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.

OSHA Safety Retaliation – What Is It?

Virtually every employee protection law, federal or state, has some sort of anti-retaliation provision. The federal Occupational Safety and Health Act is no exception. The Occupational Safety and Health Administration (OSHA) enforces the anti-retaliation provision in this federal law and also the anti-retaliation provisions contained in many other “whistleblower-type” federal laws. This post touches on the anti-retaliation cause of action in the Occupational Safety and Health Act, called a Section 11(c) claim, named after the section of the 1970 act in which it is found.

What’s Covered

My Safety Complaint Was Unsafe for My Continued EmploymentSection 11(c) applies to many forms of employee “protected activity.” Protected activity includes filing a complaint with OSHA, raising a safety complaint with the company, reporting a workers’ compensation injury, or participating in any way in an OSHA safety inspection. Notably, protected activity also includes refusing to follow a work order if an employee believes in good faith that following the order could cause death or serious injury. This type of refusal sometimes is referred to as “invoking safety rights” under the act.

What You Can’t Do

What constitutes retaliation according to OSHA? It is very broad. Any sort of negative employment decision close in time to employee-protected activity can be the basis for a Section 11(c) claim. Discipline and discharge are obvious examples. Prohibited employer conduct under 11(c) is much broader though. Any employer conduct that discourages safety or accident (or “near miss”) reporting is prohibited by 11(c). Thus, for example, OSHA has taken the position that employer safety programs that discourage the reporting of accidents or injuries can violate Section 11(c). An example would be a bonus policy that effectively rewards employees for not reporting workplace accidents without any sort of clear statement in the policy (or through training) that retaliation will not occur for accidents that are reported.

What Employees Can Get

Employers need to take potential Section 11(c) claims seriously. We have been seeing more and more of these claims recently, which is consistent with the trend of more retaliation claims generally. An employee must make a Section 11(c) claim very quickly, within 30 days of an alleged retaliatory act, and, once the claim is made, OSHA investigators should act very quickly, usually in just a matter of days. After OSHA completes its investigation, DOL lawyers will decide whether to bring a lawsuit against the company. These lawsuits are filed in federal court and proceed like many other federal discrimination lawsuits. While an individual employee cannot file the lawsuit by him or herself, these cases otherwise are similar to other discrimination cases. The complainant will have to show protected activity, an adverse action, and a causal connection between the two. If DOL is successful, remedies include back pay and back benefits, compensatory and punitive damages, reinstatement (or other remedial employment actions), notice posting and training, and an award of fees and costs. Settlement and mediation options exist as in other employment cases.

What’s Been Going on Recently

During the latter part of President Obama’s administration, OSHA issued administrative guidance related to Section 11(c). Specifically, OSHA took the position in 2016 that mandatory post-accident drug testing violated Section 11(c) unless an employer could show that drug use likely contributed to a specific accident. OSHA also attacked employer safety incentive programs that discouraged accident reporting, especially if some sort of employee benefit was withheld if accidents in fact were reported. Another aspect of the 2016 revision included a procedure by which an OSHA inspector could issue a retaliation citation even if an employee had never made a retaliation complaint to OSHA.

In the last few months under President Trump’s administration, OSHA has back tracked on some of the restrictions added by the last administration:

  • Post-incident drug testing is allowed if it is done consistently and if all persons who could have contributed to the incident are tested. In other words, testing is okay if it is not just limited to the employee who reported an injury.
  • Safety programs are allowed in many forms, including those that provide “accident-free” bonuses. Such programs should include policy statements, training, and related precautions that make clear that accidents and injuries still should be reported and that employees will not be retaliated against for doing so.

In conclusion, keep safety activities in mind when disciplining employees or implementing safety-related rules and policies. Employer intent matters. If an employment decision follows closely on the heels of protected activity or cannot be justified by legitimate non-retaliatory motivation of the decision maker, a Section 11(c) claim could be very unsafe for the company.

Securing the Bag – Sixth Circuit Affirms Award of Attorneys’ Fees to Staffing CompanyIn today’s competitive job market, it is customary for employers to include restrictive covenants, e.g., non-competition and non-solicitation provisions, in employment agreements. While these covenants are essential to protect employers from unfair competition, an attorney’s fees provision is just as critical to save employers tens of thousands of dollars in litigation expenses. In Kelly Services, Inc. v. De Steno, the Sixth Circuit not only illustrates the importance of strategically drafted damages provisions in employment agreements, but also defines the role of a jury in determining the amount of certain fees to be awarded to a party.

Background

Kelly Services, a staffing and consulting company, hired Dale De Steno, Jonathan Persico, and Nathan Peters. Before joining Kelly Services, all of the men were required to sign employment agreements that included non-compete provisions. The agreements also included damages provisions that stated that if the employee breached the agreement, he would pay reasonable attorneys’ fees, court costs, and any other related fees and/or costs incurred by Kelly Services in enforcing the agreement.

In early 2016, De Steno, Persico, and Peters left Kelly Services to work for a competitor in similar staffing positions in the same market area. Kelly Services sued the men for breach of the non-competition provisions and breach of the duty of loyalty and moved for a preliminary injunction. The district court found: (1) Kelly Services made an initial demonstration that irreparable harm may occur without an injunction; (2) harm to Kelly Services from not issuing an injunction outweighed the harm to the former employees; (3) Kelly Services demonstrated that it would likely prevail on the merits; and (4) public interest was more favorable to Kelly Services. Consequently, the district court enjoined De Steno, Persico, and Peters from violating their non-compete agreements and determined that the preliminary injunction would last for 60 days. De Steno, Persico, and Peters filed an interlocutory appeal challenging the preliminary injunction.

On July 25, 2016, three days before the preliminary injunction was set to expire, Kelly Services requested a 60-day extension.  The district court granted an extension until the Sixth Circuit ruled on the interlocutory appeal. However, within a few weeks, De Steno, Persico, and Peters voluntarily dismissed their interlocutory appeal and litigation continued. In the spring of 2017, the district court retroactively lifted the preliminary injunction and the parties engaged in mediation. After mediation was unsuccessful, the parties moved for summary judgment. The district court acknowledged that Kelly Services had received all of the injunctive relief that it sought in its complaint and agreed with Kelly Services that the only remaining issue was the amount of attorneys’ fees and costs owed to Kelly Services. Ultimately, the district court ruled Kelly Services was contractually entitled to reasonable attorneys’ fees under a plain reading of the employment agreements and a jury was not required to decide the amount of damages. De Steno, Persico, and Peters appealed.

Sixth Circuit Affirms District Court’s Award of Attorneys’ Fees

On appeal, De Steno, Persico, and Peters initially argued that the non-compete provisions were unenforceable under Michigan law and the district court never finally ruled on that issue. Like the district court, the Sixth Circuit rejected that argument, concluding that even though the district court did not reach the enforceability issue, the former employees still owed Kelly Services attorneys’ fees based on the terms of the agreements themselves. Specifically, De Steno’s agreement provided that he would “pay Kelly’s reasonable attorney’s fees and costs involved in enforcing [the] Agreement.” Similarly, Persico’s and Peters’ agreements provided that they would “pay any and all legal fees, including . . . all attorneys’ fees . . . incurred by [Kelly Services] in enforcing [the] Agreement.” The Sixth Circuit ruled that Kelly Services’ attorneys’ fees were “involved” or “incurred” “in enforcing” the employment agreements, so Kelly Services was entitled to these fees under a plain reading of the contracts. The court emphasized that the terms of the agreements did not require a final determination of liability in favor of Kelly as a condition for the award of fees.

“Unlike numerous similar agreements, these contracts [did] not employ the words “prevailing party,” nor by their literal language [did] they require a final determination of liability.”

Although the Sixth Circuit recognized that there could be problematic cases in which efforts to “seek enforcement” were unreasonable, made with little or no basis, made for the purpose of oppression or harassment, or simply unsuccessful, none of these scenarios were at issue in the present case.

In addressing the former employees’ argument that a jury must determine the amount of attorneys’ fees under the Seventh Amendment, the Sixth Circuit again sided with the district court. The court explained that the Seventh Amendment grants parties a right to a jury only for a determination of legal issues, not equitable ones, and no legal issues existed in this case. The court also stressed that it would have been “highly impractical” for a jury to determine the amount of attorneys’ fees in the instant case because the parties would have to submit evidence on attorneys’ fees before the end of the trial and resultant necessary legal services. With no provision in the employment agreements specifying the amount of attorneys’ fees to be awarded, and in the interest of fairness and efficiency, the district court rightfully determined a reasonable amount of attorneys’ fees. The Seventh Amendment did not require otherwise.

Securing the Bag

So how can employers increase their likelihood of “securing the bag” from rogue employees who violate restrictive covenants and expect to escape liability? Here are a few ideas:

  1. In addition to drafting enforceable restrictive covenants, draft damages provisions so that you are compensated for enforcing the agreement, not merely prevailing in litigation. Unless contrary to public policy, courts will generally enforce an attorneys’ fees’ provision just as any other term in a contract. Protect yourself first.
  2. Do your homework, and be sure you have a factual basis to show that your former employee violated a restrictive covenant. The rumor mill may be enough to begin investigating an employee, but it may not be enough to get a preliminary injunction. Research the former employee’s LinkedIn profile for employment updates. Review the subsequent employer’s website for any press releases about new hires or lists of employees in certain departments or industries. The internet and social media are great resources to verify suspicions of breach of an employment contract.
  3. Confront the former employee before engaging in litigation. Send a cease and desist letter to the employee and his or her subsequent employer detailing the terms of the restrictive covenant and the factual basis for your belief that the covenant has been violated. Hopefully, this is sufficient to compel the employee to adhere to the terms that he or she originally agreed to. If not, you can place the potential defendant on notice that you will seek legal action to remedy the breach. Because of your well-crafted employment agreement and due diligence, the law is likely to be on your side.