Single Ageist Comment May Be Insufficient to Sustain Age Discrimination Claim

Q.  If a supervisor makes a comment about an employee’s age, will the company be liable for age discrimination?

A.  While ageist comments are never appropriate in the workplace, an Illinois federal court recently ruled that a single age-related comment was insufficient for an employee to prevail on an age discrimination claim.

In Maglieri v. Costco Wholesale Corp., No. 16-cv-7033 (N.D. Ill. Mar. 14, 2018), the plaintiff employee alleged, among other claims, discrimination and retaliation under the Age Discrimination in Employment Act (“ADEA”). The 54-year old plaintiff worked in a Costco bakery and was directly supervised by a 57-year old manager. According to the plaintiff, the manager repeatedly yelled at her in a “nasty” and “intimidating” voice about working faster. But according to a co-worker, the manager was mean and abrasive to all subordinates and would sometimes yell to motivate employees. The co-worker also testified, however, that she once recalled the manager stating she was “kind of surprised that [Costco] didn’t hire someone younger” when plaintiff was hired. All of the plaintiff’s performance reviews reflected the manager’s concerns with plaintiff’s work speed.  However, plaintiff was not terminated or demoted and did not otherwise experience a change in her job duties.

The ADEA protects employees age 40 and above from age-based discrimination in the workplace. Employers may not discriminate against employees in any manner on the basis of age, and employers may not retaliate against employees who oppose any practices made unlawful by the ADEA. The plaintiff in this case alleged that she was the victim of both discrimination and retaliation.

In order to prove an age discrimination claim, plaintiff needed to show that her employer subjected her to an adverse employment action (such as termination, change in job duties, or a hostile work environment) because of her age. As the Court noted, “not everything that makes an employee unhappy is an actionable adverse action.” Although the manager’s yelling and alleged abrasiveness could present a Human Resources problem, merely being mean or raising one’s voice does not constitute a violation of the law.

The Court observed that plaintiff did not suffer termination or a change in job duties and also concluded that plaintiff was not the victim of an age-based hostile environment. According to the Court, it is not enough that an employee subjectively believes an employer’s conduct to be discriminatory. To prevail on a hostile environment claim, a plaintiff must show that the complained of behavior was both subjectively and objectively offensive. The evidence in this case showed that there was only one comment about age (the manager’s comment that she was surprised Costco did not hire someone younger). The Court found that “this sole age-based comment, which was not directed at [plaintiff] and did not contain any prejudiced views or derogatory slurs, is not enough to establish that [the manager] harassed [plaintiff] . . . because of [her] age.”

The Court concluded that the manager’s criticism about “slowness” and “lack of urgency,” were not a veiled way of harassing plaintiff about her age. While the ADEA prohibits employers from relying on age as a proxy for an employee’s work-related characteristics—such as productivity—the ADEA does not bar employers from focusing on the work-related characteristics themselves. According to the Court:  “Not completing work quickly enough is a legitimate workplace criticism.”

Employers should be aware that a single comment that is discriminatory on its face, such as a racial slur, could be sufficient to establish a hostile work environment.  In fact, courts have concluded that such singular comments are sufficient to bring a claim under various state and federal employment discrimination laws.

Although the employer in the above-referenced case managed to avoid liability, all employers would be well-served to conduct non-discrimination and anti-harassment training in the workplace that focuses not only on age-based discrimination and harassment but also on other forms of harassment based on sex, race, disability, and other protected traits. Pepper Hamilton’s Labor and Employment Practice Group can conduct anti-harassment training sessions for both your managers/supervisors and rank and file employees. Contact a Pepper Hamilton Labor and Employment attorney to discuss how we can tailor a training program to the needs of your workforce.

Lee Tankle

Confidential Harassment Settlements No Longer Subject to Tax Deduction

Q.  Has the #MeToo Movement led to any changes on how companies settle harassment complaints?

A.  While there are numerous legislative initiatives on the horizon intended to change how employers handle harassment complaints in light of the #MeToo Movement, the most significant federal change is a little known revision to the Tax Code recently enacted.

The Tax Cuts & Jobs Act prohibits either the employer or the employee from taking a tax deduction for (1) any settlement or payment related to a sexual harassment claim that is the subject to a non-disclosure agreement; and (2) attorneys’ fees related to such settlement or payment. The intent of the statute is to discourage parties from keeping harassment claims secret and thereby reduce the risk that the alleged harasser will strike again.

The term “related to” is not defined in the statutory language. It is possible that the settlement proceeds for any claim that merely mentions the word “harassment” may not be deductible, even if the majority of the allegations involve other issues.  However, we believe that the IRS likely will allow parties to allocate the portion of the proceeds that is for settlement of harassment allegations in those cases in which harassment is part of a larger suit involving other disputes.

The impact of the deduction for attorneys’ fees also is significant. Most claimants pay their attorneys on a contingent fee basis, meaning that the settlement proceeds are split between the claimant and the attorney, often as high as 60 percent claimant/40 percent attorney.  Since proceeds from an agreement containing a nondisclosure provision cannot be deducted, this means that the employee may not be able to deduct even that part of the proceeds that goes directly to his or her attorneys.  This is true regardless whether the employer pays the attorney directly, or pays the proceeds to the employee who then pays his or her attorney.

The new rule may have several detrimental consequences to both parties and the public. As a confidentiality provision is an important component of most settlement agreements, the new tax burden will make settlements more costly.  Employers may be less interested in pursuing such settlements, resulting in harassment claims clogging the courts.  Additionally, employees who would rather keep their claims private due to the sensitive nature of the allegations will have to face the public eye.

While it remains to be seen how the IRS interprets this new provision, both employers and employees must consider the tax consequences of any agreement that they seek to keep confidential.

–Tracey E. Diamond

 

How to Celebrate the Holidays without Ending Up in Court: Tips for Hosting a Corporate Holiday Party

Q.  Do you have any tips on how to ensure that our company holiday party does not lead to a new year liability?

A.  As the year comes to a close, many employers often celebrate with a holiday party as a way to thank employees for their contributions. The holiday party is meant to build comradery with co-workers, and provides an opportunity for all employees, management and non-management, to “let their hair down”.  A festive occasion however, can turn into a legal nightmare if employers fail to set expectations.  Everyone has heard stories of an employee (or two) having too much to drink at the holiday party and making an inappropriate joke, getting “touchy” with a co-worker, or getting into a car accident.  By following a few simple rules, employers can attempt to prevent such legal disasters.  Below are some suggestions to help ensure that your holiday party does not end up as the focus of a lawsuit.

  • Social Gathering Policy. If the company has a social gathering policy which details behavioral expectation in social settings, it should re-circulate this policy to all employees prior to the holiday party with a special note to address expectations with the respect to the upcoming holiday party. If the company does not have a social gathering party, this would be a good time to create one and send to all employees prior to the event. In lieu of a creating a social gathering policy, a company should, at a minimum, draft a memo or email to all employees encouraging them to attend the holiday party, but also reminding them of behavioral expectations, including but not limited to alcohol consumption, arranging for transportation, and the anti-harassment policy.
  • Have a Designee.   Employers may want to consider having a corporate designee, such as a Human Resources professional, attend as the sober “eyes and ears” of the party. If the designee sees or hears something inappropriate, he/she can try to temper the situation before it gets out of hand.
  • Control Alcohol Consumption.  A “dry” holiday party may have very limited attendance. When serving alcohol, however, the employer should consider whether to limit the alcohol to beer and wine. Even if the employer does not limit the alcohol to beer and wine, it should hire a licensed bartender who can identify any individuals that have had too much to drink, stop serving him/her alcohol and possibly alert the sober designee to ensure that the individual gets home safely. Another measure to control alcohol consumption is to close the bar prior to the end of the party, so that attendees have some time to “sober up.”
  • Make Sure People Get Home Safely. Arranging for car service for all employees may be an expense that employers are not willing to undertake, however, it should be strongly considered, especially in states like New Jersey, where a host that served or sold alcohol can be found liable for injuries sustained from an intoxicated driver.  If an employer is unable to pay for transportation for attendees, it may consider offering a stipend to cover some of the attendees’ transportation costs, or in the alternative, the employer can coordinate with a car share service to provide discounted transportation to attendees.
  • Make the Party Voluntary. A holiday party, especially one that occurs after working hours, should not be a mandatory event. An employer want to mandate participation to ensure employees attend.  However, when the event is after hours, this could potentially give rise to wage and hour claims. The best policy is to have voluntary attendance, which should be clearly communicated to all employees.
  • Promptly Investigate/Address Any Bad Behavior. Even after putting these procedures into place, there may still be one (or two) bad apples; likely someone who has had too much to drink and does or says something inappropriate. If this is the case, the employer should promptly investigate the allegations and take appropriate remedial action.
  • Follow-Up With Attendees. Finally, an employer may consider sending attendees a quick survey asking for feedback after the holiday party. This can serve two purposes: (1) if issues arose that the employer is unaware of, the attendee may share it via the survey and (2) if there is future litigation, it can be used as evidence to show that the employee never reported the incident.

 

Kali T. Wellington-James

Tips for Addressing and Investigating Sexual Harassment Allegations in the Workplace in Light of the #MeToo Movement

Q.  There is a lot of conversation in the national media about the #MeToo movement. How do I ensure that my employees are treating each other properly?

A.  In October of 2017, the two-word hashtag,“#MeToo,” created a social media movement amongst women and men who have experienced sexual harassment. The hashtag was an attempt to educate society about the prevalence of sexual harassment. As a result of the movement, men and women all over the world have been reporting inappropriate behavior in the workplace.  Thus, employers need to be ready for the impact of the MeToo movement and make sure that they have the appropriate policies and procedures in place to effectively address harassment complaints.

    • Be Proactive. Employers have a duty to implement sound, reasonable employment practices aimed at prohibiting and remedying workplace harassment, such as implementing and enforcing anti-harassment policies and procedures, providing sexual harassment training programs, and creating effective reporting mechanisms. Employers should make sure that their anti-harassment policies are legally compliant and their trainings are up-to-date.
    • Take Every Complaint Seriously. Employers are legally required to investigate employee complaints regarding harassment, discrimination, and retaliation. It is important for employers to adequately address every complaint it receives, and recognize that sexual harassment encompasses a variety of behaviors. Sexual harassment appears in many forms, including but not limited to distributing or displaying inappropriate materials, sexual jokes and innuendos, sexual contact and assault, unwelcome sexual propositions, distributing or displaying inappropriate emails, leering and staring, obscene gestures, unwelcome touching or groping, forwarding inappropriate text messages and emails, and making suggestive comments.
    • Begin The Investigation Promptly. It is important to investigate allegations of harassment thoroughly, impartially and quickly. Delaying an investigation makes it more difficult to collect evidence and can signal to employees that their complaints are not being taken seriously.
    • Create An Investigation Plan. Before beginning any investigation, it is helpful to generate an investigation plan. The plan should clearly define the purpose and the scope of the investigation by identifying: the individual(s) and the issue(s) that are being investigated, who will be interviewed, and what evidence needs to be collected. Investigation plans must, however, be flexible, and allow the investigator the ability to adjust the plan in light of information received and “follow the evidence where it leads.”
    • Keep the Investigation Confidential. Employers should ensure that the contents of the investigation are kept as confidential as possible. The employer cannot promise complete confidentiality because the investigator must be free to question appropriate witnesses about the events so that they can obtain a complete picture of the incident.   But information about the investigation should only be shared with individuals who have a need to know.  Failure to treat a complaint with the appropriate level of confidentiality could result in employees being hesitant to report their issues and concerns in the future.
    • Maintain Adequate Documentation. Employers should document the investigative process in case it ever has to defend its investigation during litigation or an EEOC or state agency investigation. Employers should document when the initial complaint was received, when the investigation began, the evidence collected, individuals interviewed, and the resolution. When taking notes, it is important that they are taken contemporaneously, and identify the author of the notes and the date they were taken. In addition, employers should keep in mind that these notes may become evidence in a litigation, and therefore stick to the facts and avoid using labels or drawing legal conclusions in written memoranda.
    • Maintain Objectivity. Investigators must conduct an unbiased investigation. It is recommended that, when feasible, workplace investigations include a two-person investigation team. In some instances it may be necessary to hire independent investigators.  If an employer chooses to utilize internal investigators (HR professionals, general counsel, etc.) it is important to make sure the investigators have the proper training.   Consider whether the company can (and should) keep documents created during the investigation privileged from disclosure.
    • Take Appropriate Remedial Measures. Remedial measures can be implemented before, during, or after the investigation. Depending on the nature of the complaint, it may be necessary to separate the complainant and the accused while the investigation occurs, or place the accused on leave. If the investigator concludes that unlawful conduct, or even inappropriate conduct that may not rise to the level of actionable harassment, has occurred, the employer must take reasonable action. The action the employer takes must be directed to stopping the conduct and any ongoing harm that is occurring due to the conduct. Effective remedial measures may take many forms. When the employee who committed the conduct continues with the employer, there should generally include an acknowledgement of the prohibition against harassment and additional training.
    • Proactively Avoid Retaliation. Claims of retaliation are very common among employees who raise complaints about sexual or other forms of harassment. Employers must make clear to all involved in the complaint, investigation and remedial measure processes that retaliation will not be tolerated. Any remedial measures taken by the employer should include a clear message that retaliation against the complaining party or others involved in the investigation is prohibited, and provide the individual with a mechanism for informing the employer if he or she believes he or she is being retaliated against for making a complaint and/or participating in the process.
    • Be Consistent. Employers must ensure that all complaints are investigated in accordance with their policies and procedures. It is also important that similar conduct receives a similar level of discipline.

Incorporating the following tips into your workplace investigations will help employers identify and eliminate unlawful harassment and avoid the incalculable harm done to the workplace when harassment occurs and is not remedied. These actions will also reduce a company’s liability risk from harassment and discrimination claims. If, as an employer, you feel that sexual harassment is an issue in your workplace, you may want to hire outside counsel to conduct a full investigation and make recommendations.

Renee Manson

 

Uber Sex Harassment Scandal Is Sobering Reminder of the Costs of Ignoring Complaints

Uber made headlines last week when Susan Fowler, a former engineer, claimed that she was harassed by her direct supervisor and her complaints were ignored by the human resources department. Uber took another hit a few days later when a recently-hired executive resigned amidst allegations that he had harassed employees at his former company.

How can you prevent your company from becoming the next media story?

There are several takeaways from the Uber incidents:

  1.  Distribute a written policy prohibiting harassment based on sex and other protected categories. The policy should clearly explain the legal definition of harassment, provide examples of conduct deemed offensive, provide alternative avenues for an employee to lodge a complaint, explain the investigation process, and promise absolute protection against retaliation for good faith complaints of harassment.
  2. Provide harassment prevention training at regular intervals.  Not only is such     training crucial to ensuring that employees understand their rights and obligations, but it also may provide an affirmative defense if an employee sues after failing to make an internal complaint.
  3. Train supervisors on their responsibilities to lead by example.  Supervisors need to be taught how to recognize harassment and what to do if they witness or receive a complaint about inappropriate conduct in the workplace.
  4. Take all complaints of harassment seriously and perform a prompt and thorough investigation.  Analyze emails and text messages as part of your investigation.  Ms. Fowler said that the multiple emails that she forwarded to HR were ignored.  Electronic communications can assist HR departments in determining what really happened in what sometimes can be a “he said/she said” situation.
  5. Take corrective action if appropriate, even if it is the first offense. According to Ms. Fowler, Uber didn’t take her complaint seriously because her supervisor was a “high performer.” Ensure that your evaluation metrics take into account professional behavior in addition to job performance.
  6. Never forget that diversity matters.  Ms. Fowler emphasized the low number of women on her team and in the company in general.  Promoting diversity based on gender, race, ethnicity and other categories helps to ensure that all voices are heard.
  7. Take a hard look at your hiring practices.  When performing background and reference checks, dig into information about previous claims against the prospective employee for workplace misconduct.  Keep in mind, however, that certain federal and state laws may govern your company’s ability to gather this type of information.
  8. Finally, never forget the power of the Internet.  Ms. Fowler’s story gained immediate national attention after she published a detailed essay on her personal blog.  While the Internet is a powerful place to promote your brand, this is not the sort of publicity most companies would like to see.

– Tracey E. Diamond