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Constructive Discharge

Published in The National Law Journal

Katz, Marshall & Banks partners Debra S. Katz and Lisa J. Banks published an article in the National Law Journal entitled “Constructive Discharge.”  The article, published on August 2, 2004, focused on Pennsylvania State Police v. Sliders, 124 S. Ct. 2342 (2004), in which the Supreme Court set guidelines for assessing employer liability for working conditions that become so intolerable as to lead a reasonable employee to resign – a “constructive discharge.”  The full-text of the article is available below.



Constructive Discharge

By Lisa J. Banks and Debra S. Katz

The National Law Journal

Download the PDF here.

The U.S. Supreme Court’s 2003-04 term featured few employment cases, little disagreement among the justices regarding their disposition and, on balance, more victories for plaintiffs than defendants. The court expanded the statute of limitation for certain claims brought under 42 U.S.C. 1981 and gave both plaintiffs and defendants something to applaud and decry in its decision on constructive discharge in the sexual harassment context. It rejected a theory of “reverse age discrimination,” and declined to make a substantive ruling in a much-anticipated disability case, instead chastising the 9th U.S. Circuit Court of Appeals for applying the wrong analytical framework.

In Pennsylvania State Police v. Sliders, 124 S. Ct. 2342 (2004), the Supreme Court granted certiorari to resolve a split among the circuits on the question of whether an employee’s resignation brought about by supervisor sexual harassment constitutes a tangible employment action and therefore precludes assertion of the affirmative defense to liability established in Burlington Industries lac. v. Ellerth, 524 U.S. 742(1998), and Faragher v. Boca Raton, 524 U.S. 775(1998).

In an 8-1 decision authored by Justice Ruth Bader Ginsburg, the court set guidelines for assessing employer liability for working conditions that become so intolerable as to lead a reasonable employee to resign – a “constructive discharge.” In so ruling, the court provided reasons for both the plaintiffs’ and defense bars to claim important victories.

In a ruling of first impression, the Supreme Court held that Title VII of the Civil Rights Act of 1964 is violated by “either explicit or constructive alterations in the terms or conditions of employment,” and confirmed that Title VII “encompasses employer liability for a constructive discharge.” 124 S. Ct. at 2352. In an aspect of the decision highly favorable to plaintiffs in constructive discharge cases, the court made clear that a plaintiff need not demonstrate that the employer deliberately intended to drive the employee from the workplace – a standard embraced by several circuit courts of appeals. Instead, it is enough for the employee to prove that the work environment had become objectively so intolerable that the employee’s resignation was a “fitting response.”

The court failed, however, to impute strict liability for an employee’s constructive discharge in response to a sexually hostile work environment, thereby rejecting the approach taken by the 3d. Circuit and endorsed by plaintiffs’ advocates, that a constructive discharge is tantamount to an official firing for purposes of holding the employer legally responsible.

Instead, the court held that, even in the face of a sexually hostile work environment that causes an employee to resign, an employer will be able to avail itself of the Ellerth/Faragher affirmative defense to liability when the constructively discharged employee can point to no “official” adverse job action as part of the harassment. However, an employer will not have recourse to the affirmative defense when a supervisor’s official action – such as a humiliating demotion, extreme cut in pay or transfer to a position with unbearable working conditions – constitutes the “last straw” for the plaintiff and precipitates the constructive discharge.

The court remanded the case for determination of whether Nancy Drew Suders, a dispatcher for the Pennsylvania State Police who alleged that she was subjected to severe and pervasive harassment, could demonstrate that. In addition to these unofficial acts of misconduct, her supervisors’ action in having her arrested for theft of her proficiency tests – which Suders alleges caused her workplace to become intolerable and caused her resignation – constituted an “official action” of the employer, thereby defeating invocation of the Ellerth/Faragher affirmative defense. The Suders decision will surely lead to a proliferation of litigation over exactly this question – i.e., what does and does not constitutes an “official act” in the constructive discharge context – in order to determine whether an employer is strictly liable.

Statute of limitations ruling

Plaintiffs scored a procedural victory in Jones v. R.R. Donnelly & Sons Co., 124 S. Ct. 1836 (2004), a case in which Justice John Paul Stevens, writing for a unanimous court, ruled that the federal “catchall” four-year statute of limitations applies to claims brought under 42 U.S.C. 1981, as amended by the Civil Rights Act of 1991. The plaintiffs, former employees of the defendant, alleged a racially hostile work environment and disparate treatment based on race in violation of 42 U.S.C. 1981.

Because § 1981 contains no statute of limitations and courts typically apply the most analogous state statute of limitations, the defendant moved for summary judgment based on the illinois two-year limitations period. The district court ruled that the plaintiffs’ claims were governed by 28 U.S.C. 1658(a), which provides for a four-year statute of limitations for actions arising under federal statutes enacted after Dec. 1, 1990, with no limitations period of their own. The 7th Circuit reversed, holding that the “catchall” limitations period does not apply to a cause of action based on a post-1990 amendment to a pre-1990 statute.

Resolving a conflict in the circuits, the Supreme Court reversed, holding that the Civil Rights Act of 1991 qualifies as “an Act of Congress enacted after [Dec. 1, 1990]” within the meaning of § 1658 and is therefore subject to a four-year statute of limitations period. The court stated that “[n]othing in the text or history of § 1658” supports an interpretation limited to entirely new sections of the federal code. It determined that “[a]n amendment to an existing statute is no less an ‘Act of Congress’ than a new, stand-alone statute” and therefore concluded that a cause of action is governed by § 1658 if a plaintiff’s claim “was made possible by a post-1990 enactment” 124 S. Ct. at 1844,1845. Because the plaintiffs’ claims in Jones were “made possible” by the 1991 act, the four-year limitations period applied.

The Jones ruling expands the statute of limitations for claims under § 1981 mat could only be brought because of the Civil Rights Act of 1991;.however, claims of discrimination in contract formation under § 1981 will continue to borrow state statute of limitations. Thus, the question of whether particular conduct is related to the formation of a contract will likely be the focus of future litigation. Also, in jurisdictions where the state statute of limitations is longer than four years, plaintiffs will find themselves arguing against retroactivity of the ruling.

‘Reverse age discrimination’

Addressing a long unanswered question under the Age Discrimination in Employment Act (ADEA), the Supreme Court ruled in General Dynamics Land Systems v. Cline, 124 S. Ct. 1236 (2004), that discrimination against the relatively young is outside the protections of the ADEA and rejected a cause of action for “reverse age discrimination.” The case arose out of a collective bargaining agreement that eliminated the company’s obligation to provide health benefits to future retired employees, except for current workers at least 50 years old. Plaintiffs, who were older than 40 but younger than 50, and therefore denied benefits, claimed that the agreement violated the ADEA because it discriminated against them on the basis of age – i.e., their relatively young age.

The district court dismissed the claim, ruling that the ADEA does not protect the younger against the older. A divided 6th Circuit reversed, relying on the statute’s plain language prohibiting discrimination against “any individual…because of such individual’s age,” and Congress’ failure to expressly limit the statute’s coverage to protect only the older worker against the younger.

In rejecting the 6th Circuit’s analysis, the Supreme Court acknowledged that the ADEA’s plain language is “open to a broader construction, since reference to ‘age’ carries no express modifier.” The majority nevertheless focused on congressional testimony regarding impediments suffered by older employees in the workplace, the statute’s restriction of the protected class to those 40 and older, and the fact that “social history emphatically reveals an understanding of age discrimination as aimed against the old.” Writing for a 6-3 majority, Justice David H. Souter opined that contrary to age discrimination, which is viewed more narrowly, “[w]e do not commonly understand ‘race’ to refer only to the black race, or ‘sex’ to refer only to the female.” The majority ruled that the ADEA was “structured and manifestly intended to protect the older from arbitrary favor for the younger” and therefore rejected any claim for reverse discrimination.

Justice Clarence Thomas wrote a sharp dissent in which he accused the majority of crafting a “new approach to interpreting anti-discrimination statutes.” Thomas stated that the plain language of the ADEA is not restricted to discrimination based on older age and reasoned that the statute’s minimum age was set because an individual older than 40 who suffers age discrimination, whether because they’re too young or too old, will have a more difficult time than someone under the age of 40 recovering from a discharge and finding new employment. Thomas also noted that the regulations issued by the Equal Employment Opportunity Commission recognize reverse age discrimination and that one of the bill’s original sponsors explained that “the law prohibits age being a factor hi the decision…as to one age over the other, whichever way [the] decision went.”

In Raytheon Co. v. Hernandez, 124 S. Ct. 513 (2003), the Supreme Court considered a case in which a former employee brought a claim under the Americans With Disabilities Act (ADA) against Raytheon, alleging that the company refused to rehire him based on his perceived drug addiction or record of past drug addiction. After affirming that the plaintiff had waived any disparate impact claim, the 9th Circuit, ostensibly proceeding under a disparate-treatment analysis, ruled unlawful Raytheon’s neutral policy not to rehire employees who were discharged for violating workplace conduct rules because it “screens out” disabled persons.

The Supreme Court chastised the 9th Circuit for improperly applying a disparate impact analysis in a disparate-treatment case. Rather than properly viewing Raytheon’s rehire policy as a legitimate nondiscriminatory reason under the familiar McDonnell Douglas v. Green (411 U.S. 792 (1973)) burden-shifting framework used in disparate treatment cases, the 9th Circuit held that such a policy had a disparate impact on recovering drug addicts, thereby “conflating the analytical framework for disparate impact and disparate treatment claims.”

The Supreme Court remanded the case for proper consideration of whether there was sufficient evidence that Raytheon’s proffered explanation – application of a neutral policy – was pretext for disability discrimination.

The Raytheon court declined to rule on the question on which it had granted certiorari: whether the ADA confers preferential rights on disabled employees lawfully terminated for violating workplace conduct rules. In ruling as it did, however, the court unintentionally shed light on a lingering question from last term’s Desert Palace v. Costa decision (539 U.S. 90 (2003)), in which the court found a mixed-motive analysis available to plaintiffs in circumstantial evidence cases. While some doubted the continuing viability of the McDonnell Douglas paradigm after Costa, the Raytheon decision seems to imply that such an analytical framework remains available to plaintiffs in prosecuting their disparate-treatment claims.

Lisa J. Banks is a partner at Washington’s Bernabei & Katz, which specializes in the representation of plaintiffs in employment law, civil rights and civil liberties matters. Debra S. Katz is managing partner at the firm.