The post-employment retaliation trap that your business needs to avoid

Hold on a sec. Let me finish gnawing on that T-Bone from last Wednesday’s dinner at STK in Disney Springs.

Ok, done. Vacation over. Time to start blogging again.

Let’s see. What do we have today?

What not to do after you settle a discrimination claim from a former employee.

Recently, I read this Pennsylvania federal court decision. It involves a woman who alleged sexual harassment and later entered into a written settlement agreement with her employer. Among other things, as part of the settlement, the woman agreed to resign. However, her (now former) employer agreed not to interfere with any attempts that the employee may make to seek employment with other employers.

Except, it did. Or at least that’s what the employee later alleged when she sued for retaliation.

You see, there was some evidence that the employer (now the defendant) had “coded” the separation of the employee (now the plaintiff) in a way that may have created a red flag for prospective employers.

The defendant argued that the plaintiff did not provide evidence that she suffered any “material or tangible impact” based on the defendant’s separation coding and, therefore, cannot show any adverse action. The plaintiff responded that the “surreptitious coding and responses to inquiries caused her to be red-flagged by prospective … employers.”

The low bar for retaliation.

Title VII of the Civil Rights Act of 1964 contains an antiretaliation provision, which the U.S. Supreme Court has recognized “protects an individual not from all retaliation, but from retaliation that produces an injury or harm.” This includes post-employment actions that dissuade a reasonable worker from making or supporting a charge of discrimination.

So how about coding an employee’s separation of employment in such a manner that a prospective employer may pass on considering that employee?

Yep, you guessed it. Here’s what the court said:

[I]f a reasonable employee knew, in the aftermath of filing a complaint, that the employer would unilaterally take an action that, though characterized as neutral, could curtail a prospective employer’s interest in hiring him or her, that employee would likely be dissuaded from making or supporting a charge of discrimination….If a reasonable employee knew that supporting their charge of discrimination could have this outcome, i.e., even if you prevail to the point of settlement, you still lose because it will be more difficult to procure employment with a certain class of employers, the Court finds a reasonable employee would be dissuaded from embarking upon the process of raising or maintaining a Title VII claim of discrimination.

Now, you may be thinking to yourself, “Shouldn’t the plaintiff be required to demonstrate some kind of loss in pay or benefits?”

Nope.

No relevant authority suggests that an action can be materially adverse only if it results in a decrease in pay or benefits and the plaintiff experienced no other changes with respect to her employment … Plaintiff does not merely make a generalized claim of a non-specific negative impact on her potential employment status Rather, she provides evidence that the code had a negative impact on her employment prospects.

Yadda, yadda, yadda, this one is going to trial. Or, perhaps ironically, another settlement.

Employer takeaways.

1. Post-employment retaliation claims are real. They are not spectacular.
2. A neutral-reference policy, one in which you provide only a former employee’s dates of employment and last position held, will mitigate the risk of post-employment retaliation claims.
3. Make sure that whoever receives requests for employment verification understands and follows the policy.