Kerman’s Korner returns for the new year with Jeremy discussing an arbitration that required some outside-the-box thinking, and how he learned that sometimes it’s the things you DON’T do that make all the difference.
Given that baby boomers are living longer and wanting to work past the usual retirement age, and that 40 is the new median age in the United States, companies should expect to see an uptick in age related claims. A recent federal district court decision serves as a refresher course on age discrimination in the context of a failure to promote. In Gonzalez-Bermudez v. Abbott Labs. PR Inc., 2016 U.S. Dist. LEXIS 140536 (D.P.R. October 9, 2016), the United States District Court for the District of Puerto Rico denied the Defendant’s motion for summary judgment on the Plaintiff’s claim under the Age Discrimination in Employment Act (“ADEA”).
The ADEA protects employees age 40 and over from discrimination in employment (hiring, firing, promotion, etc.) based on their age. The Supreme Court requires plaintiff to “establish that age was the ‘but-for’ cause of the employer’s adverse action,” a much stricter standard than that applied in Title VII cases. Gross v. FBL Fin. Servs. Inc., 557 U.S. 167, 129 S.Ct. 2343, 2351, 174 L.Ed. 2d 119 (2009). Courts have held that replacement of an employee with a younger employer cannot make a prima facie case of age discrimination if the age difference is less than five years. See Williams v. Raytheon Co., 220 F.3d 16, 20 (1st Cir. 2000).
In Gonzalez-Bermudez, the Court denied defendant’s motion for summary judgment primarily for the following reasons:
- Plaintiff established that the demotion was an adverse employment action, she met the minimum requirements of the job, received “Achieves Expectations” performance ratings, and was never placed on an improvement plan or disciplined;
- There was sufficient evidence to support that similarly-situated younger counterparts were treated more favorably in terms of raises and promotions;
- Plaintiff was excluded from important company processes and meetings;
- The job was filled by a 31-year-old external candidate (against company policy of favoring internal candidates and plaintiff met the requirements of the position); and
- Defendant was inconsistent and contradictory on the record.
Additionally, the Court found that the employer had possessed certain relevant evidence yet destroyed it after being notified of a potential litigation. Accordingly, the Court granted plaintiff’s request for a spoliation sanction and noted that the jury would be instructed to infer that certain e-mails destroyed would have been unfavorable to the employer.
Best practice Tips: As soon as a potential claim is made, investigate it; in making a decision to not promote an employee over 40, make sure you have a reasonable basis for the decision and document it; immediately implement a document retention policy and make sure you maintain all documents relevant to claims. Following this guidance should help reduce significantly a company’s exposure to such claims.
Did you know that an agreement shortening the time within which to bring an employment law claim may be enforceable? Indeed, in Order of United Commercial Travelers of Am. v. Wolfe, 331 U.S. 586, 608, 67 S. Ct. 1355, 91 L. Ed. 1687 (1947), the Supreme Court stated with respect to contracts generally that “in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action … to a period less than that prescribed in the general statute of limitations, [if] the shorter period [is] a reasonable period.” This principle has been applied and enforced in the employment law context.
For example, recently in Njang v. Whitestone Grp., Inc., 2016 U.S. Dist. LEXIS 65370, 129 Fair Empl. Prac. Cas. (BNA) 362 (D.D.C. May 18, 2016), plaintiff filed an action alleging race discrimination in violation of both Section 1981 and Title VII. In its motion for summary judgment, the former employer argued that plaintiff’s claims — which were filed more than two years after the termination — were time barred because the employment contract required the employee “to file all claims or lawsuits in any way relating to employment with the Company no more than six months after the date of the employment action that is the subject of the claim or lawsuit.” Id. at *5.
The court held that the shorter limitation period was enforceable with respect to the Section 1981 claim but not with respect to the Title VII claim. With respect to the Section 1981 claim, the court relied on precedent in finding that “six months is a reasonable period of time . . . both because nothing within Section 1981 indicates that Congress intended for a longer window to bring such a claim, and also because the statute lacks other features that would make filing a claim within six months impracticable, such as an administrative exhaustion requirement.” Id. at *15.
By contrast, the court held that Title VII’s time-consuming administrative requirements, including (i) plaintiff’s need to first file a charge with the EEOC within 180 days after the alleged unlawful conduct, (ii) the EEOC’s investigation of the charge, and (iii) the EEOC’s issuance of a right to sue letter, make a 6-month limitation period unreasonable. Id. at **18-19. As the court in Njang explained, “merely by complying with the administrative exhaustion requirements of Title VII, plaintiffs are typically precluded from bringing their claims in court within six months of the challenged conduct, which means that a six-month limitations period has the practical effect of waiving employees’ substantive rights under Title VII.” Id. at *20.
As a practical matter, employers should consider implementing a clause in their employment contracts and employee handbooks reducing the statute of limitations to a shorter, yet still “reasonable” time. While 6 months might be too short a period – particularly given the administrative requirements of Title VII – a 1-year period might very well pass muster as a reasonable period of time.