Moving Up the Naughty List: Level of Progressive Discipline Can Be Non-Discriminatory Reason, Says Eighth CircuitMany employers have progressive discipline policies. Are they always followed? Probably not. Should they be? Absolutely, and Lindeman v. St. Luke’s Hospital of Kansas City, a recent case in the Eighth Circuit, demonstrates that being able to point to the use of a progressive discipline policy can help dispose of an ADEA/ADA case.

The Facts

Todd Lindeman worked in St. Luke’s Hospital of Kansas City where the progressive discipline policy had varying penalties for each infraction: verbal warning for the first; written warning for the second; suspension or second written warning for the third; and termination for any subsequent infraction. After a change in his supervisors, Mr. Lindeman quickly moved through the discipline system, incurring three infractions in a four-month period. Finally, Mr. Lindeman violated the patient confidentiality policy and was terminated as a result of this fourth infraction.

Mr. Lindeman, who was over age 40 and suffers from obsessive compulsive disorder, attention deficit disorder, and bipolar disorder, filed suit under the ADA and the ADEA. St. Luke’s moved for summary judgment stating that the reason for his termination—disclosure of confidential information in violation of hospital policies—was a legitimate, nondiscriminatory reason. The burden then shifted back to Mr. Lindeman to show that the reason was pretextual. Mr. Lindeman claimed that two other employees also revealed the confidential information but were not terminated. The district court granted summary judgment, noting that Mr. Lindeman had not shown that the other two employees were at the last stage of the progressive disciplinary policy, as he was. Mr. Lindeman appealed, and the Eighth Circuit affirmed.

Moral of the Story: Follow Your Policy

This may seem like a minor case on a minor issue, but it again points to the gospel that we preach over and over: If you have a policy—enforce it and enforce it consistently. You may find a disciplinary system beneficial, as the hospital did here, to show a non-discriminatory reason for treating employees differently. But it only works if you use it properly.

A Political Entity Can Be Liable, No Matter How Small: Supreme Court Holds ADEA Still Applies to Small County EmployerCan small municipalities make decisions based on age? Not according to the United States Supreme Court, which recently resolved a circuit split on the question of whether the Age Discrimination in Employment Act (ADEA) applied to state and federal political entities with fewer than 20 employees. In Mount Lemmon Fire District v. Guido, a unanimous court found that the ADEA applies to all federal and state entities, regardless of the size of those entities’ workforce.

Mount Lemmon Facts and the Supreme Court’s Rationale

To resolve a budget shortfall, Mount Lemmon terminated its two oldest firefighters, both of whom were over age 40. Those firefighters filed suit in federal court, alleging their termination violated the ADEA. Mount Lemmon moved to dismiss the lawsuit, arguing the ADEA did not apply to it because it had fewer than 20 employees. The district court agreed. The Ninth Circuit Court of Appeals reversed the district court, finding that the ADEA applied. Because the Sixth, Seventh, Eighth, and Tenth Circuits previously found otherwise, the Supreme Court granted review of the case, siding with the Ninth Circuit’s interpretation of the ADEA.

By way of background, the ADEA initially applied to private sector employers with 20 or more employees. In 1974, Congress amended the ADEA to cover state and local governments. The amended ADEA defined a covered “employer” as:

[A] person engaged in an industry affecting commerce who has twenty or more employees . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State.

Prior to the Mount Lemmon ruling, smaller political entities were able to argue that the numerical threshold of 20 employees for ADEA claim exposure applied to them as it did private employers. The Supreme Court rejected that argument, finding that the ADEA’s:

“two-sentence delineation, and the expression ‘also means’ at the start of the second sentence, combine to establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees; and State or political subdivisions with no attendant numerosity limitation.”

The Supreme Court also found that the ADEA’s 20-employee threshold did not apply to federal employers either. Therefore, all political entities, regardless of size, are subject to potential ADEA claims.

Seven justices joined the opinion, which was authored by Justice Ruth Bader Ginsburg, with Justice Brett Kavanaugh not participating.

Takeaways

Although this case applies to small political subdivisions, it is a good reminder for everyone to be careful about potential age or other discrimination claims related to reductions in force. We don’t have any information on what criteria Mount Lemmon used to pick these two firefighters to lay off, but it probably was not their age. The fact that the terminated employees were the oldest in the department was likely a coincidence. So, when looking to save some money and balance the budget, employers need to keep an eye on whether the decisions look like discrimination (age or otherwise) and be sure they can defend the decisions. Your employment counsel can help.

The Elements Make All the Difference—Sixth Circuit Affirms Summary Judgment in Favor of Coal Brokerage Company in Age and Disability CaseWhen evaluating a discrimination case, one can never forget to go back to the basics and start with the elements of the cause of action. For example, if you are facing an age discrimination claim, is the employee in the protected class, i.e., over 40 years old? Were they replaced by someone outside of that class? A lawsuit cannot move forward if a plaintiff fails to provide evidence to support each element required by law. For that reason, the first line of defense for an employer accused of discrimination should be to attack the foundation of an employee’s claims. In Stearman v. Ferro Coals, Inc., the Sixth Circuit reminds us that an employee’s misguided theories about an adverse employment decision are insufficient to survive summary judgment in an age and disability case.

Background

Joseph Stearman was the vice president of sales at Ferro Coals, Inc. for five years. Because Stearman’s job required travel, he used a company credit card to cover costs. However, Ferro required all of its employees to seek approval for business travel, and in 2012, suspended all business travel “due to declining market conditions in the coal industry.” Although employees still traveled, they only did so when they received specific permission.

In 2013, Stearman followed the policy when he requested and received approval to attend a seminar in Myrtle Beach. When Stearman asked to attend the conference again in 2014, he did not receive a response, but went anyway, using the corporate credit card to cover his expenses. When Ferro discovered what Stearman had done, it terminated him for improper use of a company credit card in the broader context of the declining coal industry and a need to downsize. Stearman was 67 years old. After Stearman’s termination, Ferro did not hire a new vice president of sales, instead allowing another employee to absorb his duties in addition to the employee’s existing duties.

Stearman filed a complaint alleging age and disability discrimination under the Kentucky Civil Rights Act, among other claims. Because the Kentucky statute mirrors its federal counterparts, the ADEA and ADA, the district court analyzed Stearman’s claims in the same manner as it would federal claims. Ultimately, the district court granted summary judgment to Ferro on all claims, and he appealed.

Sixth Circuit Affirms Summary Judgment Ruling

On appeal, the Sixth Circuit explained that to prove age discrimination, Stearman had to show that he was replaced by someone outside of the protected class. Given that Ferro had a current employee absorb Stearman’s duties, Stearman had no such evidence. The Sixth Circuit held that Stearman had not been replaced because a replacement only occurred when a company hired a new person or reassigned an employee to take over the plaintiff’s job: “Spreading the former duties of a terminated employee among the remaining employees [did] not constitute a replacement.”

In an attempt to save his age claim, Stearman contended that the replacement test only applied in reduction-in-force cases. While the Sixth Circuit dismissed that argument, it concluded that Ferro was engaged in a reduction in force because it had cut its workforce from 18 to 12 by the time Stearman left. The Court added: “Workforce reduction is a prerequisite to wrapping up business, and it can occur even when some of the employees let go engage in unwise conduct—like taking business trips without authorization.”

Because Stearman could not show that he was replaced, his claim of age discrimination failed. With regard to his disability claim, the court held that because Stearman failed to demonstrate that he was disabled or suffered any restriction in his ability to perform his job, his disability discrimination claim also failed.

Stick to the Basics

This decision highlights what employers should initially consider when terminating an employee, particularly one in a protected class, and/or preparing to litigate a discrimination claim.

  1. When providing a reason for an employee’s termination, make sure that it is the actual reason for termination. It is especially helpful to be able to refer to a policy that has been violated. Also, tell the whole truth—if it is part of a reduction in force, document that reason even if the decision is also disciplinary.
  2. If an employee that is being considered for termination is in a protected class, discuss the circumstances with human resources. If there are red flags and you need to discuss potential risks and the elements of a potential discrimination claim, make sure counsel is involved and your conversation is privileged.
  3. Think about next steps after the employee is terminated. Will the employee be replaced? If so, by who? If not, will other employees assume their duties? Will the person assuming duties get a raise or a change in job title? Is the position being eliminated?

 

By keeping these fundamental concerns in mind, you will hopefully avoid battling an aggrieved former employee or at least be in a better position to defend the decision in court.