A recent district court ruling that granted the Equal Employment Opportunity Commission a summary judgment win on behalf of an employee in a discrimination case highlights the increasingly aggressive legal tactics the EEOC is employing.
It also may force companies to rethink the use of “last-chance” agreements in disciplinary proceedings with employees.
Summary judgments, which may be requested by either party in a lawsuit as a way to quickly dispose of a case without a trial, are rare in discrimination cases because the facts of the case are almost never cut and dry. To win a summary judgment, the material facts have to be indisputable, so very rarely do plaintiffs ask for—or win—summary judgment in an employment discrimination case due to the burden of proof that is required.
Employees who file discrimination claims have to prove beyond a doubt that the adverse action was directly motivated out of discrimination. In most retaliation cases, however, “employers can always come up with some subjective basis for their decision,” says Steven Gutierrez, manager of the labor and employment group at Holland & Hart.
“The factual disputes almost always will preclude summary judgment for the plaintiff,” agrees Chuck Lawson, of counsel with law firm Grant Konvalinka & Harrison. So it's rare, he says, that a plaintiff would not only make a motion for summary judgment, but also succeed in doing so.
The fact that the EEOC was willing to roll the dice on a request for summary judgment is the latest indication that the EEOC is attempting to be “much more aggressive in the role that it's been given by the government” to enforce workplace discrimination laws, says Gutierrez.
The case, EEOC v. Cognis, stems from a discrimination claim in violation of Title VII of the Civil Rights Act brought against Cognis Corp., a German-based subsidiary of chemical company BASF, by former employee Steven Whitlow. Whitlow alleged he was fired for opting out of a “last-chance” employment agreement to waive his right to file any discrimination claim—even charges based on conduct that might occur in the future.
Typically, employers use last-chance agreements in lieu of terminating an employee who has been disciplined for inappropriate behavior or conduct that has occurred in the past. It's essentially the employee's last-chance warning to clean up his or her act. The agreements sometimes include a waiver by the employee of the right to file discrimination suits.
“My clients use last-chance agreements with great frequency for a variety of reasons, the most important of which is that they set forth the future obligation of the employee to comply with company policies moving forward,” says Gutierrez.
The employment at issue in Cognis, however, did not merely seek to bar claims based on past conduct, but also on all future conduct of Cognis for the two-year term of the agreement. For an employer to bar claims for conduct that hasn't even occurred yet is “pretty extreme,” says Lawson. “Most employers don't ask their employees to do to that.”
“Employers doing business in the United States should take heed; duping your employees into believing their rights are waived is a risky and illegal proposition.”
—John Hendrickson,
Regional Attorney,
EEOC
The agreement further waived Whitlow's right to file charges with any administrative agency or civil rights commission, including the EEOC. According to the EEOC complaint, when Whitlow refused to be bound by the agreement and give up those rights, the company terminated him in retaliation.
“Cognis conditioned Whitlow's employment on his agreement to give up his right to make any federal complaint of employment discrimination,” the EEOC said. The EEOC further alleged that Cognis retaliated against other employees who were forced to sign the agreement for fear of termination, giving up their rights to seek relief for any potential discriminatory behavior.
In approving the EEOC's motion for summary judgment, the U.S. District Court for the Central District of Illinois, in a ruling issued May 23 found that Whitlow engaged in protected activity simply by revoking his willingness to waive the right to file a claim of liability, and that a jury “could not reasonably conclude that the employee's revocation of the agreement was not the direct cause of his termination,” the court said.
EEOC WINS SUMMARY JUDGMENT
Below is an excerpt from the EEOC's press release announcing their court victory:
A federal judge has ruled that Cognis Corporation, a German-based part of multinational chemical company BASF, unlawfully retaliated against an employee for refusing to waive his rights to file a discrimination charge, the U.S. Equal Employment Opportunity Commission (EEOC) announced today.
Chief U.S. District Judge Michael P. McCuskey of U.S. District Court for the Central District of Illinois, in an opinion issued May 23, held as a matter of law that Cognis illegally retaliated against the employee. The court said that Cognis fired Steven Whitlow after he revoked his willingness to be bound by a “last-chance” employment agreement because it would have stripped him of his rights to seek relief for discrimination or to file a charge with the EEOC.
In its lawsuit filed Aug. 18, 2010, the EEOC had alleged that Germany-based Cognis retaliated against Whitlow, a longtime employee at its Kankakee, Ill., facility, in violation of Title VII of the Civil Rights Act of 1964 (EEOC v. Cognis Corp., 10-CV-2182, C.D. Ill.). As a condition of his continued employment, Cognis required Whitlow to sign a “last-chance” agreement that prohibited him from filing a discrimination charge with the EEOC—even a charge based on conduct that might occur in the future. Thus, according to EEOC, Cognis conditioned Whitlow's employment on his agreement to give up his right to make any federal complaint of employment discrimination. When Whitlow refused to be bound by that agreement, the company fired him, the court found.
The EEOC's lawsuit also charged that a class of employees who signed similar last-chance agreements was also retaliated against because Cognis forced them to make a choice between termination and signing agreements that stripped them of their right to file charges and seek relief for future discriminatory conduct—or at least deterred them from doing so. At the court's invitation, EEOC filed a summary judgment motion on Jan. 6, 2012, asking the court to resolve all issues in the case in EEOC's favor, leaving the only issue for trial being the question of what damages are due to Whitlow and the class.
In granting the EEOC's motion with regard to Whitlow, the court noted, “It is not often that a plaintiff moves for or is granted summary judgment on a Title VII retaliation claim.” Yet the court held that no jury could reasonably conclude that Cognis did not unlawfully retaliate against Whitlow when it fired him, and that Cognis's argument to the contrary “defies simple logic.” The only issue now remaining for trial with regard to Whitlow is the amount of damages due to him.
As for the class of employees who signed last-chance agreements but were not terminated as Whitlow was, the court denied EEOC's summary judgment motion, and those claims will now proceed toward trial. The court held that a jury could conclude that Cognis engaged in unlawful anticipatory retaliation against the class when it required those employees to sign agreements waiving their right to file charges of discrimination out of fear that they might seek to exercise that civil right. The court noted that the language of the agreements supported the inference that Cognis acted unlawfully out of just such a fear “because fear of such protected activity seems to be one of the only reasons for placing the retaliatory provision” in the last chance agreements.
“Filing EEOC charges is a fundamental right of American employees, and this agency always stands ready to protect that right,” said EEOC's Chicago District Director John Rowe. “This court's opinion should cause employers to remember that seeking to dissuade employees from exercising that right is not only bad policy, it's a violation of federal law which can give rise to very substantial liability.”
The EEOC's supervisory trial attorney on the case, Gregory Gochanour of Chicago, added, “We are very pleased with this court's decision, both with regard to Whitlow and to the class. Whitlow is a brave man, willing to risk—and actually suffer—termination from a job he held for 19 years, rather than let Cognis strip him of his rights. We expect he will be fairly compensated for his damage attributable to Cognis's unlawful actions. Beyond that, we are highly optimistic that at trial, the jury will find in favor of the other class members and award them just compensation.”
Source: Equal Employment Opportunity Commission.
The court earlier rejected a summary judgment motion by Cognis, who argued that the decision to terminate Whitlow occurred prior to the protected activity taking place for his failure to meet performance expectations. “This argument is flawed and does not create a genuine issue of material fact regarding causation,” the court said.
Cognis' argument ignores the “undisputed fact,” that the agreement Whitlow signed specifically stated, “‘Cognis has decided to offer Whitlow one last chance to continue his employment in lieu of termination.'” This fact alone makes it clear that the decision to terminate Whitlow had not been previously made, the court found.
Because the EEOC won its motion for summary judgment, the only issue now remaining for trial is the amount of damages due to Whitlow. The court, however, denied the EEOC's second motion for summary judgment on the case involving the class of other employees, since they were not ultimately terminated. Those claims will now go to trial.
Implications for Employers
Despite the unique facts of the case, the wider lesson for employers is to review any last-chance agreements you may have in place with employees to make sure they don't step on the toes of the EEOC's enforcement authority.
“It's not just any employee who will quit his job in order to protect himself—and that's what employers like Cognis are banking on,” said the EEOC's Chicago regional attorney John Hendrickson. “But employers doing business in the United States should take heed; duping your employees into believing their rights are waived is a risky and illegal proposition, and the EEOC is on the lookout for cases like this where employees are most vulnerable to employer excess.”
EEOC Chicago District Director John Rowe warned that employees have a “fundamental right” to file EEOC charges. “This court's opinion should cause employers to remember that seeking to dissuade employees from exercising that right is not only bad policy, it's a violation of federal law which can give rise to very substantial liability,” he said.
On a practical level, that means that employers should craft the language in a last-chance agreement in such a way as to waive an employee's rights to file lawsuits under all applicable state and federal laws, while staying away from any reference to the filing of an administrative charge of discrimination with an agency such as the EEOC, says Richard Cohen, a partner with law firm Fox Rothschild.
In addition, in order for a last-chance agreement to be enforceable, “it should only provide that the employee waives any right to make a claim of any sort only up to the time of execution, not for the future,” Cohen adds.
Employers should also seek the advice of labor employment counsel to discuss what a proper release should look like, Lawson says, or else end up like Cognis with a summary judgment granted against you on a federal retaliation claim with no trial.
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