U.S. Supreme Court Rules that Title VII Permits Third-Party Retaliation Claims

This post was written by Samantha M. Clancy and Kimberly A. Craver.

The United States Supreme Court has unanimously held that an employee may bring Title VII retaliation claims where he or she is subject to an adverse employment action, because someone else “closely related” to the employee engaged in protected activity, such as filing a charge of discrimination or opposing discrimination.

In Thompson v. North American Stainless, LP (No. 09-291, Jan. 24, 2011), Eric Thompson and his fiancée, Miriam Regalado, were both employed by North American Stainless. Three weeks after receiving notice that Regalado had filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”), the company fired Thompson for alleged performance-based problems. Thompson filed his own EEOC charge and later sued the company, claiming that he had been fired in retaliation for his fiancée’s EEOC charge. The district court granted the employer’s motion for summary judgment. A panel of judges from the Sixth Circuit initially reversed, but after a rehearing en banc, the full circuit affirmed, holding that Thompson was not protected by the anti-retaliation provisions of Title VII because he did not personally engage in protected activity on his own behalf or on behalf of his fiancée.

The Supreme Court reversed the Sixth Circuit’s decision. Finding that the anti-retaliation provisions of Title VII must be construed broadly to encompass any employer action that might dissuade a reasonable worker from making or supporting a charge of discrimination, the Court said it was “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.”

Although the Court refused to identify a fixed class of relationships for which third-party reprisals are unlawful, it noted that firing a close family member will almost always rise to that level, “while a milder reprisal on a mere acquaintance will almost never do so.”

The Court also rejected the employer’s argument that Thompson was not, in the words of Title VII, a “person aggrieved” under that law. The Court applied the “zone of interests” test, which allows suit by any plaintiff “with an interest ‘arguably [sought] to be protected by the statutes.’” The Court concluded that Thompson fell within the zone of interest protected by Title VII because that statute is intended to protect employees, such as Thompson, from unlawful acts by their employers.

Though this ruling does not establish a bright-line test for third-party retaliation claims, employers must take notice. When deciding to take an adverse action against an employee, an employer must take care not only when the employee has engaged in protected activity himself or herself, but also where he or she is closely associated with someone else who has. 

New York Wage Theft Prevention Act Increases Penalties for Wage and Hour Violations

This post was written by David Weissman, Cindy Minniti and Daniel Schleifstein.

On December 13, 2010, New York Governor David A. Paterson signed the Wage Theft Prevention Act (“Act”). The New York Labor Law currently requires employers to notify employees in writing, at the time of hiring, of their rate of pay, pay date, and overtime rate (if applicable). The Act amends the law to significantly increase the penalties for wage payment violations, particularly for repeat offenders, and now requires employers to provide additional information regarding the payment of wages to employees. All New York employers must revise their pay practices by the Act’s effective date, April 12, 2011.

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UK tax implications for settlement payments in cases of discrimination - recent developments

Two recent cases give guidance on the tax treatment of settlement payments on termination of employment. A First-tier Tax Tribunal has, for the first time, laid down the correct approach to apportioning a settlement payment which is to compensate an employee for both discrimination and termination of employment. It was decided in Oti-Obihara v. HMRC that the proper starting point is the amount that can be identified as the ‘employment termination payment’, i.e. the amount which represents compensation for financial loss arising from the termination. The balance, being the compensation for injury to feelings, can be paid free of tax, recognising that it may be appropriate for a larger payment to be made.

In addition, the Court of Appeal in Norman v. Yellow Pages Sales Ltd has held that an employer has no implied duty to apportion a termination payment between taxable and non-taxable elements. The employer is entitled to deduct tax on the full amount (above £30,000), and any dispute over the amount of tax payable is a matter for the employee, not the employer, to pursue with HMRC.

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UK Government's final decision on plans to phase out the default retirement age

The UK Government has now issued its response to its consultation “Phasing out the Default Retirement Age”, confirming that the default retirement age (DRA) of 65 will be abolished from 1 October 2011. The last retirement notice under the current procedure should be issued by no later than 30 March 2011, so employers have very little time to prepare. We understand draft Regulations will be laid before Parliament by the end of this month and will come into effect on 6 April 2011. 

The Government has stuck to its original proposal that, from 6 April 2011, employers will no longer be able to issue notices of retirement under the DRA procedure. In practice, notices must be issued by 30 March 2011 as the current procedure requires employers to give no less than 6 and no more than 12 months notice of retirement. Notices can be issued after 30 March 2011 and before 6 April under the short notice provisions but the employee could claim compensation of up to 8 weeks’ wages as a result. Where notifications have already been made prior to 6 April 2011, employers will be able to continue with retirement procedure, as long as the retirement is due to take place before 1 October 2011. Retirement notices already issued which provide for a retirement date on or after 1 October 2011 will be void.

No retirements using the DRA procedure will be possible from 1 October 2011. After that date it will only be possible to retire a particular employee at a particular age if the employer can objectively justify that age for retirement. This will be very difficult to do other than in particular professions (such as those requiring significant physical fitness) and will require substantial supporting evidence. 

Most importantly for employers, the Government has responded to employer concerns (as communicated by us in our response to the consultation) as regards group risk insured benefits (such as medical insurance, death in service and income protection). The Government’s proposal is to provide an exemption so that employers will be able to exclude employees aged over 65 (such age rising in line with increases in the State Pension Age) from benefits under these schemes, without risk of age discrimination claims being brought. This has been a particular concern for our clients, and so it will come as a relief to many employers who will be able to continue to operate existing schemes without incurring inflated costs. We await the draft Regulations to determine which schemes will be captured by the exemption.

ACAS has now issued guidance for employers “Working without the default retirement age.” While this has been designed to assist employers rather than set statutory guidelines, we recommend that all employers read this carefully. In addition to the new ACAS guidance, the Government recommends that employers look at the guidance already available through the Age Positive Initiative. This gives information on how to review retirement practices, manage performance and flexible approaches to retirement without the use of a fixed retirement age.

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Revised ADA Regulations to Take Effect March 15, 2011 in the United States

This post was written by Joel S. Barras and Michael D. Jones.

On March 15, 2011, the U.S. Department of Justice’s amended Final Rule substantially revising and expanding the regulations implementing the Americans with Disabilities Act will become effective. Compliance, however, is not mandated until March 15, 2012. Among other substantive changes, the amended regulations adopt the 2010 ADA Standards for Accessible Design, which implement new accessibility guidelines for government facilities and commercial places of public accommodation. In addition, the amended regulations address numerous accessibility issues, including selling and issuing tickets to individuals with disabilities; accommodating service animals, wheelchairs and other power-driven mobility devices; providing auxiliary communication aids; and making reservations in places of lodging.

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