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Court Decisions Leave Companies Treading Carefully with Employees

Posted by Erica Murphy on Jan 26, 2011 1:37:00 PM

Separate rulings this week from the United States Supreme Court and the Massachusetts Supreme Judicial Court will significantly limit the actions that employers may take when addressing conflicts with employees.

Employment lawThe U.S. Supreme Court ruled unanimously on Monday that an employee who was terminated shortly after his fiancée filed a discrimination charge against their mutual employer may sue under Title VII of the Civil Rights Act of 1964 for third-party retaliation.

In Massachusetts, the Supreme Judicial Court ruled on Tuesday that a company may not dock a worker’s pay after unilaterally determining that the worker was responsible for damaging property.

The decision about third-party retaliation came in Thompson vs. North American Stainless LP. Eric Thompson and his fiancée, Miriam Regalado, were employees of North American Stainless, LP (NAS).  Three weeks after Regalado filed a sex discrimination charge against NAS with the Equal Employment Opportunity Commission (EEOC), the company fired Thompson.  Thompson filed suit against NAS under Title VII claiming that the company fired him to retaliate against Regalado for filing her EEOC charge. 

The Supreme Court ruled that “injuring [Thompson] was the employer's intended means of harming Regalado…In those circumstances, we think Thompson well within the zone of interests sought to be protected by Title VII.”

According to the Court, Title VII’s anti-retaliation provision covers conduct that “might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  The Court unanimously concluded that it is “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.” 

Bu the Court refused to identify a class of relationships for which third-party retaliation would be unlawful. So while this decision will likely result in more lawsuits being filed by spouses and significant others, the Court’s reluctance to define “zone of interests,” makes the practical implications of the decision somewhat difficult to predict.

For now, employers should tread carefully before terminating a spouse or close relative of an employee who filed a discrimination charge or lawsuit.  Employers should also re-examine policies and procedures for dealing with internal complaints in an effort to minimize the risk of a retaliation complaint.

According to EEOC statistics, retaliation became the most frequently cited form of on-the-job discrimination in 2009 (33,613 charges), overtaking race discrimination (33,579 charges) by a slim margin.  Given this decision, those numbers are likely to increase further. 

The Massachusetts ruling came in the case of ABC Disposal Service Inc., a New Bedford-based trash and recycling pickup company that wanted to cut down on damage by their workers to the company trucks and other people’s property.

The company instituted a policy saying that if it determined that an employee was at fault, the workers could either agree to pay for the damage through a deduction from their wages or be disciplined. The company said that the program led to a substantial reduction in damage. But the SJC said that under the Massachusetts Wage Act, employers are prohibited from making such deductions.

“The statutory language and the interplay of §§148 and 150 of the Wage Act reflect that employee deduction agreements of the type at issue in this case constitute special contracts that §148 prohibits unless the deductions are valid setoffs for clear and established debts within the meaning of §150,” Judge Margot Botsford wrote for the SJC.

Stay tuned to the HR Edge and the AIM Business Insider blog for additional detailed information and updates. 

Topics: AIM, Employment Law, U.S. Supreme Court, Massachusetts Supreme Judicial Court

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