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Just What Does A Racially Hostile Environment Look Like? The Eleventh Circuit Provides Some GuidanceWhat constitutes a racially hostile work environment? Is one really bad comment specifically aimed at the plaintiff sufficient or do you need a sustained series of racial comments? What if you have both but no evidence that it affects the person’s work performance? In Brenda Smelter v. Southern Home Care Services, Inc., d.b.a. Rescare Homecare, the Eleventh Circuit addresses those questions.

The Facts

From July 2 until September 9, 2013, Brenda Smelter, a black woman, worked for Rescare as a customer service supervisor. She struggled with her work and admittedly made errors, for which she was written up. On September 9, she got into a verbal altercation with a coworker and, given her prior performance issues and the fact that she was still in her probationary period, Rescare terminated her employment. Sounds pretty straightforward, right? Not so fast.

Although Ms. Smelter admits her skills may have been lacking, she claims that nearly every day of the eight weeks that she worked in Rescare’s Perry office two of her white coworkers made racist comments to each other. She testified that another customer service supervisor said:

  • Black men were “lazy” and “the scum of the earth.”
  • Black women “had babies on welfare.”
  • President Barack Obama’s “big ears” made him look “like a monkey.”
  • She did not know that black people could be buried on Sundays.
  • Smelter’s hair made her look like a “mixed monkey” from the movie Planet of the Apes.

Smelter said that the office manager also made racist remarks, including that she saw black people exiting a bus at a Walmart store and commented that it looked like they were “chained together” and that she wished she could “send them all back . . . to Africa.” Although she never reported these comments to a supervisor until the last day of her employment, she testified that the branch manager overheard at least some of the remarks and that these racist comments were “funny to everybody that worked in the Perry office” with her, even the branch manager.

The most severe comment came on Smelter’s last day at work, when she got into a heated discussion with the other customer service supervisor who allegedly jumped up, hit her desk in a rage, and said “get out of my office . . . you dumb black n       .” The branch manager investigated the altercation, and Ms. Smelter alleges that she told her about the prior racial comments and the epithet. Rescare concluded that Ms. Smelter started the altercation and terminated her employment.

Ms. Smelter sued for a racially hostile work environment and claimed that Rescare terminated her both because of her race and in retaliation for her report to the branch manager about the racial comments. Rescare moved for summary judgment, and the district court granted it. Ms. Smelter appealed.

The Eleventh Circuit’s Decision

The Eleventh Circuit agreed with the district court on the termination claims. The court found that Ms. Smelter had not offered evidence that Rescare’s reasons for terminating her were a pretext for race discrimination or retaliation. However, the court overturned the decision on the hostile work environment claim.

The court focused on whether Ms. Smelter had established that the harassment was sufficiently severe or pervasive to alter the terms of her employment and create a discriminatorily abusive working environment. It looked at four factors, assessing whether a reasonable jury could find it severe or pervasive:

(1) The frequency of the conduct – Eight comments in the two months was sufficiently frequent.

(2) The severity of the conduct – The negative comments about black people made around Ms. Smelter, capped off with the epithet directed to her on her last day, were sufficiently severe.

(3) Whether the conduct is physically threatening or humiliating, or a mere offensive utterance – Although the conduct was not necessarily physically threatening, the daily racial comments were sufficiently humiliating.

(4) Whether the conduct unreasonably interferes with the employee’s job performance -Although Ms. Smelter had little or no evidence that the conduct interfered with her work performance, “considering the totality of the circumstances, particularly the daily frequency and extreme severity of the harassment, including racist remarks made directly to Smelter about her” the other three factors sufficed.

Finally, the court found that a reasonable jury could conclude that Rescare had actual notice of the racial comments because Ms. Smelter testified that the branch manager overheard some of the remarks and thought they were funny.

Keep in mind that the court has to view the evidence in the light most favorable to Ms. Smelter. In this case, the coworkers denied making any racist comments, and the branch manager denied hearing any such comments or thinking they were funny.

Takeaways

First, the court comes close to saying that the one incident with the racial epithet could be sufficient. Do not assume one time isn’t enough to make it a federal case.

Second, that an employee does not report harassment is not evidence that it didn’t bother him or her. The court specifically notes that an employee’s failure to report harassment is not dispositive of whether the employee perceived the environment as hostile or abusive. So, if a supervisor witnesses conduct that may be close to the line but the employee does not react to it—investigate. Do not assume it will go away.

Third, an employee does not have to prove the harassment unreasonably interfered with work performance. If the other factors are strong, the absence of this one is not fatal.

Finally, Rescare won the termination claims. Given that the company terminated someone the same day that she reported that she had just been called the N-word, that is pretty amazing. Apparently Rescare had properly documented Ms. Smelter’s performance deficiencies. So, make sure you are addressing performance issues, even with probationary employees.

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.

Winning Harassment Claims in the #MeToo EraIn this #MeToo era, employers are, understandably, a little sensitive when someone raises a claim of harassment. Even with the heightened sense of peril, companies should remember that if they are doing the right thing—having effective policies in place and handling complaints appropriately—they can still prevail. A recent decision, Peebles v. Greene County Hospital Board and Elmore Patterson, makes this abundantly clear.

The Facts

Elmore Patterson was the CEO of Greene County Hospital’s (GCH) residential care facility. Beginning in November 2013, Wennoa Peebles was his executive assistant, as well as an accounts payable clerk in the business office. According to Peebles, Patterson created a hostile work environment in a number of ways, including his use of profanity, demeaning comments (telling Peebles she was “just part of the room” and “not to speak,” referring to female employees as “opossums” and that he would not sleep with the “opossums”), and occasional, off-handed sexual comments (such as comments about paddling a female employee’s rear end and bosom).

Peebles, who was not the only employee who raised concerns about Patterson, complained to a number of GCH board members about his behavior. In October 2015, GCH got a letter from Peebles’ lawyer noting that Peebles’ had complained about her work environment, was experiencing discrimination and retaliation, and was filing an EEOC charge. She filed the charge on November 4, 2015, alleging sex discrimination, retaliation, and a hostile work environment. About 10 days later, GCH told Peebles she should submit any complaints about her work environment to a designated board member. GCH also gave Peebles the option of transferring to her prior position (certified nursing assistant) at no loss of pay.

In January 2016, Patterson suspected that Peebles had disclosed board member email addresses. When he asked Peebles about it, she denied doing so. Patterson did some additional digging and concluded that not only had she disclosed the emails, she had lied to him about it and terminated her. Not surprisingly, Peebles believed that GCH terminated her not because of her disclosure of the email addresses but because of her protected activity.

Summary Judgment for the Employer

The district court granted summary judgment to GCH on both the harassment and retaliation claims. With regard to Peebles’ harassment claim, GCH apparently conceded that Peebles had established that she belonged to a protected group, that she was the subject of unwelcome harassment, and that the harassment was based on her sex. The court found, however, that Peebles had not established that the harassment was sufficiently severe or pervasive enough to alter the terms and conditions of employment to create a discriminatory or abusive working environment. The court explained that there are four factors to consider in determining whether conduct is severe or pervasive enough to permeate a workplace:

  • The frequency of the conduct
  • The severity of the conduct
  • Whether the conduct is physically threatening or humiliating, or a mere offensive utterance
  • Whether the conduct unreasonably interferes with the employee’s job performance

On balance, the court found that Patterson’s conduct over the two-year period, which was described in the opinion as hardly “boss of the year” material, was not sufficiently severe or pervasive. Accordingly, the court granted summary judgment in favor of GCH.

The court went on to find that Peebles failed to establish a case of retaliation, and GCH’s reasons for terminating her employment were legitimate and had nothing to do with her complaints about Patterson.

Takeaways

So, what can we learn? GCH did a lot of things right and still ended up getting sued—but they won. Here are a few things that employers should consider when a harassment complaint (or something that could be a harassment complaint) arises:

  • Effectively manage the complaints immediately. As soon as Peebles made complaints about Patterson, GCH addressed them, going so far as to designate a board member as a contact. GCH did this even though at least some of Peebles’ concerns were about bad behavior that did not clearly fall in the sexual harassment realm.
  • Take steps to stop any alleged harassment. In addition to a complaint procedure, GCH offered Peebles a transfer so she would not have to work with Patterson. While this is not always appropriate, employers should consider whether it is a viable option. You would not want to involuntarily transfer someone who complained, but giving them the option of getting away from the alleged harasser may be a good option to retain an employee and prevent a retaliation complaint. Of course, that is not what happened in this case, but it is still a good idea.
  • Don’t limit the assessment to the legal standard. Although the court relied on whether the behavior was sufficiently severe and pervasive enough to create a hostile work environment, employers should not limit their internal assessment to this legal standard. Behavior may not rise to the level of legal harassment but it can still violate a company’s harassment policy.