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John Rodgers represents public and private employers in employment-related litigation and assists them with employment policies, employee handbooks, workplace investigations, disciplinary actions, and terminations. He actively litigates employment disputes on behalf of employers and has handled discrimination and retaliation, wage and hour, FMLA, and non-compete cases in both state and federal court. He also devotes substantial attention to ERISA litigation and representing individuals and businesses in conservatorship matters. View articles by John

Once Is Enough: Tennessee Federal Court Rules Single Use of ‘N-Word’ By Co-Worker Sufficient to Get Hostile Work Environment Claim to JuryUsually, once is not enough, at least in the hostile work environment context. Unless, as the court found in Ronnie L. Outlaw v. SBH Services, Inc., it is.

Typically, a single incident of harassment – especially by a co-worker – is not sufficient for a hostile work environment claim to survive summary judgment and be heard by a jury. Most of the time, a viable hostile environment claim involves a series of harassing incidents based on membership in a protected class that were severe or pervasive enough to alter the conditions of the employee’s employment. A single, isolated incident usually does not meet this “severe or pervasive” standard.

In its February 19, 2019, opinion, however, the U.S. District Court for the Middle District of Tennessee did not apply this general rule and instead held that Outlaw’s single incident of harassment was sufficient to proceed to a jury.

Facts of the Case

Outlaw, an African-American, and Alex Cruz, a Hispanic, worked together on a construction site. According to the opinion, Outlaw witnessed Cruz performing work in an unsafe manner, and he attempted to correct it. In response, Outlaw claimed that Cruz “grabbed him, pushed him, and said ‘[y]ou punk ass ni—er’.” Outlaw’s employer, SBH Services, admitted Cruz used the “n-word,” but claims that Outlaw was confrontational and called Cruz a “motherf—er.” SBH Services argued “[i]n the Hispanic culture it is extremely offensive to call someone a ‘Motherf—er’ or ‘Son of a B—h’ because mothers are revered and the terms are often taken literally.”

After the incident, a construction company that was partnering with SBH Services on the project launched an investigation. During the investigation, Cruz admitted to using the slur and assaulting Outlaw. Cruz claimed Outlaw initiated the dispute by criticizing his work performance and calling him a “stubborn motherf—er.” Cruz was initially suspended for admitting he assaulted Outlaw.

Following the investigation, the investigators asked Outlaw numerous times whether he could ever work with Cruz again. According to two of the investigators, they believed Cruz and Outlaw were equally at fault and deserved the same punishment. As a result, the investigators allowed Outlaw the choice to either work with Cruz or “suffer his same fate.” Outlaw refused to work with Cruz again. He claims it was made clear to him that he could either work with Cruz or be terminated, so he quit. For his part, Cruz was terminated (apparently, although the opinion did not make it 100 percent clear, because Outlaw was not returning to work).

Outlaw sued SBH Services for race discrimination, retaliation, and hostile work environment. Although the court granted SBH Services summary judgment on Outlaw’s race discrimination and retaliation claims, not so his hostile work environment claim. In denying summary judgment, the court held that although this was only one incident of harassment, a “reasonable jury could consider [it] severe enough to constitute a racially-hostile work environment:”

“It is undisputed that Plaintiff, while on the job, was assaulted and called a vile racial slur by a fellow SBH employee. This event distally precipitated Plaintiff being fired for refusing to agree to work with the man who attacked him . . . .The record thus contains evidence of a single event, created by an SBH employee, that a reasonable jury could consider severe enough to constitute a racially-hostile work environment.”

Now What?

If the parties do not settle the case, it will now proceed to a jury. This case presents some takeaways for employers:

  • A single incident of alleged harassment – especially involving the use of the “n-word” – may be sufficient for a hostile work environment claim to survive summary judgment in the Sixth Circuit (which includes Tennessee, Kentucky, Ohio, and Michigan).
  • The court apparently felt the investigators made a mistake in equating the use of a vile racial slur combined with an assault to calling another employee a “motherf—-r.” The decision set up a situation in which Outlaw and Cruz had to either return to work together or both be fired. In the circumstances outlined by the court (which are viewed in the light most favorable to the plaintiff), the company may have been better served by administering different discipline to the two employees – termination for Cruz (who assaulted Outlaw and used the racial epithet) and lesser discipline for Outlaw (who apparently only used the confrontational language). That may have prevented a lawsuit.
  • Employers should be wary of terminating an employee because of an incident in which the employee was called a racial slur.

Although hostile work environment claims involving a single incident are oftentimes not sufficient to survive summary judgment, the combination of the admitted use of a racial slur plus the loss of a job directly related to the same incident made Outlaw’s case good enough to get to a jury. Now the employer will be left with a Hobbesian choice of its own – pay a settlement or leave its fate in the hands of the strangers in the jury box.

In a decision that could have employers rethinking how they offer employees a severance agreement, in McClellan v. Midwest Machining, Inc. the Sixth Circuit held that former employees seeking to void severance agreements do not have to give the severance pay back before filing suit under Title VII or the Equal Pay Act.

Factual Summary

Tender Me This: Sixth Circuit Holds Employees Don’t Have to Give Severance Money Back before Filing Title VII or EPA LawsuitThe facts of this case help give this legal holding some flavor. In late August 2015, Jena McClellan informed her employer, Midwest Machining, Inc., that she was pregnant. After doing so, McClellan says her supervisor started making negative comments about her pregnancy and was annoyed about the pre-natal doctor’s appointments. About three months later, Midwest Machining terminated her. The decision does not provide the articulated reason for termination.

On the date of her termination, the company’s president called McClellan into his office, gave her a severance agreement, and said that she “needed to sign then if [she] wanted any severance.” The door was shut to his office, and McClellan said she did not feel free to leave. The two reviewed the agreement together, but McClellan says the president did so very quickly, did not ensure that she understood the agreement, and used a “raised” tone during the entire meeting.

McClellan testified that she felt pressured and bullied, and she signed the agreement without the benefit of a lawyer’s counsel. The agreement waived all of her claims. McClellan later testified that she did not understand that the claims she was waiving included discrimination claims; she thought it was only claims for unpaid wages and benefits. Midwest Machining paid McClellan $4,000 in exchange for signing the agreement, and she accepted the money.

Summary Judgment Initially Granted to Employer

McClellan filed an EEOC charge claiming Midwest Machining discriminated against her, and she received her right-to-sue letter. On November 6, 2016, about a year after her termination, she finally met with an attorney, who immediately filed a lawsuit alleging pregnancy discrimination in violation of the Pregnancy Discrimination Act (which is part of Title VII) and pay discrimination in violation of the Equal Pay Act (EPA), among other claims.

Midwest Machining’s counsel informed McClellan’s lawyer of the release in the severance agreement. McClellan, at the direction of her lawyer, then sent a letter (about three weeks after the suit was filed) stating that she was rescinding the severance agreement. She enclosed a $4,000 check, the amount of the severance.

Midwest Machining responded by returning the check to McClellan, stating there was no legal basis for her to rescind the severance agreement. A couple of months later, Midwest Machining moved for summary judgment because McClellan did not “tender back” the $4,000 before she actually filed suit. After some legal wrangling, the trial court eventually agreed, relying on the common law “tender-back doctrine,” which provides that “even if a party signs a release under duress,” she must return the severance monies before she can file a lawsuit. The district court held that even if McClellan signed the severance agreement under duress (a disputed issue of fact), she did not “tender back” the severance money before she filed suit. Therefore, the district court held that she had ratified the contract waiving her claims and her lawsuit had to be dismissed.

Sixth Circuit Reverses

McClellan appealed to the Sixth Circuit, which reversed, holding that a plaintiff “is not required” to give back the severance monies before bringing claims for violations of Title VII or the EPA. The Sixth Circuit noted its concern – as expressed by other courts – that the employees would have spent their severance money already and would not be able to pay it back.

“[W]e worry that requiring recently-discharged employees to return their severance before they can bring claims under Title VII and the EPA would serve only to protect malfeasant employers at the expense of employees’ statutory protections at the very time that those employees are most economically vulnerable.”

As opposed to being a bar to suit, under the Sixth Circuit’s holding, the amount of the severance is to be deducted from any judgment awarded to a plaintiff-employee. Other federal circuits have similar holdings involving other federal employment statutes. The Sixth Circuit sent the case back to the district court for further proceedings. A dissent was filed, arguing that the case should have been remanded for further fact finding on the “tender-back” doctrine and ratification of the contract.

Takeaways

Employers should not overreact to this decision as it does not mean that severance agreements are a waste of money. This decision only addresses what happens when an employee claims duress and seeks to void the severance agreement. The key is to offer severance in a way to avoid a claim of duress.

Perhaps the biggest takeaway from this decision is don’t pressure (or look like you are pressuring) separating employees to sign severance agreements. Make sure that nothing about the circumstances surrounding the severance offer could later be used to show that the employee was under duress, fraudulently induced to sign the agreement, or any other act that would give the employee an argument to claim the contract was voidable.

Assuming McClellan’s story is true – the president of a company tells a departing employee that she has to sign the agreement that day if she wants to receive her severance – what can we learn?

  • Remember your goal is to get the employee to sign the agreement (and release any claims). The situation will be uncomfortable because the employee is losing a job, but be nice. If the company representative is intimidating or could otherwise be characterized as a bully—maybe use someone else to deliver the message. It is usually best to have two people (so if the employee later accuses someone of bad behavior, the company has a witness).
  • Give the employee a reasonable amount of time to review the agreement. If the employee is age 40 or older, follow the Older Worker’s Benefits Protection Act requirements and give the employee at least 21 days to review the agreement and seven days to revoke after signing. If the employee is not yet age 40, then give a reasonable time—say five days. Keep in mind that what is reasonable can change based on the circumstances.  Five days on Monday gives the employee a week to consult a lawyer.  Five days on Friday before a holiday weekend may not be a reasonable amount of time.
  • Allow the employee to take the agreement home to review. Think of it from the employee’s perspective—would you feel pressured or fully understand an agreement that gives up your rights while the company president is standing over your shoulder?
  • Encourage the employee to consult a lawyer as needed.

Even if you follow all of these practices, if an employee claims she was pressured to sign a severance agreement under duress and argues that the contract is voidable, understand the employee does not have to give the severance money back before filing a Title VII or EPA lawsuit, at least in the Sixth Circuit.

Voluntarily Sharing Family’s Cancer History Bars GINA Claims, Court HoldsGINA—that elusive law about employers collecting genetic information that rarely comes up. What if an employee voluntarily shares his genetic history—can he turn around and claim his employer improperly acquired the genetic information? Fortunately, in Williams v. Graphic Packaging International, Inc., the U.S. District Court for the Middle District of Tennessee, provides some guidance and says no.

GINA Refresher

The Genetic Information Non-Discrimination Act (GINA) prohibits employers with 15 or more employees from discriminating against an employee on the basis of “genetic information.” Under GINA, it is “an unlawful employment practice” for an employer to “request, require, or purchase genetic information” concerning an employee or an employee’s family member (unless an exception applies). If an employee voluntarily discloses his family’s medical history, then the employer arguably did not violate GINA because it did not request, require, or purchase the genetic information.

The Williams Case

Williams was diagnosed with prostate cancer and requested medical leave from his supervisor. He claimed that his supervisor “repeatedly questioned” him about his cancer, the doctor’s opinions concerning his cancer, and the treatment options. During at least one communication, Williams told his supervisor that cancer ran in his family.

Graphic Packaging later terminated Williams, and he filed suit, bringing multiple claims including that it violated GINA because the company became aware of his family’s medical history with cancer. Graphic Packaging moved for summary judgment, and in May 2018, the court granted its motion and dismissed the case in its entirety.

In dismissing the GINA claim, the court held that because Williams voluntarily informed his supervisor (and two other people) that cancer ran in his family, his GINA claim failed. Furthermore, the court noted that Graphic Packaging never required him or any of his family members to submit to a genetic test. Williams has since appealed the dismissal of his case to the Sixth Circuit Court of Appeals.

Takeaways

Although Graphic Packaging was ultimately successful in Williams (at least pending the results of the appeal), employers should not forget about GINA. Among other prohibitions, the act bars employers from discriminating against an employee based on an employee’s genetic information. It also prohibits employers from requesting, requiring, or purchasing an employee’s or family members’ genetic information, unless one of the statute’s expressed exceptions applies. Those exceptions include when an employer inadvertently requests or requires an employee to provide his or her medical history or family medical history. If an employee voluntarily discloses that medical history, however, the employer can successfully argue – as it did in Williams – that it did not request or require the disclosure of the family’s medical history, inadvertently or otherwise, and that the GINA claim should be dismissed. It is probably safest, however, to train supervisors to not ask about an employee’s medical condition (to comply with the ADA) and also avoid asking about things such as family medical history (to comply with GINA).