individual must establish a connection between the employment condition or decision and a prohibited basis, such as race or sex. Such a connection may be established by pointing to:

• individual instances of different or disparate treatment based on prohibited criteria, or

• neutral policies or practices that have a much harsher or adverse impact upon a protected class to which an employee or applicant belongs, such as women, Hispanics, persons over 40.⁵⁸

Discrimination may be proven based upon direct evidence (such as an acknowledgement of discriminatory intent or comments directed at a protected class) or indirect circumstantial evidence.⁵⁹

§ 3.2.2(a)(i)

Disparate Treatment

Disparate treatment discrimination occurs when an employer intentionally treats an employee differently because of an illegal criterion, such as race. The plaintiff has the initial burden of establishing a prima facie case of disparate treatment.⁶⁰ To do so, the plaintiff must produce either direct or circumstantial evidence of the employer's motivation.⁶¹ Direct evidence may take the form of a supervisor's comments about the plaintiff's race, sex, or other protected criteria. To establish a circumstantial case with respect to a failure-to-hire situation, the plaintiff must prove that:

• he or she is within a protected class (e.g., is of a particular race);
• he or she applied for a job for which the employer sought applicants;
• he or she was qualified for the job;
• he or she was denied the job; and
• the employer continued to accept applications for the job.⁶²

This framework has been applied, with obvious modifications, to employment decisions other than hiring, such as terminations and denial of promotions.⁶³

Rebutting a Claim of Disparate Treatment

If an applicant or employee establishes a prima facie case of discrimination under a disparate-treatment theory, an employer may rebut the plaintiff's case by showing that the plaintiff was not treated differently from other employees. For example, in a discipline case involving an Asian employee, the employer might show that a number of other employees of other racial backgrounds were similarly disciplined.

If, however, an employee was treated differently, the employer may show that the reasons for the different treatment were legitimate and nondiscriminatory. For example, nondiscriminatory reasons in hiring may include a consideration of qualifications, past experience, performance on an objective ability test, and past work record.⁶⁴ Similarly, legitimate, nondiscriminatory reasons for discharge decisions may include breach of work rules and misconduct.

Once the employer articulates a legitimate nondiscriminatory reason for its decision, the employee then must prove that the reason the employer has given was false or a pretext for discrimination.⁶⁵ However, an employee's proof that one of the reasons offered by the employer was pretextual does not justify a finding that all of the employer's proffered reasons were pretextual. In Odima v. Westin Tucson Hotel Co., a federal appellate court reversed a decision in favor of an employee because the trial court failed to determine whether the employee had shown that each explanation given by the employer as justification for its actions was false.⁶⁶ In St. Mary's Honor Center v. Hicks, the United States Supreme Court ruled that even if the reasons given by an employer for its actions were found to be false or pretextual at trial, the employee still ultimately had to prove that unlawful discrimination was in fact the basis for the employer's actions.⁶⁷ The Supreme Court further noted that if the reason for an adverse employment action is deemed false, that fact can be used by the trier of fact (judge or jury) as evidence of discriminatory intent.⁶⁸

§ 3.2.2(a)(ii)

Adverse or Disparate Impact

The Supreme Court, in the seminal case of Griggs v. Duke Power Co., stated that Title VII prohibits not only overt discrimination but also employment practices that appear neutral but are discriminatory in operation.⁶⁹ Thus, Title VII prohibits not only intentional discrimination but also the unintentionally discriminatory consequences of employment practices that apply to all employees. Accordingly, under the adverse impact theory, the employer's motivation in establishing the particular employment practice is irrelevant. The plaintiff presents a prima facie case of discrimination by showing that a neutral policy has a harsher or adverse impact on a protected class (i.e., Hispanics, females, Asians, etc.) For example, in Griggs, a company required that persons applying for manual labor jobs have high school degrees. Although the policy applied to all employees, more blacks were excluded because a greater number of blacks in the area did not graduate from high school, and the requirement was unrelated to the duties of the job. Statistical evidence is often used in adverse-impact cases in order to demonstrate the impact of a neutral policy upon a particular class.

The adverse impact analysis has been utilized regarding objective employment criteria such as standardized tests, height or weight requirements, and possession of a high school degree. In 1988, the United States Supreme Court held that discretionary or subjective selection devices such as interviews or performance appraisals are also subject to the adverse-impact analysis.⁷⁰

Rebutting a Claim of Adverse Impact

If an employee establishes that an employer's practice has an adverse impact upon a protected class, the burden of proof then shifts to the employer to demonstrate that the practice is job-related and consistent with business necessity. If the employer demonstrates, however, that a specific practice does not cause the adverse impact, the employer does not need to further prove that the practice is required by business necessity.

However, even if an employer successfully establishes business necessity, an employee may still prevail on an adverse-impact claim by demonstrating that an alternative and effective business practice exists that would have a less discriminatory effect, and the employer refuses to adopt the alternative practice.

Another defense that an employer may use is to demonstrate that the statistical sample used by the employee is too small to establish discrimination.⁷¹ Statistical disparities must be sufficiently substantial in order to raise an inference of causation, and the statistical evidence may not be probative if the data is small or incomplete.⁷² No bright-line rule exists in determining whether the statistics proffered by the plaintiff raise an inference of discrimination.⁷³ However, the plaintiff must first identify a specific employment practice rather than rely on bottom line numbers in the workforce.⁷⁴ Second, the plaintiff is required to present statistical evidence of a kind and degree sufficient to establish "that the practice in question has caused the conclusion of applicants for . . . promotions because of their membership in a protected group."⁷⁵ Finally, the relied-upon statistics "must be of a kind and sufficient to reveal a causal relationship between the challenged practice and the disparity" when assessed with the other evidence.⁷⁶ Yet another defense is to show that the terminated employee was not similarly situated to employees who retained their position.⁷⁷

§ 3.2.2(b)

Establishing the BFOQ Defense

Title VII and the ADEA provide that an employer may discriminate on the basis of sex, age, religion, or national origin because of a bona fide occupational qualification (BFOQ).⁷⁸ Gender-based staffing can be a BFOQ when it is necessary for therapeutic care or privacy concerns.⁷⁹ To establish a BFOQ defense, an employer must prove: (1) a relationship between the classification and job performance, (2) the necessity of the classification for successful performance, and (3) that the job performance affected is the essence of the employer's business operation. BFOQ defenses, however, are construed very narrowly and generally are not favored.

In some instances, sex may be a BFOQ where it is necessary for the authenticity or genuineness of an employee's job that an employee is of a particular sex, such as requiring an actress to play the part of a female in a play. However, it is not a BFOQ defense to a charge of sex discrimination to correlate gender with physical agility, strength, or height. Neither is it a BFOQ defense that the job traditionally has been performed by members of one sex, or that separate facilities would have to be provided. Similarly, a refusal to hire an applicant because of the preferences or prejudices of fellow employees does not give rise to a BFOQ defense.⁸⁰

Customer preference is not a defense to an action for employment discrimination. In Fernandez v. Wynn Oil Co., a female employee claimed that she was denied a promotion that would have involved conducting business on behalf of her employer in South America.⁸¹ The company defended its decision by explaining that its South American clients would refuse to deal with a female. The Ninth Circuit, however, rejected this defense, and held that customer preference based on sexual stereotypes cannot justify discriminatory conduct.

§ 3.2.2(c)

Remedies Available to Employees if Unlawful Discrimination Is Established

The remedies available to a plaintiff who successfully proves a case of employment discrimination are many and varied. For example, Title VII gives courts broad authority to remedy employment practices that have violated that Act, and courts have ordered injunctive relief, back-pay, affirmative relief including promotions and reinstatement, orders directing employers to change or abolish employment practices, and reasonable attorney's fees and costs.

Under the ADEA and the Equal Pay Act, an individual can recover unpaid wages and liquidated damages in an equal amount, plus reasonable attorney's fees and costs. Title VII, the ADA, and the Rehabilitation Act also allow for awards of compensatory and punitive damages when the employer is found to have engaged in disparate treatment discrimination. By statute, damages for compensatory and punitive damages are capped on a sliding scale, depending upon the size of the employer, from $50,000 to $300,000.⁸² This cap on damages has been addressed several times since its implementation in 1991, and has been consistently applied.⁸³

§ 3.2.2(c)(i)

Front- and Back-Pay & Other Compensatory Damages

Both front-pay and damages for lost future earnings are available under Title VII as long as the two awards are not duplicative.⁸⁴ Front-pay is a monetary award of limited duration when reinstatement is not feasible, while damages for lost future earnings compensate an employee for an injury to reputation and professional standing that might affect earnings for the rest of the employee's professional life. The amount of front-pay and back-pay damages awards must be sufficiently definite, not speculative.⁸⁵ The Supreme Court recently determined that front-pay awards do not fall within the cap on awards of compensatory damages in Title VII cases.⁸⁶

§ 3.2.2(c)(ii)

Attorneys' Fees

While prevailing plaintiffs are routinely awarded attorneys' fees, a prevailing defendant may only be awarded its attorneys' fees if it can demonstrate that the plaintiff's case was frivolous, groundless, or brought in bad faith.⁸⁷ Even if a plaintiff barely prevails, he or she remains entitled to attorneys' fees, but the court in its discretion may reduce their amount.⁸⁸

In Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health & Human Resources, the Supreme Court rejected a claim for attorneys' fees brought by an operator of assisted living facilities against a governmental entity of the state of West Virginia under the "catalyst theory."⁸⁹ The plaintiff had brought a lawsuit after failing a fire marshal's inspection, and being asked to close its facilities because its residents were incapable of "self-preservation," as defined by state law. The plaintiff brought a lawsuit claiming that the state law at issue violated federal laws, including the ADA. While the lawsuit was pending, the state legislature repealed the law at issue, and the lawsuit was dismissed as moot. The plaintiff asked for its attorneys' fees, claiming that under the "catalyst theory," it should be considered a "prevailing party" if it achieves, through settlement or otherwise, the result sought in its lawsuit. The Supreme Court rejected this theory finding that a "prevailing party" could only be a party who obtained either a judgment on the merits or a court-ordered consent decree at the conclusion of litigation. In so doing, the Supreme Court reversed precedents in virtually all federal circuits. Despite this new development, settlement agreements resolving a discrimination claim should mention that each party agrees to bear its own costs and attorneys' fees.

An employer may avoid attorneys' fees through other means. For example, in Desi's Pizza v. City of Wilkes-Barre, judgment was entered for the employee on a retaliation claim against the employer university following a jury trial. An offer of judgment, in the amount of $50,000, was filed by the university pursuant to Federal Rules of Civil Procedure 68.⁹⁰ The jury awarded the employee $35,000, less than the $50,000 offered by the university. Accordingly, the university sought attorneys' fees. The court held that a defendant in a Title VII Civil Rights suit can never recover its attorneys' fees under Rule 68.⁹¹

Attorneys' fees and costs incurred by an employee in pursuing a discrimination charge before the EEOC may not be awarded in a federal court lawsuit brought solely to collect those fees and costs.⁹²

§ 3.2.2(c)(iii)

Supreme Court Limits Employers' Liability for Punitive Damages

The Civil Rights Act of 1991 amended Title VII, the ADA, and the Rehabilitation Act to allow for awards of compensatory and punitive damages. Punitive damages are limited, however, to cases in which the employer has engaged in disparate treatment discrimination and has done so "with malice or with reckless indifference" to the rights protected by federal law.⁹³ For several years, federal courts grappled with the interpretation of this standard and its application, but in 1999, the United States Supreme Court clarified the standard in Kolstad v. American Dental Association.⁹⁴ The Court considered the circumstances under which punitive damages might be awarded in a Title VII action, and rejected the view of some of the courts of appeals, which held that an employer must have engaged in egregious conduct. Instead, the Court pronounced that as malice and reckless indifference focus on an individual's state of mind, whether the employer had knowledge that it might be acting in violation of federal law should first be examined. In addition, the Court ruled that employers will not be automatically subject to punitive damage awards even though a manager or supervisor acted with the requisite malice or reckless indifference. Instead, the Court reasoned that where an employer has undertaken good faith efforts to comply with Title VII—such as preparing and implementing written antiharassment and discrimination policies, and educating employees on harassment and discrimination issues—the employer will not be liable for the discriminatory employment decisions of its managers when those decisions are contrary to the employer's policies. If the management employee who engaged in discriminatory conduct is sufficiently senior within the company, his or her conduct may still be seen as proxy for the employer, despite good faith efforts to implement antidiscrimination policies.⁹⁵ Recently, however, circuit courts have found that, although the implementation of a written or formal antidiscrimination policy is relevant to evaluating an employer's good faith efforts at Title VII compliance, it is not sufficient in and of itself to insulate an employer from a punitive damages award.⁹⁶

§ 3.2.3

C. THE AFTER-ACQUIRED EVIDENCE DOCTRINE — A METHOD TO LIMIT DAMAGES

In McKennon v. Nashville Banner Publishing Co., the Supreme Court unanimously ruled that employers may not use after-acquired evidence to bar federal discrimination claims, but that they may use this evidence to limit damages associated with such claims.⁹⁷ In McKennon, an employee terminated in a reduction in force filed an age discrimination lawsuit against her former employer, a newspaper company. The employee admitted at a deposition that, as secretary to the controller, she had photocopied several of the newspaper's confidential financial records in the year prior to her discharge. The newspaper subsequently convinced the federal district court and the Sixth Circuit Court of Appeals to dismiss the employee's lawsuit because she would have been terminated for her misconduct, had the newspaper known of it at the time. The Supreme Court disagreed, holding that employers may not shield themselves from antidiscrimination laws by unearthing subsequent evidence of an employee's misconduct or fraud.

The Court did, however, agree that an employee's wrongdoing could not be ignored. If the employer can establish that the employee's conduct was of such severity that she would have been terminated had the employer known of the conduct, the employee's remedies will be affected.

In Greene v. Coach, Inc., the court limited the plaintiff's remedies as a matter of law.⁹⁸ The employee submitted a false employment application in which she misrepresented that she had a degree from a fashion institute and also neglected to disclose that a previous employer terminated her for taking store merchandise without payment. Because these facts were undisputed, the court dismissed the plaintiff's claims for reinstatement and front-pay, and limited her claim for back-pay to the period between her termination and Coach's discovery of her misrepresentations.

Similarly, in Maiden v. APA Transportation Corp., the employee neglected to disclose on her initial job application felony convictions for drug trafficking and drug possession.⁹⁹ The employer contended the plaintiff would not have been hired if they had known of these offenses. The court held the after-acquired evidence doctrine applicable in the "would not have hired" context. The court held that in order to meet its burden for summary judgment, the employer needed to produce evidence beyond managerial statements stating the plaintiff would not have been hired or would have been fired. The court suggested that evidence of employment records showing a consistent application of a policy may be sufficient.

The after-acquired evidence doctrine, however, has its limitations. In Taylor v. International Maytex Tank Terminal Corp., the court held that after-acquired evidence could not limit the plaintiff's ability to recover noneconomic damages and could not limit punitive damages.¹⁰⁰ In general, an employee will not be entitled to reinstatement or front-pay. With respect to back-pay awards, the amount should be calculated from the date of discharge to the date that the employer discovered the misconduct. The Supreme Court's opinion in McKennon makes it clear that courts are still free, however, to take into account equitable circumstances affecting the interests of either party.

Reliance on company policy is not enough to establish that an employee would have been terminated earlier, had the employer been aware of her conduct. In Sheehan v. Donlen Corp., a federal judge ruled that a female employee had been discriminated against on the basis of her pregnancy in violation of Title VII.¹⁰¹ The employer argued, however, that she was entitled to limited backpay, because she left several jobs off her resume and would have been terminated for this had the employer known of it during her employment. In rejecting the employer's argument, the appeals court noted that no one in the history of the company had ever been fired for falsification of a resume, and that the after-acquired evidence doctrine applied to an employer's actual employment practices, not what it said its policies were.

Likewise, post-employment misconduct does not constitute after-acquired evidence. In Sigmon v. Parker Chapin Flattau & Klimpl, a former law firm associate who was given an office to conduct a job search after being laid off made copies of her personnel file.¹⁰² The court reasoned that since she had already been laid off, her conduct could not constitute afteracquired evidence of misconduct.

§ 3.2.4

D. SEX DISCRIMINATION

The prohibition against sex, or gender, discrimination in Title VII applies equally to men as well as women.¹⁰³ In disparate treatment cases, the allegedly discriminatory treatment must occur because of the employee's sex or gender. For example, although an executive recruiter was terminated after her supervisor's wife discovered that she was having an affair with her supervisor, she was deemed to have not met all the elements upon which to bring a sex discrimination suit under Title VII. After a sexual interlude, the recruiter's supervisor informed her that he was ending both their relationship and her job in accordance with his wife's demands. In a bizarre turn, he suggested that she call his wife at her therapist's office and "beg" for her job back, which the recruiter actually did, but to no avail. The court dismissed her lawsuit, holding that voluntary, romantic relationships cannot form the basis of a gender discrimination action: "Rejection and discrimination are not synonymous." While her termination may have been unfair, it was not based upon her gender.¹⁰⁴

A double standard applied to men and women with regard to their interpersonal skills may constitute sex discrimination. In Bellaver v. Quanex Corp., a female employee claimed that she was discharged because her employer disapproved of her aggressive and sometimes abrasive interpersonal skills, while tolerating the same characteristics in male employees.¹⁰⁵ Although the employer contended that she was terminated in a reduction in force, the court refused to dismiss the case. The employee presented evidence that males who had problems with interpersonal communication were not criticized as severely, and thus a jury could conclude that the female was terminated because she did not behave in a way her employer deemed appropriate for women.¹⁰⁶

One may prove sex-based discrimination in the workplace even though they are not subjected to sexual advances or propositions. In Ocheltree v. Scollon Productions, Inc.,¹⁰⁷ evidence supported the jury finding for the employee in a Title VII action where other male employees engaged in harassing conduct. The harassment included male coworkers engaging in graphic sexual antics with female form mannequins, discussing in graphic detail their sexual exploits, and making inappropriate gestures to the plaintiff.

The court determined that, because management was aware of the misconduct and failed to provide a reasonable procedure for the victim to register complaints, the employer may be charged with constructive knowledge of coworker harassment.

Comments made to a female executive such as how her work was proceeding "in light of her child" and whether she could "perform her job effectively after having a second child," served as a sufficient basis to sustain her sex discrimination claim. The First Circuit held that the proximity of these remarks to her termination, along with repeated questions about her child bearing plans, suggested that the company's proffered reasons for discharging the executive could actually be a pretext for discrimination.¹⁰⁸ In contrast, a female attorney declined to participate in an out-of-town trial scheduled to last one month, because of childcare problems. When she later was selected for layoff, she claimed gender discrimination. While the court acknowledged that the law firm could have been more supportive of her family needs, it held that such insensitivity alone did not amount to unlawful discrimination.¹⁰⁹

§ 3.2.4(a)

Sex as a Bona Fide Occupational Qualification

In certain instances, employers may assert the bona fide occupational qualification (BFOQ) defense to a discriminatory policy. The defense requires a showing by the employer of: (1) a relationship between the classification and job performance, (2) the necessity of the classification for successful performance, and (3) that the job performance affected is the essence of the employer's business operation. BFOQ defenses, however, are construed very narrowly and generally are not favored.

The Ninth Circuit held that an airline's weight policy for flight attendants constituted unlawful discrimination against women, and was not justified as a BFOQ in Frank v. United Airlines, Inc.¹¹⁰ Using a weight table produced by an insurance company, the airline established a weight maximum for women corresponding to the medium body frame category on height and weight, as opposed to the large frame category used for men. Such practice resulted in female flight attendants having to weigh 14-25 pounds less than their male colleagues of the same height and age. Flight attendants brought a class action lawsuit alleging sex and age discrimination. The court granted judgment to the flight attendants, finding that the airline presented no evidence that a requirement that female flight attendants be disproportionately slimmer than males bore a relation to their ability to greet passengers, push carts, move luggage or provide assistance in emergencies.

A female prison guard was transferred to the night shift because the jail required that a female be on the premises at all hours of the day and night to supervise female prisoners. Although the guard quit and claimed gender discrimination, the court found that no violation of Title VII had occurred because gender was a BFOQ for the night shift position.¹¹¹

In contrast, a federal district court found no BFOQ defense available in Olsen v. Marriott International, Inc.¹¹² A hotel rejected a male applicant for a massage therapist position, who then filed suit claiming gender discrimination. The hotel asserted that it needed to hire primarily women due to its predominately female clientele, who preferred a woman masseuse to a male. The court ruled that the practice was discriminatory, in that customer preference was not a legitimate basis upon which to select male versus female applicants.

§ 3.2.4(b)

Gender Discrimination Against Males

The prohibition against sex discrimination enacted in the Civil Rights Act of 1964 was originally intended to protect females from employment discrimination. The wording of the Act, though, simply refers to discrimination based on "sex." Thus, both women and men can utilize the provisions of Title VII to challenge employment decisions based on their sex or gender. While a majority of such lawsuits are brought by women, it is not uncommon for men to file gender discrimination lawsuits as well.

In Lautermilch v. Findlay City Schools, a male teacher sued a school district because the female school principal referred to him as "too macho," and refused to call him as a substitute.¹¹³ The court held that the comment, in the context of a termination hearing, referred to Lautermilch's conduct, not his sex or gender.

A male social worker, who was laid off in a workforce reorganization, claimed that his hospital employer displayed favoritism toward women by preferring employees who displayed "caring attitudes" and "warm smiles."¹¹⁴ The court acknowledged that social work has traditionally been a predominately female profession, and even conjectured that women might be more likely than men to display caring, or "warm-and-fuzzy attitudes." However, even if true, such characteristics could not support the social worker's claim of gender discrimination, because having a caring attitude was an appropriate trait for a social worker, regardless of gender.

§ 3.2.5

E. PREGNANCY DISCRIMINATION

The 1979 amendments to Title VII ("The Pregnancy Discrimination Act" or PDA), specifically provide that sex discrimination includes discrimination on the basis of pregnancy.¹¹⁵ A pregnant employee is to be treated the same as any other employee, and when a female employee becomes unable to work due to pregnancy, childbirth, or related medical conditions, she is to be treated the same as other employees who have become temporarily unable to work.

Like other types of discrimination, pregnancy discrimination may be proven by either of two methods, the direct method or indirect method.¹¹⁶ Under the direct method, there are two types of permissible evidence. First, there is direct evidence, that is, evidence that proves the allegations without reliance on inference or presumption. The second type of evidence permitted under the direct method is circumstantial evidence, or evidence that allows a jury to infer intentional discrimination by the decisionmaker.¹¹⁷

Under the indirect method of proof, a plaintiff must first establish a prima facie case of pregnancy discrimination. To do so, the plaintiff must show that (1) she was pregnant; (2) she applied for and was qualified for the position sought; (3) she was rejected; and (4) the position remained open and the employer continued to seek applications from persons of the plaintiff's qualifications.¹¹⁸ Once the plaintiff establishes her prima facie case, the employer must then come forward with legitimate nondiscriminatory reasons for its employment decision. If the employer succeeds, the plaintiff must then come forward with competent evidence that the proffered nondiscriminatory explanation is pretextual.¹¹⁹

Typically, pregnancy discrimination is proved by the second method of proof, the indirect method.

§ 3.2.5(a)

Hiring & Firing Issues

In general, an employer may not terminate an employee because she is pregnant, and may not refuse to hire an applicant because she is pregnant if she is able to work and is qualified for the position.

A restaurant enforced a written policy transferring waitresses out of their jobs and into lower paying cashier or hostess jobs after their fifth month of pregnancy. A manager explained that at that stage of pregnancy, they were "too fat to be working." This policy resulted in a $300,000 punitive damages award, which was upheld by the Eleventh Circuit Court of Appeals in EEOC v. W & O, Inc.¹²⁰ The court found that the managers' behavior evidenced reckless indifference to the women's rights, warranting the substantial punitive damages.

Comments by supervisory staff about an employee's pregnancy were considered evidence of pregnancy discrimination in Sheehan v. Donlen Corp.¹²¹ Although the employer argued that the employee was discharged for poor performance, the jury found that the employee's pregnancy motivated the employer, noting that her supervisors made comments such as "if you have another baby, I'll invite you to stay home," "Oh, my God, she's pregnant again," and "you're not coming back after this baby."

An unmarried Alabama medical assistant's discrimination claim was ordered to proceed to trial, as the federal court held that she presented enough evidence to call into question the clinic's decision to terminate her within a week after she informed her supervisor that she was pregnant. The medical assistant claimed that the owner of the clinic stated to her he was "very disappointed in her," "didn't know how he would handle it if it was his own daughter," and "couldn't believe [she] had actually allowed this to happen." After she filed suit, the clinic contended that she was fired due to tardiness and rudeness. Considering the proximity between the alleged comments and her termination, along with other conflicting evidence, the court found that a jury could conclude that the clinic's decision was based upon a discriminatory motive forbidden by Title VII.¹²²

A terminated retail manager sued her former employer for pregnancy discrimination. The court found that the plaintiff's supervisor's response to the news of her pregnancy could serve as additional evidence of discrimination. The supervisor commented, "you realize this means that I have to pull other management out of other stores to cover your store [during the holiday season] . . . when this store should have been taken care of."¹²³

§ 3.2.5(b)

Transfers & Work Assignments

If a pregnant woman becomes unable to perform her regular job and requests a transfer to other work, a transfer is required only if transfers are granted to employees with other temporary disabilities.

The Tenth Circuit Court of Appeals found sufficient evidence of differential treatment to support a pregnancy discrimination claim, and ordered the case to trial in EEOC v. Horizon/CMS Healthcare Corp.¹²⁴ As part of their job requirements, nursing assistants were required to be able to lift up to 75 pounds. Due to temporary work restrictions placed upon them by physicians after becoming pregnant, the assistants applied for, but were denied, modified-duty assignments. Consequently, the women were terminated, laid off or placed on unpaid leave. The Tenth Circuit noted that the employer readily granted modified-duty assignments to employees injured on the job. In addition, managers made remarks such as, she "should not have taken the job if she was going to get pregnant," and she was "too big to be working," which provided additional support to send the case to the jury for decision.

A Florida district court ruled that a restaurant's inability to produce records demonstrating its nondiscriminatory assignment policy entitled a waitress to proceed to trial on her pregnancy discrimination and harassment claims. The waitress claimed that while pregnant, she received comments from several managers that she was "fat." She also was given unpleasant station assignments requiring heavy lifting. Although the restaurant claimed that assignments were distributed solely on the basis of a ranking system, which was based on an employee's performance, its inability to produce any documentation supporting this system resulted in "an inference of pretext."¹²⁵ While federal law requires that personnel records be kept for one year, in the event an employee files a discrimination charge, the employer must preserve all records until the final disposition of the case.

In Urbano v. Continental Airlines, Inc., a pregnant employee had lower back pain and was medically restricted from lifting more than 20 pounds.¹²⁶ She asked to be transferred to a light-duty assignment, but was denied one because the employer's policy guaranteed light-duty work only to employees who suffered on-the-job injuries. The Fifth Circuit ruled that the airline's policy of granting light-duty assignments only to those with occupational injuries did not violate the PDA, because the pregnant employee was treated exactly the same way as any other employee who was injured off the job.¹²⁷

§ 3.2.5(c)

Leaves of Absence for Pregnant Employees

An employer providing leaves for disabilities also must provide leaves for pregnancy-related disabilities. Pregnant employees may not be required to begin their maternity leaves at a preset time (e.g., at the end of the seventh month of pregnancy), nor may an employer require a pregnant employee to remain on leave for a predetermined time (e.g., the employee cannot return until six weeks after the birth of the child).

However, an employer may require a pregnant employee to produce medical verification of her continued ability to work, as long as such verification is also required from other employees who inform the company that they anticipate a future disability leave. Similarly, an employee returning from maternity leave may be required to submit medical verification of her ability to work, provided that other employees returning from other disability leaves also must submit such verification. A job description may be sent to the employee's physician to ensure that the employee's physician fully understands the duties of the job involved, if this practice is also followed with other employees when medical verification of their continued ability to work is sought.

Under Title VII, an employee's job must be held open while the employee is on maternity leave on the same basis that jobs are held for employees on other disability leaves. In sum, an employer subject to Title VII must treat pregnancy-related disability leaves on the same basis as it treats leaves for any other disability. However, employers also must comply with the Family and Medical Leave Act (FMLA). The FMLA requires private employers of 50 or more employees and some government employers to provide eligible employees up to 12 workweeks of unpaid leave for, among other things, the birth or adoption of a child, or the care of a seriously ill child. Further, this Act requires employers to return employees to the same or an equivalent position at the end of their leaves.

Although Title VII requires employers to treat pregnant employees the same as other employees requesting leave, it does not require preferential treatment. For instance, it is not a violation of the PDA or FMLA to terminate an employee on maternity leave if that employee would have been terminated even had she been actively working.¹²⁸ An employer that terminated an employee after she exhausted her maximum leave under the FMLA and under the employer's extended medical leave policy, due to her need to recover from serious pregnancy complications, did not violate the PDA.¹²⁹ While the employee argued that her employer could have done more for her, in light of her high risk pregnancy, than was required under its leave policies, the court concluded that the PDA does not require that employers treat pregnant employees more favorably than nonpregnant employees.

§ 3.2.5(d)

Incidental Absences & Conditions Related to Pregnancy

The Eleventh Circuit Court of Appeals held that a packaging equipment company did not violate the Pregnancy Discrimination Act when it discharged a clerk for absenteeism caused by pregnancy-related illnesses during her probationary period.¹³⁰ The court reasoned that employers may terminate employees for excessive absence attributable to pregnancy so long as they do not overlook comparable absences of nonpregnant employees. Therefore, the PDA did not require an employer to treat a pregnant employee whose pregnancy caused her to miss work more favorably than a nonpregnant employee who missed work due to different medical conditions.

§ 3.2.5(e)

Fringe Benefits for Pregnant Employees

Fringe benefits (including the accumulation of fringe benefits while on leave, payment into health or disability plans, and payment of sick leave during maternity leave) must be applied to pregnancy disabilities pursuant to the same terms and conditions as they are applied to other disabilities. Thus, an employer's medical insurance plan cannot exclude coverage for pregnancies. However, it is not a violation of the PDA to exclude fertility treatments from medical coverage, because such exclusion affects women and men equally.¹³¹

Employers covered by the Family and Medical Leave Act must maintain any existing health plan coverage for eligible employees while such an employee is on a leave of absence pursuant to the Act.

A company changed its method of calculating service credit and gave employees full credit for pregnancy and maternity leave after the PDA's implementation in 1979. However, it did not grant back credit to employees who took such leaves prior to that date. Observing that the PDA has not been treated as a retroactive statute, the Seventh Circuit Court of Appeals denied two employees' claims that the Company committed a fresh violation of the Act by not affording them service credits for their pre-1979 pregnancy leaves.¹³²

§ 3.2.6

F. SEXUAL ORIENTATION DISCRIMINATION

Federal courts have consistently declined to expand the meaning of sex discrimination in Title VII of the Civil Rights Act to include discrimination on the basis of sexual orientation.¹³³ However, a trend is emerging by which employees who claim to be discriminated against on the basis of sexual orientation are able to bring lawsuits under Title VII, alleging discrimination based on improper gender stereotype, or discrimination "because of sex."

In Nichols v. Azteca Restaurant Enterprises, Inc., the Ninth Circuit held that a male employee who was repeatedly teased for female mannerisms and referred to as "she" or "her" had stated a viable cause of action under Title VII.¹³⁴ The court reasoned that the severe and pervasive hostile work environment the plaintiff was forced to endure was caused because of gender stereotypes of how a male restaurant server should behave. In so doing, the court relied primarily on Price Waterhouse v. Hopkins, where the court had found that denying partnership to a woman because she did not fit gender stereotypes was a form of sex discrimination.¹³⁵ No direct mention is made in the opinion whether the male plaintiff was openly gay.¹³⁶

The Ninth Circuit also held that an openly gay male butler of a Las Vegas casino had stated an actionable cause of action for sex discrimination under Title VII.¹³⁷ In Rene, the plaintiff complained that his coworkers teased him because he was gay, and engaged in unwanted and inappropriate behavior which included calling him sweetheart and doll, mocking him for effeminate behavior and grabbing his buttocks and genitals. Although reiterating that Title VII does not protect employees from discrimination because of sexual orientation, the court held in a very divided en banc opinion that the plaintiff was subjected to unwelcome conduct of a sexual nature, and, therefore, was discriminated against "because of sex." The court relied heavily on Oncale v. Sundowner Offshore Services, Inc., in which the Supreme Court found that a male employee on an offshore rig who had been physically assaulted in a sexual manner by male coworkers, had been discriminated against "because of sex."¹³⁸

The Supreme Court has held that same-sex sexual harassment is a cognizable claim under Title VII.¹³⁹ Moreover, courts have recently held that the Equal Protection Clause protects against same-sex sexual discrimination harassment by government officials.¹⁴⁰

A federal court in Illinois found that a homosexual public employee was protected from discrimination under the Equal Protection Clause.¹⁴¹ A number of states, counties, and cities have also adopted laws prohibiting discrimination on the basis of sexual orientation.¹⁴²

§ 3.2.7

G. RACE DISCRIMINATION

Multiple federal laws prohibit discrimination based on race, including Title VII of the Civil Rights Act of 1964 and the Civil Rights Acts of 1866 and 1871. These laws prevent an employer from using an individual's race as a basis for any employment decision. Significantly, Title VII protects only employees, and not independent contractors.¹⁴³

An employee need not be fired or denied a job or promotion in order to demonstrate that he suffered an adverse employment action for the purposes of a racial discrimination suit.¹⁴⁴ In Tart v. Illinois Power Co., the Seventh Circuit held that two African-American employees had suffered material adverse employment actions where they were transferred away from jobs they enjoyed, in addition to losing their computers, independence, customer contact, and skilled job duties.¹⁴⁵

In order to prevail in a racial discrimination suit premised upon disparate treatment, the employee must show that he "was either replaced by someone outside the protected class, or that other similarly situated employees outside the protected class were treated more favorably."¹⁴⁶ Such was not the case in Bryan v. McKinsey, where an African American male held the position of "associate principal" (AP) with an elite worldwide management consulting firm. The firm had an "up or out" advancement system, whereby employees were either promoted or terminated within a certain period of time, and most employees were eventually terminated. The employee was terminated, and sued the firm for race discrimination contending that white employees were given more time as AP's and additional performance evaluations before being terminated. The Fifth Circuit rejected the employee's claim, noting that he and his white counterparts were all either terminated or promoted within a two year period. Title VII also protects employees who advocate on behalf of minorities. In Johnson v. University of Cincinnati, a university's African-American vice-president of human resources claimed he was discharged because he protested what he believed were discriminatory hiring practices.¹⁴⁷ The court found that his conduct was protected under Title VII and ordered his race claim to proceed to trial.

Title VII also protects employees from discrimination because they happen to associate with others of a different race. In Tetro v. Elliott Popham Pontiac, Oldsmobile, Buick & GMC Trucks, Inc., a white finance manager for an automobile dealership did well in his employment until the dealership's owner discovered the finance manager had a biracial daughter.¹⁴⁸ After the owner ridiculed and insulted the manager regarding his biracial daughter, the manager was terminated after he and the owner got in a disagreement over appropriate dress at work. The manager then filed suit, claiming race discrimination under Title VII. The Sixth Circuit allowed the manager's case to proceed to trial, ruling that Title VII not only protects employees because of their race, but also protects their association with persons of other races.

Opinions of coworkers that a supervisor's behavior toward an employee was racially motivated were not admissible to prove discrimination in Hester v. BIC Corp.¹⁴⁹ The court ruled that while coworkers could testify about their own observations of the supervisor's interactions with the employee, they could not voice any opinions about the supervisor's ultimate motivation.

§ 3.2.8

H. NATIONAL ORIGIN DISCRIMINATION

§ 3.2.8(a)

National Origin Discrimination Under Title VII

Under Title VII, national origin has been broadly interpreted to mean the country from which an applicant or employee, or his forebears, came.¹⁵⁰ However, a plaintiff alleging national origin discrimination under Title VII is not required to specify a country or nation of origin in his complaint.¹⁵¹ National origin does not include citizenship, and courts have held that discrimination on the basis of citizenship is not actionable under Title VII.¹⁵²

A human resources director's intervention in the selection of employees for layoff did not constitute national origin discrimination in Kulumani v. Blue Cross/Blue Shield Association.¹⁵³ An accountant of Indian descent filed a Title VII lawsuit when he was selected for layoff. The human resources director evaluated the layoff list, which was based upon performance and seniority; she placed the accountant on the list, removing another employee with greater seniority. While the court stated that the action may have been "unusual," it was insufficient to establish discrimination. The court noted that a human resources director who failed to object to managers' proposals might as well be a "doormat."

In DiCarolo v. Potter, the Sixth Circuit held that an Italian-American former employee had presented direct evidence of national origin discrimination where his supervisor had called him a "dirty wop" and complained about there being too many "dirty wops" working at the facility.¹⁵⁴ In reaching this holding, the court emphasized that it was the employee's supervisor and a decisionmaker who made such statements, and that the hate speech occurred three weeks prior to the employee's termination.

In Salvadori v. Franklin School District, the plaintiff, originally from the Philippines, worked as a teacher for seven years when her contract was not renewed.¹⁵⁵ Throughout her employment, she exhibited problems interacting with students, parents, and administrators. The court held that she failed to establish a prima facie case because she could not show satisfactory job performance. The Seventh Circuit applied the same rationale to a claim of national origin discrimination brought by a Spanish-born teacher whose history of ineffective teaching style, inappropriate student discipline and poor interpersonal relations with other staff members supported the school district's decision not to renew her contract and was not a pretext to hide national origin discrimination.¹⁵⁶ In Amro v. The Boeing Co., an engineer claimed that he was discriminated against because of his Lebanese ancestry.¹⁵⁷ He alleged that he was given an inadequate annual raise, denied a special pay raise, and not given a transfer to another position quickly enough. The court rejected the engineer's pay raise claims, noting that he failed to establish that he had the same or better performance than those engineers given larger raises. His transfer claim also failed because he failed to establish that his transfer took longer to process than those of non-Lebanese employees.

A manager's comments regarding an employee's accent may constitute direct evidence of national origin discrimination.¹⁵⁸ In Fonseca v. Sysco Food Services, the plaintiff, a Hispanic of Guatemalan descent, alleged discrimination based on his ethnicity because the company had offered overtime to white employees that should have been offered to him, and because he was disciplined for accidentally dropping a pallet of merchandise that another employee had improperly loaded.¹⁵⁹ The plaintiff presented evidence that his supervisor had pretended not to understand him and mocked his accent only two months prior to the two incidents. The Ninth Circuit held that the supervisor's conduct was sufficient for the plaintiff to survive summary judgment.

§ 3.2.8(b)

National Origin Discrimination & English-Only Rules

The EEOC guidelines state that the "primary language of an individual is often an essential national origin characteristic," and that English-only rules require close scrutiny because they may violate Title VII by creating an atmosphere of inferiority, isolation, and intimidation based upon a person's national origin.¹⁶⁰ The EEOC guidelines further conclude that while a limited English-only rule may be permissible in some circumstances, such a rule would be deemed unlawful unless the employer can show that it is justified by business necessity and notifies the employees not only of the general circumstances when speaking only in English is required but also of the consequences of violating the rule.

An example of a permissible English-only policy is illustrated in Sanchez v. City of Altus.¹⁶¹ The City required its employees to use English in the workplace and in their business communications, but were permitted to converse in their chosen language during private conversations while on breaks. It asserted "that the English-only policy was adopted to facilitate communications between City employees, to prevent employees who speak only English from feeling excluded, and to address potential safety concerns."¹⁶² In upholding the policy and rejecting Hispanic plaintiffs' disparate treatment claim, the court ruled that the plaintiffs failed to show "that requiring them to use English in the workplace imposed significant, adverse effects on the terms, conditions or privileges of their employment."¹⁶³ The court noted that the City had offered sufficient evidence to prove business justification for the policy as it had received complaints from non-Spanish speaking employees that they could not understand what was being said on the City's radio frequency and that they felt uncomfortable when their coworkers spoke Spanish around them.

A Texas company instituted an English-only policy which required employees to speak English at all times on company property, unless an employee had to speak Spanish to a customer who did not understand English. If employees violated the policy, they were subject to discharge.¹⁶⁴ Because the policy prohibited non-English conversations during lunch, on breaks, and during other personal time, the court found the policy unlawful, and issued an injunction against it. The court also awarded back-pay, compensatory and punitive damages to Hispanic class members.

§ 3.2.8(c)

EEOC Guidance on Unauthorized Workers

The EEOC issued Enforcement Guidance on Remedies Available to Undocumented Workers Under Federal Employment Discrimination Laws, No. 915.002 (Oct. 26, 1999). The EEOC takes the position that Title VII, the ADEA, the ADA, the Equal Pay Act and the Rehabilitation Act of 1973 provide unauthorized workers with the same remedies available to other victims of discrimination, including injunctive relief, reinstatement, back-pay, attorney's fees and punitive damages. Although not binding upon federal courts, EEOC guidelines are generally given a high degree of deference.

§ 3.2.8(d)

The Immigration Reform & Control Act

The Immigration Reform and Control Act (IRCA) has as one of its principal purposes the goal of stemming the tide of illegal immigration.¹⁶⁵5 To accomplish this goal, the Act imposes penalties on employers who hire unauthorized aliens. A concern arose that employers would react to the threat of penalties by refusing to hire all noncitizens or generally discriminating against foreign-looking individuals. Consequently, IRCA makes it an unfair immigration-related practice for an employer to discriminate against any individual (other than an unauthorized alien) because of such individual's national origin, or in the case of a citizen or an intending citizen, because of such individual's citizenship status.

IRCA also prohibits retaliation against those who bring charges and prohibits documentation abuse by employers who ask applicants to provide additional documentation or refuse to honor documents that reasonably appear to be genuine. Both IRCA and Title VII, therefore, prohibit national origin discrimination. To avoid the problem of overlapping enforcement, IRCA provides coverage to all employers of three or more employees but exempts from coverage those employers who are subject to Title VII.

Executive Order No. 12989 sets forth the policy of the federal government, which is not to contract with any employers who knowingly hire unauthorized workers in violation of IRCA.¹⁶⁶

§ 3.2.9

I. AGE DISCRIMINATION IN EMPLOYMENT ACT

The Age Discrimination in Employment Act (ADEA) prohibits discrimination against applicants or employees age 40 or over because of age. The ADEA also prohibits employers from discriminating on the basis of age between two individuals, both of whom are within the protected age group. For example, it is a violation under the Act for an employer to hire a 45- year-old applicant as opposed to a 65-year-old applicant on the basis of the difference in age between them. A majority of federal circuits have held that age differences of less than ten years are not significant enough to establish a prima facie case of age discrimination.¹⁶⁷ For example, the Seventh Circuit has held that a seven year age gap between a 52-year-old terminated employee and his 45-year-old replacement did not establish discrimination, because the difference between their ages was not substantial.¹⁶⁸ Similarly, the Sixth Circuit held that a six year age gap between an employee and a replacement was not significant.¹⁶⁹

The prohibitions against age discrimination found in the ADEA, as with the prohibitions found in Title VII, forbid discrimination in hiring, discharges, promotions, and all other terms or conditions of employment. The approach used in Title VII litigation to establish discrimination generally will be followed in ADEA litigation. Some courts have relied on the similarity between the two statutes to analogize cases arising under the ADEA to precedent established under Title VII.¹⁷⁰ These courts have found that a plaintiff makes out a prima facie case of age discrimination by demonstrating that: (1) the plaintiff was in a protected age group, (2) the plaintiff was qualified, (3) the plaintiff was nevertheless adversely affected, and (4) the defendant sought someone else with similar qualifications to perform the work. However, in a termination case, the U.S. Supreme Court ruled that a plaintiff does not have to show that he was replaced by someone outside the "protected class," i.e., someone under 40 years of age. Rather, all that is necessary is for the plaintiff to show that he has been replaced by someone younger than himself.¹⁷¹ Also, age based discrimination can be shown even when the complained of action is taken by those over 40, as long as they are younger than the complaining employee.¹⁷²

In a unanimous decision, the U.S. Supreme Court ruled that an employee's initial showing of age discrimination, combined with sufficient evidence for a reasonable fact-finder to reject the employer's nondiscriminatory explanation for its decision as false, is sufficient to uphold a jury verdict for the employee. In Reeves v. Sanderson Plumbing Products, Inc., a company ordered an audit of timesheets and discovered significant discrepancies in a supervisor's employee attendance reports.¹⁷³ It then terminated the supervisor, a 57-year-old man who had worked for the company for 40 years. At trial, the supervisor provided substantial evidence rebutting the company's explanation that he was at fault. The supervisor also introduced evidence that the director of manufacturing had made several ageist remarks towards him; one comment was that he was "so old [he] must have come over on the Mayflower." The Supreme Court upheld the jury's verdict as supported by the evidence.

Although employers can be held liable for the actions of their agents, courts disagree whether the agents themselves can be held personally liable for their own discriminatory conduct. Some federal courts have held that agents cannot be held individually liable for discrimination under the ADEA. In Birkbeck v. Marvel Lighting Corp., a company vice president made age-related comments prior to discharging a 62-year-old employee.¹⁷⁴ The employee tried to claim that the vice president should be held liable for discrimination along with the company. The Fourth Circuit Court of Appeals disagreed, and stated that the ADEA merely holds the company liable for the conduct of its agents. The Ninth Circuit Court of Appeals and a federal district court in New Jersey reached the same conclusion in Miller v. Maxwell's International, Inc.,¹⁷⁵ and in Crawford v. West Jersey Health Systems.¹⁷⁶ However, a number of other federal district courts disagree and have found that supervisors may be individually liable for discrimination under the ADEA.¹⁷⁷

In 2004, the U.S. Supreme Court addressed whether the ADEA prohibits preference for older employee over younger employees in General Land Dynamics, Inc. v. Cline.¹⁷⁸ In Cline, the Court found that the ADEA does not prohibit such reverse age discrimination. The Court held that, "the text, structure, and history of the ADEA, along with its relationship to other federal statutes, show[s] that the [ADEA] does not mean to stop an employer from favoring an older employee over a younger one."¹⁷⁹ Employers must be mindful, however, that certain state antidiscrimination laws do recognize reverse age discrimination.¹⁸⁰

§ 3.2.9(a)

Adverse Impact Claims Under the ADEA

Adverse impact occurs when a company's neutral policy has a harsher or adverse effect upon a protected group. The circuit courts of appeals are split on the issue of whether adverse impact claims may be brought under the ADEA.¹⁸¹ The Eleventh Circuit in 2001 held that a disparate impact theory does not apply to claims under the ADEA in Adams v. Florida Power Corp.¹⁸² Conversely, in 2004, the Second Circuit in 2004 held that the ADEA allowed for disparate impact claims.¹⁸³ Recently, the Supreme Court granted a writ of certiorari in Smith v. City of Jacksonville to resolve this circuit court split, and clarify whether the ADEA does, in fact, allow for ADEA claims under a disparate impact theory¹⁸⁴

§ 3.2.9(b)

Age-Related Comments & Other Evidence of Age Discrimination

Stray remarks, standing alone, may not give rise to an inference of discrimination. For example, one stray remark overheard by another employee that the management employees were too old coupled with the fact that the remark was not made by a decision maker or made in connection with the termination was insufficient to establish discrimination.¹⁸⁵ The Eighth Circuit recently held that comments by a prison warden regarding "old timer dinosaurs" was insufficient to establish age discrimination in an action brought by a corrections officer who had applied, and was denied, two promotions at the prison.¹⁸⁶ Similarly, statements by non- decisionmaker supervisors calling employees "old farts" did not constitute direct evidence of age discrimination.¹⁸⁷

Age related comments were found not to be evidence of discrimination in Pottenger v. Potlatch Corp.¹⁸⁸ The supervisor's remarks, referring to an "old management team," an "old business model," and "deadwood," in relation to a 60-year-old employee; were insufficient to show a discriminatory motive for the employee's age discrimination claim.

Such remarks, however, are not irrelevant in analyzing an employment discrimination action. Comments made by top management during a series of roundtable meetings with supervisory-level employees, stating a preference for younger employees, were held sufficient to support an age discrimination claim.¹⁸⁹

In EEOC v. Warfield-Rohr Casket Co., the Fourth Circuit reversed a lower court's grant of summary judgment for an employer where the employee's supervisor terminated him, telling the employee, "You're too f---ing old, you're making too much f---ing money" and that the supervisor was retaining another employee because the other employee "could give more years."¹⁹⁰ The court concluded, notwithstanding the employer's articulated, nondiscriminatory reasons for terminating the employee, that such statements could lead a jury to determine that the employee's age was a motivating factor for his termination under a mixed-motive analysis.¹⁹¹ The court also noted that there is no requirement that an employee's testimony regarding an employer's statements to him be corroborated in order to apply the mixedmotive framework.

In Marques v. Bank of America, a supervisor's comment to an employee following a consolidation at the bank was found sufficient to support a claim for age discrimination.¹⁹² When the employee found out her job was being eliminated and inquired about alternative positions, the supervisor remarked, "I'm surprised you are fighting this. Why don't you just retire and get a little job some place?" Although the supervisor had no decisionmaking power with respect to hiring employees into alternative positions, the court held that his comment powerfully suggested that he would be disinterested in assisting the employee to find other work. Furthermore, the remark implied that given her age and retirement status, the employee should have known that she need not bother seeking another job at the bank.

§ 3.2.9(c)

Promotions & Demotions

It is not unlawful for an employer to either:

• limit eligibility for promotions to those employees in an existing workforce, or to give preference in selection for promotion to an incumbent employee; or
• to promote a candidate under age 40 in preference to a candidate over age 40, based on the younger candidate's superior experience, or other work related qualifications.

However, an employer may not refuse to select a candidate for promotion simply because the individual is over age 40.

Although the fact that a similarly situated employee received better treatment is relevant, a decision to demote an older employee does not become a discriminatory decision merely because a younger employee is treated differently. In Simpson v. Kay Jewelers, a 57-year-old store manager who was demoted for poor sales cited the company's failure to demote a 26- year-old manager who also had inconsistent sales, as evidence that the employer's reasons for her demotion were a pretext for age discrimination.¹⁹³ The court rejected her argument, noting that she ignored the evidence presented by her employer that 35 other managers also were demoted; all were younger than the store manager; and 34 of them were under 40 years of age.

In Brown v. Packaging Corp. of America, an employee brought an age discrimination claim against his employer after he was denied a promotion.¹⁹⁴ In doing so, plaintiff relied on evidence that his area manager told him he was not getting the promised promotion because the employer's vice president wanted younger people. The court determined that this comment was not direct evidence of age discrimination under the ADEA because the manager had no involvement in the decision not to promote the employee and did not reveal the basis for his alleged insight into the vice president's thought process. Under the circumstances, the comment was not material in showing that the employer's action was based on age discrimination.

§ 3.2.9(d)

Terminations

Where substantial evidence demonstrated that a 51-year-old corporate communications director's termination was due to his insubordination, and his replacement was only three years younger, a court of appeals rejected his claim for age discrimination.¹⁹⁵ The director claimed that statements by his supervisor displaying favoritism towards younger employees and evincing a desire to change the "old, white men culture" indicated bias. However, the court characterized such remarks as stray remarks, noting that the director had failed to offer any evidence contradicting the employer's basis for discharge.

One district court denied the employer's motion for summary judgment on an employee's ADEA claim where the employee's supervisor, who was directly involved in the decision making process regarding her employment, made derogatory comments in reference to the plaintiff's age and gender.¹⁹⁶ Citing the supervisor's statements that plaintiff was "an old crazy woman" and that "he believed that women think with their feet," the court held that the plaintiff had presented direct evidence of discrimination on the basis of age, thereby relieving her of the burden of persuasion under the McDonnell Douglas framework.¹⁹⁷ "Evidence is 'direct' (and thus justifies a mixed-motive jury instruction) when it consists of statements by a decisionmaker that directly reflect the alleged animus and bear squarely on the contested decision."¹⁹⁸

A vice president who was discharged under a "promote and eliminate" strategy designed to "refresh" the top executive pool was not a victim of age discrimination, the Seventh Circuit court concluded in Ransom v. CSC Consulting, Inc.¹⁹⁹ Under this type of promotion dynamic, the company promoted individuals to high-level positions and then continuously eliminated the worst performers to make room for other promising candidates. Although upper management was open in its desire to replace poorly-performing executives with "younger people," the court agreed that the term "younger" had less to do with the age of the candidates than a genuine corporate goal of promoting fresh, qualified talent, regardless of age. Moreover, the executive's failure to meet a multimillion dollar sales quota was a legitimate measure of his lack of performance and a nondiscriminatory reason for his discharge.

A former sales associate established that the employer terminated him based on his age, where he produced evidence that two months before the associate was terminated, the employer's vice president wrote a memo discussing the company's broad plan to "thin the ranks" of older sales associates, and that 14 employees over 50 years of age, of whom at least 11 did not request severance packages, were targeted for severance offers.²⁰⁰ Conversely, an employer's subjective reasons defeated an age claim in Chapman v. AI Transport.²⁰¹ A 61- year-old employee who applied for the position of casualty claims manager was not hired based upon the company's view that he "interviewed poorly." By this the company explained that the employee failed to answer questions precisely and was not "aggressive" during the interview in that he failed to ask any questions. The Eleventh Circuit found that subjective reasons may be legitimate and nondiscriminatory where the employer articulates a clear, factual basis upon which it based its subjective opinion.

§ 3.2.9(e)

Same Actor Defense Available When Same Person Hires & Fires an Employee

The courts have applied varying weight to the strength or value of the inference of nondiscrimination that occurs when an employee is hired and fired by the same individual. In Williams v. Vitro Services Corp., the Eleventh Circuit held that a jury could infer, if they chose, that if the hiring and firing were done by the same person, there was no discrimination.²⁰²

The "same actor" defense, however, is not irrefutable. If a terminated employee can show evidence of age discrimination, he or she may still succeed at trial. In Roberts v. Separators, Inc., the Seventh Circuit considered whether the termination of a 62-year-old machinist was age related.²⁰³ He had been hired and fired by the same manager within a year, and the employer claimed that he was terminated because of the damage that he caused to some machinery, and because of an "attitude problem." The machinist produced evidence to suggest that he did not damage the machinery, and that he did not make certain comments that suggested a poor attitude at work. The court held that his evidence was insufficient to support an age discrimination claim. It is not enough for him to simply prove that he did not make certain statements or engage in certain conduct; rather, he must prove that his employer did not honestly believe that such statements were made or that such conduct occurred.

§ 3.2.9(f)

Retirement

§ 3.2.9(f)(i)

Mandatory Retirement

Employers are prohibited from requiring employees within the protected age group to retire because of their age, with certain limited exceptions made to bona fide executives as explained elsewhere in this chapter. Thus, no seniority system or employee benefits plan can permit the forced retirement of any individual because of age. The law's prohibitions extend to all new and existing systems and plans that force or permit involuntary retirement.²⁰⁴

The Sixth Circuit dismissed the ADEA action of a 68-year-old chief engineer who claimed his employer's persistent inquiries into his retirement plans pressured him to retire. Recognizing that a company has a legitimate interest in anticipating turnover and hiring needs, the court distinguished between an employer merely inquiring into an employee's retirement plans and forcing him to retire.²⁰⁵ The Eighth Circuit has held that mere inquiries into employees' retirement plans are not sufficient, by themselves, to create an inference of discrimination.²⁰⁶ Conversely, one district court recently denied an employer's motion for summary judgment on an ADEA claim where there were issues of fact regarding whether a supervisor's inquiries concerning an employee's retirement date were reasonable or whether the supervisor hounded the employee enough to begin to raise an inference of age discrimination.²⁰⁷ In arriving at this ruling, the court noted "retirement-related inquiries could be probative of a discriminatory campaign to encourage older employees to leave . . . with questioning employees about retirement being a part of that effort."²⁰⁸ Similarly, the Seventh Circuit has ruled that the employer's belief that the employee's retirement was imminent was not a pretext for age discrimination even though the employee alleged she never intended to retire.²⁰⁹

§ 3.2.9(f)(ii)

Early Retirement Is Lawful if Voluntary

As a result of the prohibition against mandatory retirement because of age, an employer cannot give employees an ultimatum that they either accept retirement under a special early retirement plan or be subjected to adverse treatment such as demotion, reduction in pay, or diminished chance of career advancement.²¹⁰ However, early retirement programs which are purely voluntary and are offered to reduce costs are lawful.²¹¹

Employers must be careful that any lawful early retirement incentive given to employees is not in fact a potentially discriminatory employee benefit.²¹² For example, the Second Circuit recently held that a collective bargaining agreement which provided that teachers who met certain age and service criteria could choose between retiring early and receiving a $20,000 payment or continuing to work in exchange for a $7,000 a year bonus over three years violated the ADEA.²¹³ Under the collective bargaining agreement, the plaintiff teachers over the age of 55 who had not elected to take the $20,000 and retire under the previous collective bargaining agreement were forever barred from doing so. Because age, and not years of service, served as the trigger for eligibility under the agreement, the court determined that the plaintiffs had demonstrated a prima facie case of age discrimination. Offering an employee who is laid off in a reduction in force an option to receive either a lump sum payment or an early retirement option does not violate the ADEA. In Stokes v. Westinghouse Savannah River Co., the employee argued that while younger employees received their severance packages unconditionally, older workers were forced to choose between two benefits — severance or early retirement — inevitably resulting in the loss of one.²¹⁴ The court ruled that the ADEA allows an employer to offer voluntary early retirement packages, as long as the triggering event to offer them is unrelated to age.

§ 3.2.9(g)

Reductions in Force

"During a reduction in force, an employer's obligation under the ADEA is limited to providing older employees with the same job placement opportunities it offers younger employees."²¹⁵ In order to prove age discrimination, the terminated employee must produce circumstantial or direct evidence from which a fact finder might reasonably conclude that the employer intended to discriminate in laying off the older employee rather than a younger employee.²¹⁶ The fact that an older employee is laid off and is eventually replaced by a younger employee is not enough to establish that the employer's reasons were pretextual.²¹⁷ Moreover, the fact that an employer's workforce actually increased in size after a reduction in force is not evidence that the reduction was a pretext for discrimination, if the new employees possessed new and distinct skills that the former employees lacked.²¹⁸

However, where a company undertakes to transfer employees su