Tuesday, October 26, 2010

Federal Court Allows Age and Gender Discrimination Claims Against Rite-Aid To Proceed

In Lazzaro v. Rite Aid Corporation, 09-cv-1140 (W.D. Pa. 8/17/2010), the U.S. District Court for the Western District of Pennsylvania permitted age and gender discrimination claims filed against Rite Aid Corporation under the Age Discrimination in Employment Act (ADEA), Title VII and the Pennsylvania Human Relations Act (PHRA), to proceed to trial.

Plaintiff, Joann Lazzaro, a 55 year old female, had worked for Rite Aid and its predecessor companies for thirty-six years, beginning on June 20, 1972. She began her career with Brooks/Eckerd stores, and transitioned to Rite Aid after Rite Aid acquired Brooks/Eckerd. After her Brooks/Eckerd store was closed in October of 2007, Lazzaro was transferred as Store Manager to a Rite Aid store located in Wilkinsburg, PA.

In February of 2008, Jeff Suriano, a 37 year old male, became Lazzaro's supervisor when he was made the Rite-Aid District Manager responsible for the Wilkinsburg store. During his first visit to the Wilkinsburg store, Suriano stated to Lazzaro that he thought she was retiring, noting that she had worked there for 30 years. Lazzaro corrected him, noting that it would be thirty-six years in June. In turn, Suriano commented "that's almost as long as I have been born," and further mentioned that he "swore he heard that she was retiring," on at least two other subsequent occasions.

On March 24, 2008, five of Lazzaro's family members, none of whom were Rite Aid employees, assisted Lazzaro in the Wilkinsburg store by helping her prepare the store for its upcoming inventory. Lazzaro claimed that she told Suriano about this, who said he would "look the other way this time." Suriano, however, denied having any conversations with Lazzaro about her family members working at the Wilkinsburg store. On March 25, Suriano gave Lazzaro a "Written Notice" as a result of the Wilkinsburg store's poor inventory performance.

On May 5, 2008, Suriano and Lynne Shawley, Rite Aid's Human Resources Manager, met with Lazzaro to discuss the Wilkinburg store's poor inventory performance. At this meeting, Suriano raised the issue of Lazzaro's family members working in the Wilkinsburg store. Lazzaro admitted that she had her family members perform work at the Wilkingsburg store, but stated that Suriano knew that it was happening. Suriano again denied having any knowledge of Lazzaro's family members working at the Wilkinsburg store prior to March 24, 2008. During this meeting, Shawley also commented to Lazzaro that she had heard that Lazzaro was "always complaining about aches and pains," and that she "was very slow to catch on to the new Rite Aid system." At the close of the meeting, Shawley informed Lazzaro that an investigation would be conducted regarding the extent to which she permitted her family members to work at the Wilkinsburg store.

Later, at Shawley's request, Lazzaro provided a written statement that approximated the amount of time her family members had worked at the Wilkinsburg store. Shawley then suspended Lazzaro for her alleged misconduct, but did not suspend Suriano for his alleged knowledge of Lazzaro's family members working at the Wilkinsburg store.

On June 2, 2008, Shawley submitted a recommendation to the Senior Resources Manager for Rite Aid that Lazzaro be terminated. Subsequent discussions between and among upper-level Human Resources individuals and management for Rite Aid Corporation approved Shawley's recommendation. At Shawley's instruction, Suriano called Lazzaro on June 3, 2008 and informed her that she had been terminated.

Following Lazzaro's termination, Rite Aid transferred a 25-year-old male to fill the Store Manager position at the Wilkinsburg store that had been vacated by Lazzaro. During her previous thirty-six years of employment, Lazzaro had never received any disciplinary action or performance warnings from Rite Aid or its predecessors.

On November 21, 2008, Lazzaro filed an EEOC charge against Rite Aid, alleging age and gender discrimination. Following the filing of Lazzaro's EEOC charge, Rite-Aid terminated at least four other store mamagers, aged 45, 37, 55 and 47, for permitting individuals who were not Rite Aid employees to perform work at their respective stores. Rite Aid then replaced these terminated store managers with individuals who were aged 27, 24, 34 and 57.

In her subsequent lawsuit, Lazzaro claimed that her discipline and termination were discriminatory actions against her based upon her age and/or gender, and that Rite Aid's reasons for terminating her were mere pretext. Rite Aid filed a motion for summary judgment, arguing that it had legitimately and properly terminated Lazzaro for permitting non-employees to work at the Wilkinsburg store and that Lazzaro had failed to establish any evidence of discrimination.

The District Court denied Rite Aid's motion for summary judgment, and permitted Lazzaro's claims to proceed to a jury. Contrary to Rite Aid's assertions, the Court held that Lazzaro had submitted enough conflicting evidence that could allow a jury to determine that Rite Aid's proffered reasons for terminating Lazzaro were mere pretext. Specifically, the Court noted that: (1) during Suriano's first visit to the Wilkinsburg store, he had made comments about Lazzaro retiring and about her age; and (2) during the May 5, 2008 meeting, Shawley had made comments about Lazzaro complaining about aches and pains and being "slow to catch on to the new Rite Aid system." The Court also found that there existed a factual dispute as to whether or not Suriano actually knew that Lazzaro's family members were working at the Wilkinsburg store. The Court noted that the determination of this factual dispute could allow a jury to draw reasonable inferences as to whether Lazzaro's disparate treatment was meritorious, and could enable them determine whether Rite Aid treated Suriano, a younger male, differently than Lazzaro, an older female.

The Court also pointed to the fact that Lazzaro was the first store manager fired for allowing non-employee family members to work at her store. And, there was no evidence offered to establish that Rite Aid had a policy prohibiting non-employees from volunteering their services, nor any Rite-Aid policy that permitted immediate termination for allowing such an activity.

Ultimately, the Court concluded that it was the jury's job to determine whether Rite Aid was using terminations for violations of an unwritten company policy as pretext, thus promoting the inference that a pattern of terminations existed where older store managers were being replaced with younger ones. Put another way, "[s]imply providing the Court with evidence that defendant has terminated other store managers for the same reason as [Lazzaro] in no way legitimizes a pattern of termination that a reasonable fact-finder may otherwise conclude is pretext."

Monday, October 25, 2010

Third Circuit: Employer Who Fired Workers For Poor Performance While Allegedly Engaging In Discriminatory Training Methods May Be Liable For Discrimination

In Grassmyer, et al. v. Shred-It USA, Inc., No.: 09-3876 (3d. Cir. 8/25/2010), the Third Circuit Court of Appeals held that in a sex discrimination claim under Title VII, a plaintiff can rebut an employer's allegedly nondiscriminatory reason for terminating the plaintiff due to poor performance, by setting forth evidence that the employer failed to provide plaintiff the same training and assistance opportunities available to other employees of the opposite sex.

In Grassmyer, three plaintiffs, all female, sued their former employer, Shred-It USA, Inc., claiming that Shred-It illegally discriminated against them on the basis of their sex, in violation of Title VII. Two of the plaintiffs had been fired by Shred-It for failing to meet specifically designated monthly sales quotas. The third plaintiff resigned claiming that she had been constructively discharged. All three plaintiffs admitted that they had failed to perform the minimum monthly sales quotas required of them. Nevertheless, the plaintiffs claimed that Shred-It had discriminated against them when it: (1) did not terminate male sales representatives who were performing comparably or worse than the plaintiffs; (2) applied sales quotas unevenly among male and female sales representatives; and (3) discriminated on the basis of sex in matters such as training, territory assignments and performance requirements.

The trial court dismissed plaintiffs' claims, finding that over the five previous years, Shred-It had terminated seven male sales representatives and only four female sales representatives, and this fact would thus prevent any rational jury from finding that plaintiffs were terminated because of their gender. The trial court also found that plaintiffs' allegations of discrimination with respect to the allocation of sales territories was not actionable due to the undisputed fact that the plaintiffs were unable to meet their sales quotas, and also concluded that the plaintiffs failed to present any evidence whatsoever that the actions by Shred-It with respect to training opportunities "occurred because of invidious gender discrimination."

On appeal, the Third Circuit reversed the trial court's ruling that plaintiffs had failed to set forth a viable sex discrimination claim against Shred-It. Specifically, the Court recognized that the plaintiffs had introduced testimony that conflicted with the evidence set forth by Shred-It as to how training programs and opportunities were provided and how sales territories were assigned. The Third Circuit held that Shred-It's reason for terminating two of the plaintiffs - failure to meet their minimum required sales quotas - did not automatically become legitimate and non-discriminatory simply because plaintiffs' performance failure was undisputed. Rather, the plaintiffs had introduced sufficient evidence to allow a jury to conclude that the reason why plaintiffs had failed to meet their required sales quotas was because they were improperly denied training opportunities and superior sales territories that were provided by Shred-It to its similarly situated male employees. The Court reaffirmed the rule that an employer who discriminates on the basis of a protected class by failing to provide an employee with sufficient training, cannot then automatically escape liability under Title VII by subsequently terminating that employee for poor performance.

The Court also rejected the trial court's reliance upon Shred-It's past termination record of both male and female sales representatives, noting that "Shred-It's past employment statistics say nothing about the training and territory allocations of the male and female sales representatives who were terminated over the last five years or whether Shred-It otherwise discriminated against women in ways that affected their ability to meet the sales quotas, as is alleged here." Furthermore, the Court recognized that even if Shred-It's past employment statistics conclusively demonstrate no past discrimination of women, that would not immunize Shred-It from all present and future claims of discrimination.

The Third Circuit's full opinion in Grassmyer may be read here: http://www.ca3.uscourts.gov/opinarch/093876np.pdf

Federal Court Dismisses ADA and FMLA Claims Against Wal-Mart

On August 26, 2010, in the case of Stoppi v. Wal-Mart Transportation, LLC, No.: 3:09-cv-916 (M.D. Pa. 2010), District Judge James M. Munley dismissed plaintiff's claims of employment discrimination and harassment against Wal-Mart Transportation under the Americans with Disabilities Act (ADA), but allowed plaintiff's claims of retaliation under the ADA and Family Medical Leave Act (FMLA) to proceed.

Plaintiff, Kimberly Stoppi, was hired by Wal-Mart Transportation, LLC in 2006 as a Driver Coordinator/Router position. Stoppi had been diagnosed with bipolar disorder in her early thirties, but did not reveal her diagnosis to Wal-Mart at the time she was hired.

Prior to November of 2007, Stoppi spoke with her supervisor and asked to be seated away from a window while she adjusted her medication, because taking her medication weakened Stoppi's eyesight and made her hands unsteady. Stoppi testified that her supervisor refused this request and insisted that she perform one-hundred percent or take a leave of absence. Other supervisors repeated this instruction and Stoppi instead stopped taking her medication, and suffered as a result.

Wal-Mart granted Stoppi a leave of absence related to her medical condition in November 2007 until December 2007. When Stoppi returned to work in December of 2007, there was a vacancy in a management position in the facility. A Human Resources Manager for Wal-Mart told Stoppi of the position and asked her if she wanted to interview for the job. While Stoppi was allegedly enthusiastic about applying for the position, Wal-Mart chose not to grant Stoppi an interview. Stoppi contended that she was well-qualified for the position, had nearly five years of transportation experience, had trained new employees and was already in a management position. Stoppi also argued that the employees who did receive interviews lacked the experience in transportation that she had - one had worked for a bingo hall prior to working for Wal-Mart and another had worked in a dentist's office. Wal-Mart contended that Stoppi lacked recent supervisory or management experience, and that it exercised business judgment in choosing to interview other employees with more relevant experience. Ultimately, Wal-Mart did not fill the management position.

After her return to work in December of 2007, Stoppi also claimed that she had been subject to a hostile work environment because of her disability. Specifically, Stoppi referenced five incidents: (1) on December 27, 2007, a driver commented in the breakroom in front of Stoppi that workers can get a "mental leave" at Wal-Mart; (2) on January 13, 2008, another driver saw Stoppi crumple a piece of paper and asked if she was having a "bipolar moment"; (3) Stoppi had heard other workers talking about taking medications, "looney bins" and "going postal" around the workplace; (4) In November of 2008, a driver asked Stoppi if she had forgotten to "take her pill," and in December, the same driver told Stoppi "I see you took your prozac"; and (5) in March of 2008, Stoppi's coworker gave her a coffee mug with the character "Dopey" on it. Stoppi did not report all of these incidents to management or complain about inappropriate comments, as she felt that Wal-Mart would not remedy the situation. Stoppi did complain to one of her managers about the "Dopey" mug, who laughed when Stoppi complained. Stoppi also contended that Wal-Mart's Human Resources Department "leaked" the information concerning her illness to her supervisors.

Stoppi filed claims against Wal-Mart for (1) discrimination under the ADA, (2) harassment under the ADA, and (3) retaliation under the ADA and FMLA. Under her first claim, Stoppi alleged that Wal-Mart discriminated against her because of her disability when it refused to grant her an interview for a position for which she was clearly qualified. Under her second claim, Stoppi alleged that the various comments and actions by the drivers and coworkers set forth above created a hostile work environment that was detrimental to her. Finally, Stoppi claimed that Wal-Mart's failure to grant her an interview and promote her to the vacant management position constituted retaliation for her earlier requests for accommodation and her subsequent medical leave.

The Court granted Wal-Mart's motion for summary judgment on Stoppi's first two claims, and dismissed them. With respect to Stoppi's ADA discrimination claim, the Court held that Stoppi had failed to establish an adverse employment action necessary for a discrimination claim, because it was undisputed that Wal-Mart did not promote anyone. Relying upon a prior decision by the Third Circuit, which held that a plaintiff who did not receive a non-existent employment position could not establish a case of Title VII retaliation, the District Court held that since Wal-Mart had ultimately decided not to fill the vacant management position at all, any failure to grant Stoppi and interview cannot constitute an adverse employment action, as a matter of law.

With respect to Stoppi's claim for harassment under the ADA, the District Court held that while Stoppi may have considered the comments by the Wal-Mart employees to be "hostile," the conduct was not objectively severe enough for a jury to find the existence of a hostile environment. The incidents that Stoppi complained of amounted to an infrequent few over a two-year period, and Stoppi did not point to any evidence that this conduct unreasonably interfered with her job performance.

The District Court, however, permitted Stoppi's retaliation claims under the ADA and FMLA to proceed, holding that Stoppi's argument that the stated reasons for refusing to interview her for the vacant management position were mere pretext, could be accepted by a reasonable jury. Wal-Mart's claim was that Stoppi was denied an interview because she allegedly lacked recent supervisory experience, but Stoppi introduced evidence that those who actually were interviewed had less supervisory experience than she did. As such, the Court held that a jury could find that the stated reason for Wal-Mart's employment decision - Stoppi's lack of experience - was not the real reason. Thus, the Court permitted Stoppi's retaliation claim to proceed.

Tuesday, October 19, 2010

PA Superior Court: Restrictive Covenants Survive Purchase of Membership Equity Interests of LLC

In Missett v. HUB International Pennsylvania, Inc., 2010 PA Super 178 (9/23/2010), the Pennsylvania Superior Court held that when a Limited Liability Company (LLC) sells all of its membership equity interests to another business entity, a restrictive covenant (or covenant not to compete) that was previously entered into by an employee of the LLC, will survive without the need for specific assignment language in the restrictive covenant.

In HUB International, Christopher Missett became employed by Clair Odell Insurance Agency, LLC ("Clair Odell") as a salesperson in the company's benefits department. In this capacity, Missett originated business for Clair Odell, negotiated with potential clients and worked with existing clients to meet their coverage and services needs. In 2000, Missett entered into an agreement with Clair Odell that contained a non-solicitation clause, which prevented Missett from soliciting Clair Odell's clients or prospective clients for two years following the date of his termination.

In 2001, Citizens Financial Group ("Citizens") purchased the membership interests of Clair Odell, and changed the name of the company to Citizens Clair Insurance Company, LLC ("Citizens Clair"). In December of 2002, Missett entered into a second Agreement that amended and restated the original 2000 Agreement, and which contained the same confidentiality and non-solicitation provisions as the 2000 Agreement.

In 2006, HUB U.S. Holdings, Inc. ("HUB U.S.") entered into a Purchase and Sale Agreement with Citizens, in which it acquired all of the issued and outstanding membership equity interests of Citizens Clair. The name of the company was then changed to Hub International Pennsylvania, LLC ("HUB Pa"). The Purchase and Sale Agreement required the companies to abide by the terms of any existing employment agreements that were attached as exhibits. Missett's 2002 Agreement was specifically included as an exhibit to the Purchase and Sale Agreement.

Missett was terminated on April 29, 2008. The stated reason for his termination was that HUB Pa did not want to pay his high commission schedule.

Missett subsequently initiated litigation seeking to enjoin HUB Pa from enforcing the non-solicitation agreement and requesting a declaration from the court that his 2002 Agreement was unenforceable. Missett argued that pursuant to the Pennsylvania Supreme Court's decision in Hess v. Gebhard & Co., Inc., 808 A.2d 912 (Pa. 2002), a restrictive covenant not to compete that is contained in an employment agreement is not assignable to a purchasing business entity in the absence of a specific assignability provision, where the covenant is included in the sale of assets. While Missett's Agreement in this case did contain an assignment provision, it limited such an assignment only to "affiliates" of the company, of which HUB Pa was not. As such, (according to both Missett and the trial court below), the non-solicitation provision of the 2002 Agreement was unenforceable by HUB Pa.

The Superior Court disagreed, reversed the trial court's decision in favor of Missett, and remanded the case for further proceedings. The Court held that the Supreme Court's decision in Hess was distinguishable and not controlling, because the reasoning in Hess was clearly premised upon a "sale of assets" of a corporation, as opposed to the sale of stock. The Superior Court noted that other decisions from the Superior Court and from the federal bench, namely J.C. Ehrlich Co., Inc. v. Martin, 979 A.2d 862 (Pa. Super. 2009), Siemens Medical Solutions Health Services Corp. v. Carmelengo, 167 F.Supp.2d 752 (E.D. Pa. 2001) and Zambelli Fireworks Manufacturing Co., Inc. v. Woods, 592 F.3d 412 (3d. Cir. 2010), all recognized that under Pennsylvania law, a transfer of a corporation's stock does not destroy the corporate entity, because "a corporation is an entity irrespective of, and entirely distinct from, the persons who own its stock." In other words, even when a corporation's stock is purchased by an outside entity and the name of the corporation is changed, the corporate entity nevertheless remains the same. The Superior Court held that "the structure of a sale of equity membership interests," of an LLC is "akin to a sale of stock rather than an asset sale," and therefore, the reasoning of Ehrlich, Carmelengo and Zambelli were applicable and controlling.

As such, the Superior Court concluded that because HUB Pa had acquired Citizens Clair via the purchase of Citizen Clair's membership equity interests, and not by purchasing its assets, no assignment provision was required in order for HUB Pa to enforce the terms and provisions of Missett's 2002 non-solicitation Agreement.

You can read the Superior Court's full opinion in HUB International here: http://www.superior.court.state.pa.us/opinions/a16035_10.pdf

Monday, October 11, 2010

PA Superior Court Affirms Award of $210,704.79 in Attorneys' Fees Under Wage Payment & Collection Law

In Ambrose v. Citizens National Bank of Evans City, No.: 10-3156 (Pa. Super. 9/17/2010), the Pennsylvania Superior Court held that the Wage Payment and Collection Law permits a trial court to make an award of attorneys fees incurred by a successful plaintiff in defending against an employer's counterclaim, where that counterclaim is "inextricably intertwined" with plaintiff's wage claim.

In Ambrose, the plaintiffs sued their former employer under the Pennsylvania Wage Payment and Collection Law, arguing that the employer failed to pay to plaintiffs commissions that were due, and sought compensation, interest, liquidated damages and attorneys fees. The employer filed a counterclaims, alleging unfair competition, breach of fiduciary duties and conspiracy. After trial, the lower court found in favor of the plaintiffs and awarded them $210,704.79 in attorneys fees. Specifically, the trial court determined that employer's counterclaims were without merit, and were pursued by employer for the purpose of intimidating plaintiffs into dropping their wage claims.

Employer appealed, arguing that the trial court committed multiple errors, such as: (1) awarding attorneys' fees to plaintiffs for work performed in defending against employer's counterclaims; (2) including in its calculation of attorneys fees the work performed by plaintiffs' attorneys on appeal; and (3)awarding an unreasonable sum of attorneys' fees.

The Superior Court rejected employer's arguments and affirmed the trial court's award of the attorneys' fees. Specifically, the Superior Court held that the trial court's inclusion of the time plaintiffs were forced to spend defending employer's counterclaims was properly counted in calculating the award of attorneys' fees, because employer's counterclaims were "inextricably intertwined," with plaintiffs' wage claims so as to fall under the fee-award provision of the Wage Payment and Collection Law. The Court also held that awarding attorneys fees for work performed through the appeal process was also proper because including such fees furthers the legislative purposes behind the Wage Payment and Collection Law of making employees who are denied compensation whole. Finally, the Court held that the employer had failed to introduce sufficient evidence to challenge the reasonableness of the hourly rates or fees that were submitted by the plaintiffs and relied upon by the trial court in calculating the final award of attorneys' fees.

Consequently, the Court affirmed the trial court's award of $210,704.79 in attorneys fees against the employer.

The Superior Court's full opinion can be read here: http://www.superior.court.state.pa.us/opinions/A09027_10.pdf

Commonwealth Court: Preschool Teacher Fired For Leaving Child Unattended For Four Minutes In Violation of Employer's 100% Supervision Rule Not Entitled To Unemployment Compensation Benefits

In Oliver v. Unemployment Comp. Bd. of Review, No.: 1798 C.D. 2009 (Pa. Cmwlth. 9/1/2010), the Commonwealth Court affirmed a finding of the Unemployment Compensation Board of Review that denied claimant unemployment compensation benefits after claimant was fired from a preschool for violating the school's 100% child supervision policy.

The claimant was a preschool teacher. On February 26, 2009, claimant took her group of six children from the playroom to an outdoor play area. The employer had a policy that a teacher must supervise all of the children in her charge at all times, without exception (the "100% supervision policy"). After claimant had taken her children to the outdoor play area, claimant's supervisor noticed that one child had remained behind in the playroom. She retrieved the child and brought him to the claimant. The supervisor asked claimant how many children she had, and the claimant stated that she had six. The supervisor responded that "no ... you have five, because here is your sixth one." The supervisor reported the incident to claimant's superiors, and claimant was terminated that day for violation of the 100% supervision policy.

Claimant subsequently applied for unemployment compensation benefits, arguing that she had made an honest mistake in violating the 100% supervision policy, and as such, her actions could not constitute "willful misconduct." Claimant testified that when she brought the children outside, she had not realized that one had remained behind in the playroom because she had been distracted by falling into a piece of play equipment in the playroom. Claimant also testified that the child was only left alone for approximately four minutes. Claimant also stated that she was aware of employer's 100% supervision rule, and admitted that she had received a verbal warning for violating that policy back on February 13, 2009. The Unemployment Compensation Board of Review did not find claimant's testimony to be credible, and instead concluded that claimant had engaged in willful misconduct when she violated employer's 100% supervision rule.

On appeal, the Commonwealth Court affirmed the decision of the Board of Review denying claimant's application for benefits. The Court noted that the Board is the ultimate fact-finding body and is empowered to resolve all conflicts of evidence and determine the credibility of witnesses and the weight of the evidence. The Court recognized that the Board had found claimant's testimony internally inconsistent and not credible, and as such, the Court was not empowered to disturb that finding. However, the Court also noted that even if the claimant did stumble and accidentally lose track of the child, she admitted to not counting the children when she first brought them outside, as was required under the employer's 100% supervision policy. As such, even if her actions in losing track of the child constituted an honest mistake, it did not justify claimant's violation of employer's 100% supervision policy. The Court thus held that claimant had violated her employer's rule without establishing good cause for doing so and the Board of Review did not err in denying claimant's application for unemployment compensation benefits.

The Commonwealth Court's full opinion can be read here: http://www.aopc.org/OpPosting/Cwealth/out/1798CD09_9-1-10.pdf

Commonwealth Court: Claimant Entitled To Unemployment Compensation Benefits After Leaving Work While Upset

In Procyson v. Unemployment Comp. Bd. of Review, No. 1771 C.D. 2009 (Pa. Cmwlth. 9/22/2010) , the Pennsylvania Commonwealth Court reversed a finding by the Unemployment Compensation Board of Review that denied unemployment compensation benefits to a claimant due to a finding that the claimant had voluntarily quit her job after abruptly leaving following comments made by claimant's supervisor about claimant's job performance that made claimant visibly upset.

Claimant worked full-time for her employer from 11/2007 through 11/2008, when she was injured in a biking accident, which caused her to miss five weeks of work. Claimant then returned to work on a part-time basis with medical restrictions. During both her absence from work and her part-time schedule, the employer's general manager hired her brother to fill in for claimant's missed time. In early January of 2009, claimant was cleared by her doctor to return to work full-time. While at work on January 9, 2009, claimant called the general manager and requested to return to a full-time schedule. The general manager told claimant that she would have to talk to some other people, including employer's president, about claimant's request for a return to a full-time schedule. The general manager then told claimant that both she and the pharmacist agreed that the general manager's brother was able to do claimant's job faster than the claimant.

Claimant became very upset about these comments, and began to cry. She then gathered her belongings, called the pharmacist "two-faced," and left. The pharmacist followed claimant through the building and into the parking lot, telling claimant "don't leave like this." Claimant shouted back "no, leave me alone," and left. At no time did claimant ever say "I quit."

Claimant then reported for her next scheduled shift on Tuesday, January 13, 2009. When she arrived at work, she was called to the president's office, who (according to claimant) accused claimant in a loud voice of yelling and screaming in the store the previous Friday. The president then told claimant that she was fired, should leave and never come back.

Claimant then applied for unemployment compensation benefits, and was denied. At a hearing before the Referee, the Claimant admitted that she had walked out without completing her shift, but denied she had quit. Rather, she explained that she went home because she did not want the customers to see her upset and crying. Claimant testified that she loved her job and would never quit.

The Referee denied claimant unemployment compensation benefits, finding that claimant had abandoned her position and did not take reasonable steps to preserve her employment. Similarly, the Board of Review found that claimant had voluntarily terminated her employment on January 9, 2009 when she walked out of work while giving her employer "no inkling that she intended to return." The Board of Review also found that claimant's walking out of work because of comments by claimant's supervisor about her job performance did not constitute "necessitous and compelling reasons to quit."

On appeal, the Commonwealth Court reversed, and found that claimant was entitled to unemployment compensation benefits. Specifically, the Court emphasized that Pennsylvania law requires "evidence of a conscious intention to abandon a job," and that claimant "never expressed such a conscious intention." The Court agreed with claimant's argument that "the fact that a claimant leaves work before the end of a shift does not, in itself, establish an intent to quit." Here, the Court found that claimant was attempting to return to work full-time when the altercation occurred, and that on the day in question, she never said "I quit." And, while claimant did leave work on Friday January 9, she attempted to return to work for her next scheduled shift on Tuesday January 13. The Court noted that it was not reasonable to infer that by not calling her employer during her scheduled days off, claimant had expressed an intent to quit. Rather, the Court recognized that the employer "had the opportunity to contact the employee, but chose, instead, to drop Claimant from the Tuesday schedule without calling her." The Court held that by returning to work the following Tuesday, claimant "acted to preserve the employment relationship." The Court ultimately determined that it was the actions of the president in firing claimant on Tuesday January 13, which terminated claimant's employment, not her leaving work the Friday before. As such, the claimant was entitled to unemployment compensation benefits.

The Commonwealth Court's full opinion is available here: http://www.aopc.org/OpPosting/Cwealth/out/1771CD09_9-22-10.pdf

Monday, October 4, 2010

Third Circuit Rejects Application of Fair Pay Act To Failure-To-Promote Claims

On October 1, 2010, in the case of Noel v. The Boeing Company, No.: 08-3877, the Third Circuit Court of Appeals held, in a case of first-impression, that the provisions of the Lilly Ledbetter Fair Pay Act of 2009 (FPA) do not apply to discrimination claims under Title VII, even when an alleged failure to promote an employee results in lower compensation being paid to that employee as a consequence.

By way of background, Congress passed the FPA in direct response to the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., in which the Court held that an employer's alleged discriminatory decision that resulted in an employee's pay being set at a certain rate, constituted a "discrete act" of discrimination under Title VII, which triggered the running of the statute of limitations. In Ledbetter, for example, Ms. Ledbetter had been employed at Goodyear from 1979 until 1998. At trial, she proved that throughout her employment, her supervisors evaluated her poorly because of her sex, which resulted in her receiving lower pay than if her evaluations had been free of discrimination. She also proved that these discriminatory pay decisions affected her pay throughout the course of her employment, resulting in a salary that was less than her male peers. In dismissing her case as barred by Title VII's statute of limitations, the U.S. Supreme Court held that her claims for sex discrimination began to run when Goodyear made the alleged discriminatory evaluations. The Court rejected Ms. Ledbetter's argument that a distinct and seperate claim against Goodyear actually accrued each time she received a paycheck that was less than it should have been because of the discriminatory decisions she complained about.

In direct response to this decision, Congress passed the FPA, which amended Title VII. Now, each paycheck that stems from an alleged discriminatory compensation decision or pay structure constitutes a "tainted, independent employment-action that commences the administrative statute of limitations." In other words, if an employee is not receiving "equal pay for equal work," as a consequence of an employer's discriminatory employment decision or policy, then each paycheck received by the employee constitutes a discrete discriminatory action that carries with it its own administrative statute of limitations.

In Noel, the Third Circuit was asked to apply the provisions of the FPA to an employee's claims that his employer discriminated against him by failing to promote him to a position for which he was qualified. Specifically, Noel claimed that his employer's failure to promote him because of discriminatory reasons occurred in July and September of 2003. But, Noel did not file an administrative claim with the EEOC until March of 2005, well after the exhaustion of his 300-day administrative statute of limitations period. Noel argued on appeal that the district court improperly dismissed his case because the provisions of the FPA operated to renew his claims for failure-to-promote everytime he received a paycheck that was lower than it should have been as a consequence of that non-promotion.

The Third Circuit disagreed and affirmed the dismissal of Noel's claims. First, the Court held that Noel was pursuing a failure-to-promote claim, as opposed to a discrimintation-in-compensation claim. The Court noted that Noel did not allege a nexus between his employer's decision not to promote him and any resultant disparate compensation, nor did he allege that he received less pay than his white peers for work performed at the same grade level. Noel simply argued that he was denied his promotion for discriminatory reasons; but, had he received that promotion in the absence of discrimination, he would have received more pay. In other words, Noel never argued that he did not receive "equal pay for equal work."

The Court also looked to a decision from the D.C. Circuit Court of Appeals, and held, as a matter of law, that the FPA does not apply to failure-to-promote claims. The Court determined that the intent of Congress in passing the FPA was to address a particular type of discriminatory compensation decisions, which are often concealed and not discovered until long after Title VII's 180 or 300-day limitations period has expired. Promotion decisions, on the other hand, are discrete employment actions in and of themselves, which are readily ascertainable eitehr at the time they are made, or shortly thereafter. And, because the FPA was passed in direct response to the U.S. Supreme Court's decision in Ledbetter, the Court saw no reason to expand the scope of the FPA beyond claims for disparate compensation.

A copy of the Third Circuit's full opinion in Noel can be found here: http://pacer03.ca3.uscourts.gov/opinarch/083877p.pdf