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Supreme Court Decisions and Impact on Employment Discrimination, Retaliation Cases


Employment Practices Liability Insurance for BusinessesEmployment Practices Liability Insurance for Businesses

June 2013 saw some landmark Supreme Court decisions that have the country a buzz. Two of the Court’s decisions raise the standards for American workers to prove retaliation and discrimination in the workplace. The Court was divided (5-4) on both of its rulings, with one of the Justices calling for Congress to take action.

Basically, the Supreme Court in one of the cases ruled that a person must be able to hire and fire someone to be considered a supervisor in discrimination lawsuits, which makes it more difficult to lay blame on a business for a co-worker’s racism or sexism. In the other case, the court limited how juries can decide retaliation lawsuits, saying victims must prove employers would not have taken action against them but for their intention to retaliate.

The first case involved Maetta Vance, who was a catering specialist at Ball State University, and accused a co-worker, Shaundra Davis, of racial harassment and retaliation in 2005. Vance sued the school under the Civil Rights Act of 1964, saying the university was liable since Davis was her supervisor. But a federal judge threw out her lawsuit, saying that since Davis could not fire Vance, she was only a co-worker, and since the university had taken corrective action, it was not liable for Davis’ actions. The 7th U.S. Circuit Court of Appeals upheld that decision, and Vance appealed to the Supreme Court. Justice Samuel Alito, who wrote the majority opinion, said for the university to be liable, Davis must have had the authority to “hire, fire, demote, promote, transfer, or discipline” Vance.

“We hold that an employee is a ‘supervisor’ for purpose of vicarious liability under Title VII if he or she is empowered by the employer to take tangible employment actions against the victim,” Alito said. “Because there is no evidence that BSU empowered Davis to take any tangible employment actions against Vance, the judgment of the Seventh Circuit is affirmed.”

According to lawyers not related to the case, the court accepted the 7th Circuit’s definition of a supervisor and rejected the EEOC’s definition, which employers do not like because the agency’s definition “leaves lots of room for argument” about who is a supervisor.

The other case involved the University of Texas Southwestern Medical Center, which wanted a discrimination lawsuit won by a former employee, Dr. Naiel Nassar, thrown out. Nassar, after complaining of harassment, left the University in 2006 for another job at Parkland Hospital, but the hospital withdrew its job offer after one of his former supervisors opposed it. Nassar sued, saying the University of Texas Southwestern Medical Center retaliated against him for his discrimination complaints by encouraging Parkland to rescind its offer. A jury awarded him more than $3 million in damages. The Medical Center appealed, saying the judge told the jury it only had to find that retaliation was a motivating factor in the supervisor’s actions, called mixed-motive. Instead, it said, the judge should have told the jury it had to find that discriminatory action wouldn’t have happened “but-for” the supervisor’s desire to retaliate for liability to attach. Justice Anthony Kennedy, who wrote the opinion, agreed with the lower court and the university, saying people “must establish that his or her protected activity was a but-for cause of the alleged adverse action by the employer.” But he didn’t rule completely for the Medical Center, sending the case back to the lower courts after saying a decision on the resolution of the case “is better suited by courts closer to the facts of this case.”

Both of these cases underscore the importance for strong employment best practices throughout an organization and the need for Employment Practices Liability Insurance (EPLI). EPLI provides coverage for most claims of harassment, discrimination, wrongful terminations, breach of contract, and workplace misconduct. It covers not only actual monetary losses by the plaintiff, but also costs of emotional and physical distress. Even if your company is not liable, there can be significant defense costs. Additionally, if there are regulatory or government investigations involved, costs can escalate.

The Equal Employment Opportunity Commission (EEOC) has been vigilant in stepping up its activity in investigating companies for alleged employment practices violations. It’s vital for any company to protect itself with EPLI. Axis Insurance Services, LLC, a leading professional and management liability insurance specialist, offers employers EPLI coverage, including large corporations and small businesses. Give us a call at (877) 787-5258 to discuss our insurance programs.

Source: Associated Press, Business Insurance

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Blogged on: July 2, 2013 by Mike Smith
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