Ninth Circuit Confirms Prior Salary Can Be a Legitimate Factor Other Than Sex Under Federal Law

Relying on salary history to justify differences in employee pay can be a valid defense under the Equal Pay Act, according to a recent decision by the United States Court of Appeals for the Ninth Circuit.  Rizo v. Yovino, 2017 U.S. App. LEXIS 7427 (9th Cit. Apr. 27, 2017). 

The Ninth Circuit rejected the District Court’s reasoning and vacated its decision.  According to the Ninth Circuit, prior salary alone can be a legitimate factor other than sex warranting dismissal of an EPA/Title VII claim, provided the employer’s use of prior salary effectuates a stated business policy and is reasonable in light of the stated purpose.  The ruling adds to an already existing Circuit split – while the Seventh and Eighth Circuits both allow employers to rely on prior pay as an affirmative defense to federal wage discrimination laws, the Tenth and Eleventh Circuits have held that prior pay alone cannot justify a wage disparity (though it can be considered alongside other non-discriminatory factors).  Notably, Rizo’s claim arose before California enacted its Fair Pay Act, which states specifically that “[p]rior salary shall not, by itself, justify any disparity in compensation.”

The case serves as a reminder to employers that relying on an employees’ salary history to determine current compensation is increasingly risky.  A growing number of states and localities (including recently New York City) have enacted or are in the process of enacting legislation prohibiting employers from inquiring into an applicant’s salary history or otherwise basing employee compensation on prior pay.  Employers should review their applicable jurisdiction’s requirements before basing compensation decisions on an employee’s previous compensation. 


Eight Figure Jury Award in California Highlights Risks of Retaliation Claims

A jury in California awarded $22.4 million in punitive damages to a former sales manager of Cardiovascular Systems, Inc., a medical device company, based on a finding that his employer retaliated against him under both the California Fair Employment & Housing Act (California Government Code § 12940(h)) and the California Whistleblower Act (California Labor Code § 1102.5(b)) for making complaints regarding alleged discrimination against female employees as well as various unethical medical sales practices.  The punitive damages award came just one day after the jury awarded Plaintiff $2.7 million in compensatory damages.

The employer contended that Plaintiff’s employment was terminated for legitimate, non-retaliatory reasons based on a verbal confrontation between Plaintiff and his supervisor.  The employer submitted evidence that Plaintiff yelled, slammed his fists on a table and called his supervisor a “liar.”  The employer also argued that Plaintiff’s complaints were not asserted in “good faith”, but were simply made up to prevent his supervisor from modifying his sales territory.

The jury rejected the employer’s defenses and entered a verdict for the Plaintiff.  Prior to the award of punitive damages, Defendant’s attorney told the jury that Plaintiff already had been fully compensated by the jury’s $2.7 million award of compensatory damages.  He also stated that since the employer had already gotten the message, there was no need for any award of punitive damages.  The Plaintiff’s attorney told the jury that the Defendant attorney’s statements showed that the employer still did not believe it violated the law, despite the unanimous verdict against it.  The Plaintiff’s attorney emphasized that the employer failed to present any evidence that it had or will make changes to prevent retaliation from occurring in the future.

The magnitude of this jury award underscores the importance of training supervisors of the risks of retaliation claims even if the employee’s underlying complaint is believed to have been made in bad faith.  Further, it highlights that employers should carefully consider that juries will evaluate the extent to which an employer has presented evidence that its policies and practices have or will prevent unlawful retaliation in the workplace.

Dentist’s Remarks To Pregnant Employee Propel Her Case Forward

In Sims v. America’s Family Dental, LLP, Defendant’s motion to dismiss Plaintiff’s claims under Title VII and the Pregnancy Discrimination Act was denied by a federal district court. 

Plaintiff, a registered dental assistant, alleged that she was demoted and subsequently terminated due to her pregnancy.  Defendant’s motion was denied, in part, because Plaintiff alleged that the owner made repeated offensive statements to her and other staff related to her pregnancy including constantly telling her that she would be fired because she is pregnant and informing the staff that he would fire the next woman who announces she is pregnant. These comments – if believed by a jury – could amount to direct evidence that Plaintiff’s pregnancy was a factor in her termination. The Court distinguished these comments from mere “stray remarks” because they were clearly related to Plaintiff’s pregnancy, were made by the owner who has the authority to fire Plaintiff, and specifically reference her termination – the challenged adverse employment action.   To avoid risk, training managers to prevent such remarks is critical.


Sensitivity to Electromagnetic Voltage Not a “Disability” Under the Americans With Disabilities Act

The Seventh Circuit Court of Appeals affirmed the grant of summary judgment dismissing a former employee’s claim that he was terminated because of his purported disability, “sensitivity to electromagnetic voltage.”  Hirmiz v. New Harrison Hotel Corp., Docket No. 16-3915 (7th Cir. Apr. 6, 2017).  The Court held that “sensitivity to electromagnetic voltage” was not a condition protected by the Americans with Disabilities Act (“ADA”) because it was not an impairment that “substantially limited” any of his “major life activities.”  The case was limited to that issue under the ADA because claimant did not try to establish protection by other ADA protections, i.e., a “record” of an impairment or being “regarded as” disabled by the employer.

This decision, particularly the Court’s note about the “regarded as” prong of the ADA definition of protected conditions, should serve as a reminder to employers that, even though an employee may not be suffering from a condition that technically is covered by the ADA, an employer’s perception that an employee has a disability can be sufficient for a disability claim to survive dismissal. While the plaintiff in this particular case did not put forth evidence that he was “regarded” as disabled, the court nonetheless considered that possibility in determining whether dismissal was appropriate.  The “regarded as disabled” prong of the ADA often is implicated in cases where an employee is discharged because of perceived psychological issues (even if the underlying psychological issue is not diagnosed or does not otherwise “substantially limit a major life activity”).  Accordingly, employers should avoid making such determinations and instead base all employment related decisions on legitimate business reasons unrelated to any actual or perceived disability and appropriately obtained medical documentation.

“Ignorance” May Not Be Bliss: Court Denies Employer’s Motion for Summary Judgment on an ADA Claim

In Preeson v. Parkview Medical Center, a federal court in Colorado denied Defendant’s motion for summary dismissal of a claim under the Americans with Disabilities Act (“ADA”).  Plaintiff alleged, in relevant part, that her termination from employment constituted discrimination on account of a disability.  Plaintiff suffered from Cyclic Vomiting Syndrome (“CVS”).  As such, she contended her absences from work were the result of sudden spells of nausea.  The employer argued that it was not on notice of this condition because she did not reveal it to her supervisor.

To establish a prima facie discrimination case under the ADA, Plaintiff must show that “her employer terminated her under circumstances giving rise to an inference that termination was based on Plaintiff’s disability.”  Further, if the employer provides any legitimate, non-discriminatory explanation for the adverse employment action, Plaintiff must demonstrate that the explanation is pretextual, or more likely motivated by discrimination.

In this instance, the employer admitted that CVS constituted a disability.  However, it contended that without knowledge of Plaintiff’s disability, it was impossible that her termination could have been “under circumstances giving rise to an inference of discrimination.” The Court disagreed.  It found that, at the very least, the employer was aware that Plaintiff suffered from frequent nausea and vomiting, which caused her to take leave under the Family and Medical Leave Act.  Additionally, Plaintiff informed her supervisor that she took medication to address her nausea.  The Court considered this evidence sufficient to satisfy Plaintiff’s prima facie burden.  The Court also found the employer’s reason for Plaintiff’s termination – falsification of time records – to be unconvincing and pretext for disability discrimination.  Specifically, the Court pointed to a supervisor’s disparaging comment that Plaintiff’s leave was “baloney” and found explicitly that this comment was “probative of an animus toward [Plaintiff] needing to take time off from work due to her disability.”

This decision underscores that employees may be able to succeed on ADA claims without specifically disclosing a diagnosis to their employers. Employers cannot take adverse action while ignoring objective information concerning an employee’s medical condition.  Further, supervisors should be educated about the impact of their off-the-cuff opinions about, inter alia, reasons for absences or workers’ medical conditions.

Employer Will Have to Do Heavy Lifting After Court Denies Motion for Summary Judgment

In Crain v. Roseville Rehabilitation and Health Care, the United States District Court for the Central District of Illinois denied an employer’s motion for summary judgment dismissing a claim under the Americans with Disabilities Act (“ADA”) and the Rehabilitation Act.  In Crain, Plaintiff alleged that her employer discriminated against her under the ADA because of her doctor-mandated weightlifting restrictions and failed to provide her with a reasonable accommodation.  The employer argued that Plaintiff was unable to perform the essential functions of her job as a Certified Nursing Assistant and Transportation Aide because job description required lifting up to fifty pounds.  Plaintiff contended that despite what was included in the job descriptions, her job, in practice, did not require her to do “heavy” lifting.

Under the ADA, employers must “make reasonable accommodations for the disabilities of an employee who can perform the essential functions of her job with or without accommodation.” 42 U.S.C. §§ 12112(b)(5)-(7). An essential job function is determined by considering several factors, including the “employer’s judgment as to which jobs are essential, written job descriptions . . . the work experience of past incumbents in the job, and/or the current work experience of incumbents in the job.”  Accordingly, in deciding whether lifting was an essential function of Plaintiff’s job, the Court analyzed not only the written job descriptions, but also evidence of how the job was performed in practice.  Because the employer could not refute evidence that in practice the job duties were inconsistent with the job description, the Court found that the “official job descriptions . . . [did] not tell the whole story.”

Job descriptions can be helpful in managing leave requests and defending ADA claims when they accurately describe the job’s essential functions. However, if the job description is inaccurate and does not reflect the current reality of the workplace, employers will be exposed to liability.  Employers should continuously revisit their job descriptions to ensure they accurately describe the duties actually performed.

Former Employee Advances Retaliation Claim Despite Execution of Settlement Agreement

An Ohio federal district court recently denied a former employer’s motion for judgment on the pleadings, holding that the plaintiff could proceed with her retaliation claim even though she signed a settlement agreement and general release. Bryant v. Central Community Health Board (Case no. 16cv00620 March 29, 2017).  This case focuses upon what is (and what is not) barred by a release agreement.   After Central Community Health Board (“CCHB”) terminated plaintiff’s employment in June 2012, she filed and eventually settled a discrimination lawsuit against CCHB.  Plaintiff executed the settlement agreement on April 10, 2015.  Prior to expiration of the seven-day revocation period set forth in the agreement, plaintiff alleged that her CCHB supervisor forwarded to plaintiff’s new employer an email conveying that plaintiff had violated professional boundaries with clients.  Her new employer subsequently terminated plaintiff’s employment.

In coming to its decision that the release did not bar the new claims, the Court noted that although any claims occurring before April 10, 2015, were barred by the settlement agreement, claims based on events after that date were not (even though she could have revoked the agreement and proceeded upon pre-existing claims).

As to the new claim, retaliation could exist despite her status as a former employee. The Court explained that although Plaintiff was no longer employed by CCHB, in the retaliation context, former employees were considered “employees” under Title VII. Plaintiff’s initial lawsuit constituted protected activity. Moreover, Plaintiff’s allegation that the April 14 email was sent in an effort to get her fired for filing a lawsuit against CCHB satisfied the causal nexus prong of her retaliation claim.

The decision highlights that execution of a settlement agreement does not bar future claims of discrimination or retaliation. As such, employers should be mindful about their communications concerning former employees in the wake of a settlement agreement. Supervisors should be educated that they cannot provide information to a worker’s new employer.  Only Human Resources can do so and, even, then, solely as permitted by the employer’s reference policy.  All should be told that they represent the company and that their opinions and desire to communicate about a worker are subject to the employer’s communication policies.

Appeals Court First To Hold Sexual Orientation Discrimination Covered By Title VII

The Seventh Circuit Court of Appeals held this week that sexual orientation discrimination is covered under Title VII of the Civil Rights Act.  The federal appellate court is the first to do so.  Just last week, we reported that the Eleventh Circuit held to the contrary.  For a complete analysis of the Seventh Circuit’s decision, see our firm’s article by clicking here.



Second Circuit Finds Allegations of Gender Stereotyping Sufficient to Permit Claim to Move Forward

In Christiansen v Omnicom Grp., Inc. (Docket No. 16-748), Plaintiff alleged that his supervisor drew a picture of him in tights and a low-cut shirt “prancing around,” and made a poster depicting plaintiff’s head attached to a female body clad in a bikini, which resulted in one co-worker referring to plaintiff as a “submissive sissy.”  In addition, the supervisor allegedly told other employees that plaintiff “was effeminate and gay so he must have AID[S].” 

The question presented was whether the supervisor’s conduct violated Title VII’s prohibition against gender (but not necessarily sexual orientation) discrimination.  In reversing the District Court’s ruling, the Second Circuit discussed at length the difference between sexual orientation discrimination (which is not prohibited by Title VII) and gender stereotyping (which is considered gender discrimination and thus banned by Title VII).  The Court reasoned that the sexual orientation of the plaintiff was immaterial to the reasons behind the supervisor’s conduct.  Most of the behavior, the Court concluded, had more to do with how he perceived that a man is supposed to act; regardless of that person’s sexual preference.   The Court relied upon the U.S. Supreme Court’s decision in Price Waterhouse v. Hopkins.  In that case, a female was denied partnership because she did not act feminine enough (which had nothing to do with her sexual orientation).  Thus, the Second Circuit stated, “gay, lesbian, and bisexual individuals do not have less protection under Price Waterhouse against traditional gender stereotype discrimination than do heterosexual individuals.”  The Court went on to note that prior decisions merely hold that being gay, lesbian, or bisexual, standing alone, does not constitute nonconformity with a gender stereotype that can give rise to a cognizable gender stereotyping claim.

As the Court noted, there is a fine line oftentimes between sexual orientation discrimination and gender stereotyping.  Employers should strongly consider training for supervisors to understand the nuances involved in this developing area of the law so as to minimize future liability.