Court Report: Title VII Protects Welfare-To-Work participants

By Michael C. Leitch May 1, 2004
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HR May 2004 MagazineAlso: Self-publication defamation claim fails; misconduct after discharge limits front pay.

[United States v. City of New York, 2d Cir., No. 02-6102, Feb. 13, 2004.]

Participants in a mandatory welfare-to-work program, who worked in exchange for cash payments, food stamps and other benefits, were employees covered by Title VII of the Civil Rights Act of 1964, the 2nd U.S. Circuit Court of Appeals has ruled.

The federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) authorizes funding for state efforts to reduce needy families’ reliance on government benefits. To receive this funding, states must ensure that a certain percentage of families receiving benefits engage in work activities. The PRWORA requires the reduction or elimination of benefits to a recipient’s family if the recipient refuses to participate in an assigned work activity. New York state has implemented the PRWORA through its Work Experience Program (WEP).

Five WEP participants filed charges of workplace discrimination against the City of New York with the Equal Employment Opportunity Commission (EEOC). On the basis of their respective allegations, the EEOC found “reasonable cause” to believe that discrimination had occurred, referred four of the cases to the Department of Justice (DOJ) for prosecution and issued a right-to-sue letter to the fifth claimant. The DOJ filed suit on behalf of the four individuals, alleging violations of Title VII. The trial court dismissed the complaint, holding that the individuals were not “hired” by the employer and thus did not meet the legal definition of “employees” so as to be covered by Title VII.

The 2nd Circuit reversed, holding that the plaintiffs were employees under Title VII because they received cash payments and food stamps equivalent to earning minimum wage, transportation and child care expenses, and also qualified for workers’ compensation benefits. The court also held that the plaintiffs’ potential loss of grant funds if they refused to work further demonstrated their employee status.

The appeals court distinguished earlier case law, cited by the dissenting judge, holding that a college student receiving work-study financial aid was not an employee and could not file a Title VII lawsuit because the student provided services to a hospital that had no affiliation with the college that provided the aid. In contrast, the court found in this case that the city both paid the benefits and received the plaintiffs’ services.

Notably, the PRWORA lists four specific discrimination laws that apply to the programs funded by the act but omits Title VII. The court held that this omission did not indicate any intent to exclude PRWORA participants from Title VII protections.

By Marc A. Mandelman, an attorney with Proskauer Rose LLP in New York.

Connecticut Rules Out ‘Compelled Self-Publication’ Defamation Claims

[Cweklinsky v. Mobil Chemical Co., Conn., SC 16846, Jan. 6, 2004.]

Connecticut’s Supreme Court has refused to recognize a claim for defamation based on an employee’s “self-publication” of a former employer’s allegedly defamatory explanation for a discharge decision.

In November 1998, Victor Cweklinsky, a machinist for Mobil Chemical Co., took six weeks of paid medical leave for carpal tunnel syndrome surgery. Cweklinsky’s treating physician cleared him to return to work beginning Dec. 11, 1998.

Instead, after a series of events involving alteration of the return date in his doctor’s note, Cweklinsky returned to work on Dec. 14. After investigation, Mobil determined that Cweklinsky had not falsified the doctor’s note, but that he had taken paid medical leave without a medical justification. For that reason, Mobil terminated Cweklinsky’s employment.

Cweklinsky sued Mobil in federal court, making a Connecticut state law claim that he had been compelled in job interviews to repeat Mobil’s allegedly defamatory explanation for the discharge and had lost job opportunities as a result. Although there was no binding Connecticut precedent recognizing such a claim, the federal trial court held that Mobil’s statements were defamatory and that publication occurred when Cweklinsky—ostensibly under compulsion—repeated to prospective employers Mobil’s stated reason for the discharge.

On appeal, the 2nd U.S. Circuit Court of Appeals sent to the state’s supreme court the question of whether Connecticut recognizes a cause of action for defamation based on compelled self-publication. The court responded in the negative.

Traditional defamation claims cannot rest on the plaintiff’s own dissemination of alleged defamatory statements that were made only to the plaintiff, but a minority of courts have created an exception to that rule in the employment context, the court observed.

In rejecting the exception, however, the Connecticut court emphasized that the availability of such claims would chill workplace communication, expose employers to liability in discrimination cases (where a judge or jury might consider an employer’s silence about the reason for a discharge to be evidence of pretext) and allow plaintiffs to give rise to a new claim every time they uttered the defamatory statements.

Cweklinsky contended that the requirement that self-publication be “compelled” would erode the employee’s perceived power to control the claim. But the likelihood that the subject would come up during job interviews, combined with an applicant’s need to be truthful, would create compulsion in virtually every instance, the court countered.

Ultimately, the court explained that acceptance of a cause of action for defamation based on compelled self-publication would seriously erode the doctrine of employment at will and would effectively require employers to conduct expensive and prolonged investigations for every termination to prevent liability.

Even a comprehensive investigation would not immunize the employer from litigation, the court said. The employer’s affirmative defense of truth is a question of fact for a jury. Employers successful in court still would pay a stiff price due to the time and expense of litigation.

By Lawrence Peikes, an attorney with Wiggin and Dana LLP in Stamford, Conn.

Employee’s Post-Discharge Misconduct Limits Right to Front Pay

[Sellers v. Mineta, 8th Cir., No. 02-1425, Feb. 24, 2004.]

An employee’s misconduct occurring after she is unlawfully fired may limit her right to collect front pay from her former employer, the 8th U.S. Circuit Court of Appeals recently held for the first time.

Wendy Sellers was an air traffic controller who complained of sexual harassment by a co-worker. She claimed the Federal Aviation Administration (FAA) fired her in retaliation for her harassment complaint. A jury agreed with her and awarded her more than $1 million in damages.

Sellers also sought an award of front pay. Front pay is a disfavored alternative to the preferred remedy of reinstatement, awarded only where reinstatement is impractical or impossible due to circumstances not caused by the plaintiff. Sellers argued that front pay was appropriate because the degree of acrimony remaining between her and her co-workers, supervisors and the FAA made reinstatement unfeasible.

A month after her trial, but before the hearing on front pay, Sellers was fired from her new job at a bank because she had attempted to process an unauthorized loan application in the name of her spouse’s former wife. Sellers admitted that she completed the application to obtain the ex-wife’s credit history, and the bank promptly terminated her employment.

The FAA learned of the termination and raised it as a defense to Sellers’ demand for front pay. The FAA argued that Sellers’ misconduct as an employee of the bank made her unsuitable for reinstatement as an air traffic controller and, therefore, should likewise bar an award of front pay. The trial court disagreed and awarded Sellers more than $600,000 in front pay.

The 8th Circuit reversed that award, holding that Sellers’ post-termination misconduct limited her right to front pay. An employee who would have been discharged for on-the-job misconduct—which is discovered only after the employee’s discriminatory discharge—may lose the right to remedies for the discriminatory discharge, the court noted.

The court applied that same principle to misconduct that occurs after the employee’s termination. For example, an unlawfully discharged employee convicted and imprisoned for a crime unrelated to her former employment has no potential for reinstatement.

“It would be inequitable for a plaintiff to avail herself of the disfavored and exceptional remedy of front pay where her own misconduct precludes her from availing herself of the favored and more traditional remedy of reinstatement,” the court concluded.

By Michael C. Leitch, an attorney with Spencer Fane Britt & Browne LLP in Kansas City, Mo.

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