Michael J. Davey, Esq. mdavey@eckellsparks.com 610.565.3700

Thursday, August 25, 2011

Supervisor who is terminated for asking subordinates for a loan is not entitled to unemployment compensation

In Weingard v. Unemployment Compensation Board of Review, No.: 2729 C.D. 2010 (Pa. Cmwlth. 8/10/2011), the Commonwealth Court held, in a matter of first impression, that a supervisor who is fired for requesting a substantial loan from a subordinate is not entitled to receive unemployment compensation, even if the employer does not have a specific rule prohibiting the solicitation of loans in the workplace. The Court held that such a request constitutes a disregard of the standards of behavior an employer has a right to expect from its employees.

In this case, Weingard learned that a co-worker was selling a motorcycle for $1,000.00 and he wanted to buy it. But, due to his poor credit history, Weingard knew that he would be unable to obtain a loan from a bank. So, Weingard asked his supervisor for a $1,000.00 loan and was turned down. Weingard then asked five other employees - at least one of whom was Weingard's subordinate - if he could borrow the $1,000.00 and was similarly rejected. One of the employees who was supervised by Weingard complained to Weingard's supervisor about Weingard's request to borrow money, indicating that it made her uncomfortable. The employer conducted a three-week investigation into the matter, after which it terminated Weingard for his requests to borrow money, deeming such an action to be "coercive."

The employer's handbook did not contain any specific rules regarding the lending or borrowing of money between supervisors and subordinates, but did prohibit employees from "operating or acting in any manner that is contrary to the best interests of Employer."

Weingard then filed for unemployment compensation benefits. The Unemployment Compensation Referee granted benefits to Weingard, finding that the employer had failed to meet its burden to establish the existence of a rule regarding the lending or borrowing of money between supervisors and subordinates, and that a violation of that rule could result in termination.

On appeal, the Unemployment Compensation Board of Review reversed, holding that the employer had in fact established the existence of a policy that prohibited Weingard from acting in a manner that was contrary to the employer's best interests. The Board thus denied Weingard unemployment compensation benefits.

The Commonwealth Court affirmed the decision of the Board that denied Weingard unemployment compensation benefits, but did so on different grounds. The Court found that employer's general policy that prohibited employees from "operating or acting in any manner that is contrary to the best interests of Employer," was "so general as to be meaningless to this appeal." The Court held that the Board committed error when it found that Weingard had knowingly violated this vague standard because "[Weingard] testified that he did not know there was a policy prohibiting him from soliciting loans from co-workers, and he did not believe that asking another employee for a loan harmed Employer's interest in any way. Employer provided no evidence to the contrary." Thus, the Court found the Board's conclusion that Weingard had committed willful misconduct by knowingly violating a work rule, was erroneous.

The Court nevertheless determined that Weingard was ineligible to receive unemployment compensation benefits. Examining for the first time whether a supervisor's request of a substantial loan from a subordinate constitutes willful misconduct, the Court found that in asking to borrow $1,000.00 from a subordinate, "[Weingard] used his position of authority in an unseemly way. He may not have used overt threats or direct coercion, but that fact is not dispositive of the issue. [Weingard] held the upper hand in the relationship with the employees he supervised. . . There is an unspoken, and implicit, coercion when a boss makes a request for a significant loan of an employee under his supervision." Therefore, the Court concluded that while Weingard may not have violated a specific written rule of his employer regarding money-lending between employees, his conduct "violated the standards of behavior his Employer had a right to expect," from its employees, which constituted willful misconduct that disqualified him from receiving unemployment compensation benefits.

The moral of the story? If you need a loan, go to a bank.

You can read the WeingardCourt's full opinion here: http://www.courts.state.pa.us/OpPosting/Cwealth/out/2726CD10_8-10-11.pdf

Saturday, August 20, 2011

Vote for "Pa Employment Law" as one of ABA's top 100 blawgs for 2011!

The American Bar Association is one again compiling its list of the top 100 legal blogs in the country and is looking for nominations.

If you like "Pa Employment Law" then please take a few minutes and vote!

Just click on this link: http://www.abajournal.com/blawgs/blawg100_submit/, fill out the short form and click submit!


Thursday, August 18, 2011

Think supervisors and employers are immune from retaliation claims because employee discipline is recommended by an internal review committee? Think again.

In McKenna v. City of Philadelphia (8/17/2011) the Third Circuit Court of Appeals held that the Philadelphia Police Department's use of an internal disciplinary review committee to recommend an officer's termination did not insulate that officer's supervisor, or the City itself, from charges of unlawful retaliation and termination. In so doing, the Court analyzed and applied the recent decision of the U.S. Supreme Court in Staub v. Proctor Hospital, in which the Court held that an employer may be held liable for unlawful discrimination based upon the discriminatory motivation of an employee who influenced, but did not make, the ultimate adverse employment decision. (To read more about the Staub decision, see my earlier post on this blog here: http://paemploymentlaw.blogspot.com/2011/03/us-supreme-court-adopts-cats-paw-theory.html

McKenna involved a former Caucasian Philadelphia police officer, Raymond Carnation, who testified that he used to work in a police squad that experienced significant internal racial tensions. Shortly after Sgt. John Moroney was named as the permanent supervisor of Carnation's squad, Carnation complained to Moroney of the issues involving racial tensions within the squad. Carnation also complained to the local district commander, Captain William Colarulo, about the racial tensions. When nothing appeared to be happening to change the environment within the squad, Carnation told Colarulo that he thought Moroney was condoning racism by failing to address the issues Carnation had complained of. Carnation also told Moroney that he thought Moroney was contributing to the problems by failing to take action.

As a direct consequence of making these complaints, Carnation testified that he was subjected to retaliation, such as being assigned unassisted duty in dangerous neighborhoods in unpleasant weather conditions. In another instance, Carnation testified that Colarulo told him that if Carnation filed an EEOC complaint, Colarulo would make Carnation's life "a living nightmare," and ordered Carnation to apologize for making his previous accusations.

In May of 1997, Carnation attempted to call Moroney at the district, in order to speak with him. Carnation received a telephone call back from Colarulo, who ordered Carnation to "not call Sgt. Moroney." The next Saturday, however, Carnation called Moroney and spoke with him about his concerns surrounding the racial issues in the squad. The next day, Carnation called Colarulo, who was off duty and on vacation for the Memorial Day holiday, and told Colarulo that he had spoken to Moroney and resolved many of his concerns, but still wanted to schedule a meeting between all three of them. Colarulo refused to schedule a meeting.

After the Memorial Day holiday, Colarulo served Carnation with disciplinary papers relating to the phone calls that had been placed over the weekend, and brought charges of insubordination, using profane or insulting language to a superior officer, and neglect of duty for failing to comply with oral orders of a superior, against Carnation.

As per Philadelphia Police Department procedures, the charges were then sent to an internal disciplinary board called the "Police Board of Inquiry" or "PBI." The PBI is a three-member panel of police officers, which listens to the evidence before it and then decides what proper sanction, if any, that it will recommend to the Police Commissioner, who holds the power to impose any recommended sanctions.

Carnation pled "not guilty" to the charges against him, and a hearing was held before the PBI, at which Carnation was represented by private counsel, and testified on his own behalf, as did Colarulo. The PBI found Carnation guilty of all three counts brought by Colarulo and, on its own initiative, added a fourth charge of conduct unbecoming an officer. The PBI then recommended Carnation's termination to the Police Commission, who approved the same.

Carnation subsequently filed suit against the City of Philadelphia, alleging unlawful retaliatory termination in violation of Title VII. The jury found that Carnation's termination constituted illegal retaliation that stemmed from his protected activity of complaining about racial discrimination to Colarulo and Moroney during the Memorial Day weekend, and awarded Carnation $2,000,000.00 in compensatory damages.

The City appealed from the district court's decision upholding the jury verdict, arguing that the City could not be held liable for any retaliatory animus held by Colarulo against Carnation, as a matter of law, because Carnation's termination was not carried out by Colarulo. Rather, Carnation's termination was carried out by a separate, internal disciplinary board that made its recommendation to dismiss Carnation only after receiving testimony and evidence in an unbiased, neutral due-process hearing.

The Court of Appeals disagreed and affirmed the jury's verdict against the City. The Court rejected the City's arguments that the use of the PBI insulated the City and Colarulo from liability as a matter of law. Specifically, the Court recognized that in Staub, the Supreme Court held that the test for analyzing whether an employer can be held liable for the discriminatory or retaliatory animus of a non-decisionmaker was not whether the non-decisionmaker exerted "singular influence," over the eventual adverse employment action, but rather whether the non-decisionmaker's animus was the "proximate cause," of the adverse employment action suffered by the employee. The Third Circuit noted that "proximate causation requires only some direct relation between the injury asserted and the injurious conduct alleged and excludes only those links that are too remote, purely contingent, or indirect." The Court held that the record in this case was insufficient to establish that the PBI's role in Carnation's dismissal rose to such a superseding level that it rendered any retaliatory animus harbored by Colarulo remote, purely contingent or indirect. Rather, the Court held that on the evidence presented, the jury was justified in finding that Colarulo's retaliatory animus "bore a direct and substantial relation to Carnation's termination and that the PBI's recommendation was not independent and was foreseeable." This conclusion was further supported by the Staub decision, in which the Supreme Court itself noted that "[a] supervisor's biased report may remain a casual factor if [an] independent investigation takes it into account without determining that the adverse action was, apart from the supervisor's recommendation, entirely justified. . ."

This case illustrates that, following the rule set forth by the Supreme Court in Staub, an employer cannot rely upon the use of an internal disciplinary review process to always insulate it from liability for discrimination or retaliation under Title VII, even when the individuals who participate in the review process have no relation to the employee or to the supervisor who may have recommended disciplinary action.

To read the Third Circuit's full opinion in McKenna v. City of Philadelphia, click here: http://www.ca3.uscourts.gov/opinarch/093567p.pdf