How to Avoid Liability for Discrimination

Posted on September 17, 2009 by Patrick Smith

A recent decision from the Eighth Circuit provides good training material about what "not to do" if you want to your company to avoid being liable for discrimination, and possibly punitive damages.

The EEOC filed suit against Siouxland Oral and Maxillofacial Surgery Associates, a medical clinic in Sioux Falls South Dakota.   The complaint alleged that Siouxland terminated one employee and refused to hire another because of their pregnancy.  

The first employee, Richelle Dooley, had worked for the clinic for two days when she was terminated.   She told the office manager she was pregnant at the time she was filling out health benefit forms.   The next day during a meeting with the business manager, the managing partner was informed about Dooley's pregnancy.   He reportedly responded as follows:

"the young lady we just hired is going to have a baby this summer, she isn't going to be available to work.  It doesn't make any sense to begin training her...when she won't be able to work the summer.... [W] are going to have to let her go."

The business manager and another physician in the clinic apparently told the managing partner they could not terminate Dooley because of her pregnancy.  Nonetheless, she was fired.

When Dooley asked the business manager why she had been fired after only her second day on the job, she says she was told:

"your baby is going to be due during the busy season";  the clinic "never would have hired [you] if they had known [you were] pregnant." 

A few months later, the office was seeking an employee to work in central sterilization and post-operative recovery.   Angie Gacke applied for the job.  The following is reported to have occurred in the job interview:

Applicant:  "I don't know if this is a problem or not, but I do want to let you know that I am four months pregnant."

Interviewer: "yes, it's a problem.  You are just going to end up causing more work for everybody else than you will be helping them."   

Applicant:  "my due date is in August"

Interviewer: "that's the middle of our busy season, and we don't grant any vacation or anything to anybody during the busy season."

The clinic's defense to Gacke's failure to hire claim was that she was overqualified.   The interviewer had written the following on a copy of her resume:

"overqualified for job", she "needed insurance", and she was "4 months pregnant!"

Based upon this evidence, the jury found Siouxland had discriminated against the plaintiffs because of their pregnancy.  However, the trial court refused to instruct the jury about punitive damages.    On appeal, the Eighth Circuit found there was evidence managerial employees engaged in discrimination while knowing that such discrimination was prohibited by federal law.  The Appellate Court held it was error to grant Siouxland judgment as a matter of law on the punitive damages claims, and remanded for a new trial solely on the issue of punitive damages.

Enough said.

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Iowa Supreme Court Issues Important Ruling on Pregnancy Discrimination

Posted on September 2, 2009 by Patrick Smith

Last week the Iowa Supreme Court issued a ruling in a pregnancy discrimination case that decided three issues significant to employers and employment litigators.  

The first issue in DeBoom v. Raining Rose, Inc. involved whether an employee must actually be pregnant at the time of a termination to be protected by the Iowa Civil Rights Act's prohibition against pregnancy discrimination.   The Plaintiff in DeBoom was terminated one week after returning from maternity leave, allegedly because of poor performance.  The Iowa Supreme Court held in a case of first impression that the ICRA's express protection of employees disabled by pregnancy extends to women "affected by pregnancy, childbirth, and other related conditions."  This includes women who have recently returned to the workplace after maternity leave.  In so ruling,  the Court followed the interpretation by many courts of the federal Pregnancy Discrimination Act (PDA), even though the language of the ICRA is different than that of the PDA.  The Court reasoned that such a broad interpretation was "necessary to effectuate the purpose of the statute." 

The crucial issue, therefore, is not whether the employee is pregnant at the time of the termination, but whether the employer was motivated by the fact of her pregnancy.  Interestingly, however, the Court cautioned that if the employer's reason for terminating plaintiff was because she decided after returning from leave to prioritize family over work, it would not constitute discrimination because of pregnancy under the ICRA.  According to the Court, "such a decision can be made by men as well as women and, therefore, is not based on the unique capacity of women to bear children so as to fall within the scope of Iowa's statute."   This is a notable distinction, especially given the fact that, under federal law, discrimination against caregivers is sometimes viewed as discrimination on the basis of sex.   (See this post for discussion of caregiver discrimination).  Employers should not interpret this cautionary note as giving them a free reign to take adverse action against new mothers returning from leave.

The second significant issue in DeBoom was whether a plaintiff is entitled to a "pretext" instruction under the ICRA.  Such an instruction tells the jury they may find that unlawful discrimination occurred if the plaintiff proves the employer's stated reason for the adverse action was not the real reason, but merely a pretext to hide discrimination.    The Court held that a pretext instruction "is required where, as here, a rational finder of fact could reasonably find the defendant's explanation false and could infer from the falsity of the explanation that the employer is dissembling to cover up a discriminatory purpose."

While the employer's proffered reason for an adverse action is always an important issue in employment litigation, this ruling makes it more likely courts will submit these claims to the jury, even if there is little evidence of discriminatory intent beyond the supposedly false reason.  

The third important ruling in DeBoom concerns whether the jury must find that the employer's unlawful reason was "a motivating factor" in the employment decision, or "a determining factor".   While on the surface these two terms are very similar, the key is how they are defined under Iowa law.    In cases where an employee alleges wrongful discharge against public policy, the Iowa Supreme Court requires that the wrongful reason be a "determining" factor in the discharge.    A "determining" factor is a reason that tips the scales decisively one way or the other.  However, most federal courts use the term "motivating" factor in discrimination claims, which is generally defined to mean the unlawful reason played a part in the decision, but was not necessarily the only reason.    The Iowa Supreme Court ruled that "motivating" factor is the correct standard by which to instruct the jury.  

One potential side effect of the Court's ruling on the "motivating" versus "determining" factor issue is that it will encourage age discrimination plaintiffs to file in State court under the ICRA, and avoid asserting a claim under the federal Age Discrimination in Employment Act (ADEA).  Because of the U.S. Supreme Court's decision in Gross v. FBL Financial Services (discussed in a previous post here), claims under the ADEA will no longer instruct on "a motivating factor".   Under the ADEA after Gross, plaintiffs must prove age was the determining factor in the adverse action, not merely a motivating factor.

The jury in DeBoom ruled in favor of the employer, but the Iowa Supreme Court reversed and remanded for a new trial based upon the faulty jury instructions.   It will be interesting to see if the new instructions change the result when the case is tried again.

 

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