Newsletter
Dec 14, 2012
Massachusetts Employment & Labor Law Report
Hired Employee Can State Claim of Hiring Discrimination
First Circuit Finds Disabled Employee Must Show "But-For" Causation to Establish Retaliation
Staffing Agencies and Worksite Employers to Face New Regulations in 2013
No Means No: First Circuit Interprets Tip Pooling Law and Upholds Mandatory Treble Damages Law
Request for Extension of Time to Pass Test Not a Reasonable Accommodation
District Court Rejects Disparate Impact Race Discrimination Case Based on Four-Fifths Rule
First Circuit Holds Employment Arbitration Clause Unenforceable Against Job Applicant
Termination of Religious School Teacher is Covered by Ministerial Exception to Discrimination Law
Hired Employee Can State Claim of Hiring Discrimination
In Fisher v. Town of Orange, the U.S. District Court for the District of Massachusetts held that a female employee could sue her employer for hiring discrimination even though the employer had hired her over another male applicant.
In August 2007, Rebecca Fisher applied to be a full-time firefighter for the town of Orange, Massachusetts. Fisher alleged that after she applied, the town put the hiring process on hold and implemented an independent applicant assessment procedure. The town had never before utilized this independent assessment process, and Fisher alleged that it never conceived of utilizing this process until after she applied. Fisher was assessed in early October 2007, received the top rating, and was asked to interview. Before her interview, a male candidate (who was deemed less qualified than Fisher by the independent assessment) told Fisher that he had been offered the position. During Fisher's interview, one interviewer asked Fisher if she thought she would be accepted by the other firefighters, and another remarked that he did not think the town was ready for a female firefighter. The next day, the town's fire chief offered Fisher the job after telling her that the town administrator said that he "could not see a way around" hiring Fisher. Fisher claimed that she was subjected to a hostile work environment after she was hired and she resigned in May 2008.
Fisher sued the town, alleging that the town had violated Title VII of the Civil Rights Act of 1964 by engaging in gender discrimination in its hiring practices. The town moved to dismiss the claim, arguing that Fisher could not maintain a discriminatory hiring claim because she had been hired over a male applicant.
Although a discriminatory hiring case typically requires a plaintiff to establish that he or she was not hired, a plaintiff's prima facie obligations can vary based on the facts of each case. The District Court noted that the central focus of a gender discrimination case is whether a plaintiff was treated less favorably because of his or her sex. The District Court held that Fisher's allegations that the town engaged in a substantial delay in the hiring process because of her gender could constitute discrimination under Title VII. The District Court further held that Fisher did not need to show that another person was hired instead of her; rather, she needed only to demonstrate that the town sought a replacement for her. The District Court found that Fisher satisfied her prima facie burden of hiring discrimination because she alleged that (1) the position was offered to a less qualified male; (2) one interviewer said the town was not ready for a female firefighter; and (3) she was offered the job only because the town did not see a way around it.
This decision turned on the specific facts of Fisher's complaint, which were deemed to be true at the motion to dismiss stage prior to any discovery. Nevertheless, it serves as a reminder that employers must ensure that the hiring process, in addition to the ultimate hiring decision, is fair and free from any conduct that could be perceived as discriminatory. Comments made during the hiring process, delays in the decision, or altered hiring procedures could support a discriminatory hiring claim, even if an individual is ultimately hired.
First Circuit Finds Disabled Employee Must Show "But-For" Causation to Establish Retaliation
In Palmquist v. Shinseki, the U.S. Court of Appeals for the First Circuit held that a disabled employee who alleged that his employer failed to promote him because he complained of disability-based discrimination was required to establish that his complaint was the "but-for" reason why he was not promoted, and not merely a motivating factor.
Mark Palmquist, a veteran who suffered a brain injury during his military service, brought a retaliation claim against his employer, the Department of Veterans Affairs. Since Palmquist was employed by a federal government agency, he brought his claim under the Rehabilitation Act of 1973, which prohibits federal government agencies from discriminating against employees on the basis of disability or retaliating against them for raising discrimination complaints.
After unsuccessfully applying for a promotion, Palmquist complained to his employer that he did not receive the promotion preferences to which he was entitled under federal law as a disabled veteran. Palmquist subsequently applied for another promotion, and his supervisor gave a reference in which she made remarks arguably related to Palmquist's earlier complaints, such as saying that Palmquist tends to "go overboard" on behalf of veterans. While the supervisor said that she intended those comments to reflect positively on Palmquist, the decision-maker viewed the comments negatively and did not give Palmquist the promotion.
Palmquist alleged that his employer denied him the promotion because of his complaints and, in so doing, unlawfully retaliated against him. At trial, the jury found that while Palmquist's complaints were a motivating factor in the decision not to promote him, the complaints were not the "but-for" cause of that decision. The trial court therefore entered judgment for the employer.
Palmquist appealed to the First Circuit, arguing that the trial court should have entered judgment in his favor because the jury found that his complaints were a motivating factor in the decision not to promote him. The First Circuit rejected this argument, holding that Palmquist had to establish that his complaints were the "but-for" cause of his employer's decision. The First Circuit reasoned that Congress amended Title VII, which prohibits discrimination on the basis of factors such as race, to allow a plaintiff to prove a violation by establishing that a protected characteristic was a motiving factor in an employment decision, even if it was not the "but-for" cause. Congress, however, did not make a similar amendment to the Americans with Disabilities Act (ADA), which is the statute that courts review when addressing Rehabilitation Act claims. The ADA, like the Age Discrimination in Employment Act (ADEA), states that no person shall retaliate against an individual "because" the individual has opposed any discriminatory practices. The U.S. Supreme Court held that the ADEA requires proof of but-for causation.
While Palmquist's claim was brought under the Rehabilitation Act, which does not apply to most private employers, the First Circuit's decision is significant to private employers because the Rehabilitation Act borrows its causation standard from the ADA. Employers can argue therefore that under the ADA an employee must establish "but-for" causation and that motivating factor causation is insufficient.
Staffing Agencies and Worksite Employers to Face New Regulations in 2013
On January 31, 2013, "An Act Establishing Temporary Workers Right to Know" goes into effect in Massachusetts. The law requires temporary staffing agencies to provide temporary employees with comprehensive, individualized, pre-employment information regarding each new work assignment, limits the fees for which agencies and worksite employers may charge temporary employees, and requires staffing agencies to reimburse temporary employees sent to worksites where no work is available. Violations of the law can result in civil fines and criminal penalties. Staffing agencies should review their current practices and ensure that they are compliant.
Under the law, staffing agencies will need to provide temporary employees with (1) the contact information for the staffing agency, the workers' compensation carrier, the worksite employer, and the Massachusetts Department of Labor Standards (DLS); (2) a description of the position and any special requirements for the position; (3) the designated pay day, the hourly rate, and whether overtime pay may occur; (4) the anticipated schedule and project duration; (5) whether meals will be provided and, if so, any charge to the employee; and (6) details about transportation to the worksite and any fees for such transportation. Although staffing agencies may provide this information via telephone, they must provide written confirmation before the end of the first pay period. Staffing agencies must also post this information in a conspicuous place in each of its locations and in languages other than English, when appropriate. These disclosure requirements do not apply to professional employees, as defined in the federal Fair Labor Standards Act (FLSA), or to secretaries and administrative assistants with certain enumerated duties.
The law also prohibits staffing agencies and worksite employers from charging fees for the following: (1) the cost of registering with the agency or for procuring employment; (2) any goods or services unless the there is a written contract on point and provided the employer does not profit from the fee; (3) issuing a bank card, debit card, payroll card, voucher, draft, money order or similar form of payment or wages, or any drug screen, that exceeds the actual cost per applicant/employee; (4) a criminal record offender information request; and (5) transportation, unless the charge is no more than the actual cost of the transportation, does not exceed 3% of the employee's total daily wages, and does not reduce the employee's daily wages to below the minimum wage. Staffing agencies and worksite employees cannot make a deduction from an employee's wages without the employee's express written authorization. Finally, the law prohibits staffing agencies from engaging in certain conduct, such as providing false information to any applicant or employee and placing an employee for an illegal purpose or in violation of the law. The DLS has stated that it will promulgate regulations after a public hearing.
Staffing agencies should consider immediately reaching out to their Massachusetts clients, as they will be required to obtain additional information from clients prior to contacting temporary employees regarding assignments. Staffing agencies should also review whether any of their temporary employees are exempt from the notice requirements. Worksite employers should review any fees they currently charge to temporary employees to ensure compliance with the law.
No Means No: First Circuit Interprets Tip Pooling Law and Upholds Mandatory Treble Damages Law
In Matamoros v. Starbucks Corporation, the First Circuit interpreted two key Massachusetts wage and hour statutes, Massachusetts General Laws ch. 149, § 152A (Tip Statute), which regulates gratuities, service charges, and tip pools, and ch. 149, § 150, which provides for mandatory treble damages for wage violations.
The plaintiffs in Matamoros are baristas who claim that Starbucks violated the Tip Statute by allowing shift supervisors to receive a share of tips left by customers in tip jars at the store's registers. Under the Tip Statute, only wait staff and certain other employees who have "no managerial responsibility" are permitted to share in tip pools.
The District Court held that although shift supervisors spend the majority of their time serving customers, they possess managerial responsibility for purposes of the Tip Statute because they also direct employees to workstations, open and close the store, open the store's safe, and handle and account for cash. The First Circuit affirmed, rejecting Starbucks's attempt to distinguish the shift supervisors' relatively minor supervisory duties from "management" and holding that even extraordinarily limited managerial responsibility prevents an employee from participating in a tip pool. The First Circuit based its decision on the language of the Tip Statute, stating: "'No' means 'no,' and we interpret that easily understood word in its ordinary sense: 'not any.'"
Most importantly for Massachusetts employers in general, the First Circuit upheld the mandatory treble damages provision. Prior to 2008, the Massachusetts Supreme Judicial Court (SJC) held that treble damages are punitive in nature and could only be assessed for wage violations if the employer's actions were "outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others." The legislature subsequently amended the statute, making treble damages mandatory and labeling them "liquidated damages." Starbucks argued that mandatory treble damages violated due process. The First Circuit held that treble damages do not create the kind of due process concerns that are implicated by jury-awarded punitive damages. The Court stated that the legislature had characterized the damages as liquidated damages, which are not punitive in nature.
The First Circuit's decision is a blow to Massachusetts employers. There are no exceptions to the Massachusetts treble damages provision and thus it creates the potential for massive liability for even minor and unintentional wage payment errors. However, the First Circuit's decision may not be the end of the story. First, Starbucks may seek rehearing or Supreme Court review. Second, since the First Circuit based its decision solely on federal constitutional law, employers may still be able to attempt to invalidate the provision based on state due process principles, particularly in light of the SJC's decision that the pre-2008 treble damages was punitive in nature. Regardless, employers need to be vigilant about ensuring compliance with Massachusetts' wage and hour laws and correcting any unintentional errors as soon as possible.
Request for Extension of Time to Pass Test Not a Reasonable Accommodation
In Jones v. Nationwide Insurance Company, the First Circuit held that an employer did not violate the ADA or Massachusetts Laws ch. 151B (Chapter 151B) when it refused to extend the deadline to pass a licensing examination for an employee who had repeatedly failed the exam.
Mark Jones, a Retirement Program Services Director, suffered brachial plexus palsy (BPP), underwent numerous surgeries between 2006 and 2008 for issues related to a shoulder injury, and regularly took painkillers to manage his conditions. In early 2006, Nationwide announced that it would offer a new retirement product, known as ProAccount, and that employees in certain positions (including Jones's position) were required to pass the Series 65 licensing exam in order to sell ProAccount. Jones never took the exam in 2006. He failed the exam in late 2007. In December 2007, Nationwide informed its sales personnel that they would be transferred or terminated if they did not pass the exam by December 31, 2008. Jones failed the exam again in February and April 2008 and on December 23, 2008.
On December 24, 2008, Jones raised the possibility of being granted an extension of time. On December 28, 2008, Jones formally requested an extension and claimed, for the first time, that his 2006 shoulder injury and its "aggressive treatment," including high doses of morphine and oxycodone, had "drastically hindered his academic ability." Jones did not submit any medical information in support of his assertions and did not reference BPP. Nationwide denied Jones's request, but offered to help him transfer to another position in another state. Jones declined to pursue an open alternate position. Accordingly, Nationwide terminated Jones's employment on January 31, 2009. Jones sued Nationwide in October 2010.
The District Court granted Nationwide's motion for summary judgment, and Jones appealed. Bypassing the issue of whether Jones was disabled, the First Circuit focused on whether Jones was a "qualified individual" and whether his requested accommodation was reasonable, which the First Circuit characterized as two interrelated criteria. Based in part on Nationwide's repeated characterizations of the exam, the Court found that passing the exam and obtaining the license was an essential function of the job. The Court then held that Jones's extension request was not reasonable on several grounds: (1) Jones failed to link his requested accommodation to his alleged disability, BPP; (2) the request was too late, after Jones knew his employment was being terminated; and (3) Jones provided no basis for Nationwide to conclude that the extension would help him pass the exam. Finally, the Court affirmed the dismissal of Jones's claim that Nationwide failed to engage in a "interactive process" on the grounds that Jones failed to present evidence that the parties would have been able to find a reasonable accommodation and because Jones declined Nationwide's offer to help him locate another position.
This decision is helpful for employers who find themselves faced with a last minute assertion of a disability and request for accommodation, or other internal complaints, after placing an employee on notice of an anticipated adverse action. According to the First Circuit, such requests may be "too little, too late." Nevertheless, all assertions of disabilities and any request for an accommodation must be reviewed on a case-by-case basis to ensure compliance with the law.
District Court Rejects Disparate Impact Race Discrimination Case Based on Four-Fifths Rule
In Jones v. City of Boston, the District Court granted the City's motion for summary judgment and rejected police officers' disparate impact race discrimination claim based on the Equal Employment Opportunity Commission's (EEOC) "Four-Fifths Rule."
The Boston Police Department uses hair testing to determine if its officers are using illegal drugs. The plaintiff officers failed the hair test and suffered adverse employment actions. The officers sued the City , claiming that the hair test had a disparate impact on African-Americans and thus violated Title VII and Chapter 151B.
The plaintiffs relied on expert statistical evidence in their attempt to establish a prima facie case of disparate impact discrimination. The plaintiffs' expert found evidence that differences in the rates at which African-Americans failed, rather than passed their hair test, were statistically significant. Although it was undisputed that during an eight-year period African-American officers had passed the test at rates between 97% and 99% and white officers passed at rates between 99% and 100%, the plaintiffs argued that their evidence revealed a statistically significant disparity that satisfied their prima facie burden. The District Court disagreed.
The District Court stated that to establish their prima facie case the plaintiffs must identify statistical disparities that are sufficiently substantial that they raise an inference that an employment practice disparately impacts an identified racial group. No one test controls in measuring disparate impact. The District Court observed that the First Circuit has approved the EEOC's "Four-Fifths Rule," which is a rule of thumb for measuring the sufficiency of statistical evidence in employment cases. This rule states that a selection rate for one race that is less than four-fifths of the selection rate of the group with the highest rate will be regarded as evidence of disparate impact. Conversely, a greater than four-fifths rate will generally not be regarded as evidence of disparate impact.
Applying the Four-Fifths Rule here, the District Court held that the plaintiffs failed to establish a prima facie case and "the question is not even close" because "the passing rate for African Americans was at least 97% of the passing rate for whites." The District Court rejected the plaintiffs' reliance on the statistical significance of failure rates, stating that "[f]ocusing on failure rates, rather than passing rates, eludes the point of the Four-Fifths Rule, where the EEOC addressed 'selection' rates rather than 'exclusion' rates."
Employers should consider utilizing the Four-Fifths Rule when assessing whether any practices, including hiring and promoting examinations, have an unintentional disparate impact on a protected group.
First Circuit Holds Employment Arbitration Clause Unenforceable Against Job Applicant
In Gove v. Career Systems Development Corporation, the First Circuit held that an unsuccessful pregnant job applicant was not required to arbitrate her pregnancy and gender discrimination claims because the employer's arbitration clause was ambiguous and therefore unenforceable.
In May 2008, Anne Gove began working for Training & Development Corporation (TDC), a job training and placement organization. In 2009, the account Gove had been working on at TDC was awarded to another company, Career Systems Development Corporation (CSD). During the account's transition, CSD offered Gove an opportunity to apply for a job and to continue working on the account. Gove completed CSD's online application, which included a mandatory arbitration clause stating, "any dispute between you and CSD with respect to any issue prior to your employment, which arises out of the employment process" is to be resolved through arbitration. Two weeks later, Gove, visibly pregnant, interviewed with CSD. During the interview Gove was asked when she was due and whether she had any other children. CSD did not hire Gove and continued to advertise for the position.
Gove filed a complaint with the Maine Human Rights Commission, which found reasonable grounds to conclude that she was denied the position because of her pregnancy. Gove then filed a complaint in the District Court for the District of Maine, alleging that CSD discriminated against her on account of her gender and pregnancy in violation of Title VII and the Maine Human Rights Act. CSD moved to compel arbitration, arguing that Gove was bound by the arbitration clause she had agreed to in the job application. The District Court denied CSD's motion and held that the arbitration clause was invalid and unenforceable because an ambiguity existed regarding whether it applied to an applicant, like Gove, who was never hired, and that the ambiguity must be construed against CSD, the drafter. CSD appealed.
The First Circuit rejected the District Court's decision that the arbitration clause was invalid because of the ambiguity. Rather, the issue as framed by the First Circuit concerned the scope of the arbitration clause – whether it applied to non-hired applicants – not its validity. Although normally giving significant weight to the federal policy of presuming arbitration, the First Circuit did not consider federal policy because of CSD's failure to make this argument on appeal. Like the District Court, the First Circuit applied Maine contract law construing ambiguity against the drafter. The First Circuit found that since the arbitration clause did not refer to "applicants," and instead solely referenced "your employment," "the employment process," and "pre-employment disputes," Gove could reasonably believe that she would be bound by the arbitration clause only if hired. Because the scope of the arbitration was ambiguous as to applicants not hired, the First Circuit construed the agreement against CSD and affirmed the District Court's judgment.
Gove demonstrates the need for employers who want to compel arbitration to use clear and specific language in their agreements. Employers that choose to include arbitration provisions in their applications for employment should ensure that their clauses also include references to "applicants."
Appeals Court Affirms Dismissal of Wrongful Termination Claim For Failure To File Administrative Charge with MCAD
In Ryan v. Holie Donut, Inc. the Massachusetts Court of Appeals affirmed the dismissal of a wrongful termination case that stemmed from alleged sexual harassment and retaliation in the workplace. The Court concluded that the plaintiff's claims should be dismissed because of her failure to file a timely administrative charge with the Massachusetts Commission Against Discrimination (MCAD).
Plaintiff Maria Ryan was an employee of Holie Donut. According to her complaint, in 2006 a police officer who frequented the donut shop began a pattern of sexual harassment that included a sexual assault. In September 2007, Ryan informed Holie Donut that she intended to report the police officer's conduct to law enforcement. Ryan claimed that Holie Donut encouraged her not to report the police officer's conduct, and that it discharged her after she initiated steps to report the conduct.
On September 2, 2010, almost three years after her termination, Ryan filed a complaint in superior court against Holie Donut, alleging that her termination constituted a wrongful termination in violation of public policy. Holie Donut moved to dismiss Ryan's complaint on the basis that she had failed to file an administrative charge with the MCAD within 300 days of the alleged harassing and retaliatory conduct. The superior court granted Holie Donut's motion, and Ryan appealed.
In her appeal, Ryan argued that her claim for wrongful termination fell outside of Chapter 151B because she alleged that Holie Donut's conduct – terminating her in response to her report of a crime to law enforcement – is not a practice that is forbidden by Chapter 151B. Therefore, according to Ryan, she was not required to file an administrative charge with the MCAD within 300 days of the retaliatory conduct.
The Court rejected Ryan's argument. While recognizing that Massachusetts law permits claims of wrongful discharge in violation of public policy in limited circumstances, the Court examined the allegations of her complaint and found that a "full and balanced view of the complaint reveals a story of sexual harassment." The Court noted that Chapter 151B furnishes a "comprehensive remedial process designed to resolve claims of discrimination with fairness and efficiency for both the complainant and the respondent." The Court held that Ryan's claims fell within the statutory jurisdiction of the MCAD, and that her failure to first file an administrative charge within the 300 day deadline required dismissal of her complaint.
This decision is helpful for employers who find themselves faced with plaintiffs who seek to avoid Chapter 151B's filing requirements (including its 300 day limitations period) by characterizing their claim as one for wrongful termination.
Termination of Religious School Teacher is Covered by Ministerial Exception to Discrimination Law
The SJC recently affirmed dismissal of the age discrimination claim of a religious school teacher under Chapter 151B, holding that school's actions fell within the "ministerial exception" to federal and state discrimination law.
Temple Emanuel of Newton v. Massachusetts Commission Against Discrimination centered on the termination of a religious school teacher by a Conservative Jewish congregation (Temple). The teacher filed a charge with the MCAD asserting age discrimination in violation of Chapter 151B. Temple moved to dismiss the teacher's claim, asserting that its actions were exempt from Chapter 151B under the ministerial exception. The ministerial exception arises from the Establishment Clause and Free Exercise Clause of the First Amendment to the United States Constitution. The exception is based on the concept that freedom of religion is infringed where state or federal government interferes in decisions by religious institutions as to "which individuals will minister to the faithful."
After an MCAD investigator denied Temple's motion to dismiss, Temple appealed to the superior court. The superior court entered judgment in favor of Temple and dismissed the teacher's MCAD Charge before the MCAD rendered a final decision on the Charge. The MCAD appealed this decision to the SJC.
The SJC first held that the superior court erred by taking jurisdiction over the case prior to the time that the MCAD's administrative proceedings had concluded. Temple's ministerial exception defense had not yet been addressed by the full commission, and the SJC noted that "there could be no assurance as to how the commission would ultimately rule on this issue." The SJC also held that while the case raised important legal questions, the questions were not so far reaching as to compel the superior court to take the case prior to exhaustion of Temple's administrative remedies. Finally, relying on U.S. Supreme Court precedent, the SJC held that the superior court erred in reasoning that mere investigation by the MCAD violated the First Amendment if the ministerial exception applied.
Although the SJC found the superior court's decision to be premature, it nonetheless affirmed the dismissal based on the undisputed facts presented on appeal. The Court held that on the facts presented, the school teacher was a "minister" and thus the ministerial exception applied to the case. The Court reasoned that the school teacher "taught religious subjects at a school that functioned solely as a religious school, whose mission was to teach Jewish children about Jewish learning, language, history, traditions and prayer." The Court thus concluded that "the State should not intrude on a religious group's decision as to who should (and should not) teach its religion to the children of its members."
The case clarifies the limited circumstances under which judicial review of MCAD administrative proceedings may be obtained, particularly prior to the conclusion of the MCAD's administrative process. The case also clarifies the circumstances under which the ministerial exception applies to employment decisions relating to religious school instructors.
Table of Cases
Fisher v. Town of Orange, No. 10-30172 (D. Mass. Feb. 24, 2012).
Palmquist v. Shinseki, 689 F.3d 66 (1st Cir. 2012).
Matamoros v. Starbucks Corp., 699 F.3d 129 (1st Cir. 2012).
Jones v. Nationwide Life Ins. Co., 696 F.3d 78 (1st Cir. 2012).
Jones v. City of Boston, No. 05-11832 (D. Mass. Sept. 28, 2012).
Gove v. Career Sys. Dev. Corp., 689 F.3d 1 (1st Cir. 2012).
Ryan v. Holie Donut, Inc., 82 Mass. App. Ct. 633 (2012).
Temple Emanuel of Newton v. Massachusetts Commission Against Discrimination, 463 Mass. 472 (2012).
Next Massachusetts Employment & Labor Law Report:
March 15, 2013