Employee May Not Have Waived Racial Bias Claims by Signing Agreement

Takeaway: In determining whether an employee has waived discrimination claims by signing a purported waiver agreement, a court will consider a number of factors, including the employee’s experience and education, the clarity of the alleged waiver, and the circumstances under which the agreement was entered into. 

An employee might not have waived his racial discrimination claims by signing an agreement that released his employer from all liability regarding the worker’s employment, a federal appeals court ruled. After examining the employee’s background, the situation in which the employee signed the agreement, and the wording of the agreement, the court concluded that it was unclear whether the employee had waived his claims and that, therefore, a lower court had erred in dismissing the claims before trial. 

The employee held various positions at a soft drink bottling company from 2015 to 2018. In March 2017, he was involved in an accident at work and underwent drug testing, pursuant to the company’s drug and alcohol policy. He tested positive for marijuana, although the amount in his sample was less than the amount prohibited by the company’s drug policy. The company nevertheless negotiated a second-chance agreement (SCA) with its employees’ union and the employee, which stated that the employee would be subject to 24 months of random drug testing. 

In June 2017, the employee was cited as being insubordinate for swearing and inciting a work slowdown during a pre-shift meeting. He was terminated, but his union negotiated a last-chance agreement (LCA) with the company. In a meeting with his supervisor and the union vice president, the employee signed the LCA, which stated that he discharged the company from all liability relating to his employment. 

After the employee signed the SCA and LCA, he was randomly drug tested six times. On July 12, 2018, he submitted a positive test for cannabinoids. This time, the concentration was above the company’s permitted threshold. He was terminated on July 31, 2018. 

He sued the company for racial discrimination in violation of Title VII of the Civil Rights Act of 1964, claiming that he was treated differently from similarly situated white employees with respect to the required drug testing, the discipline he received for his alleged insubordination, and his eventual termination. 

The employer sought to have the case dismissed before trial. The trial court found that the employee had waived his pre-LCA claims when he signed the LCA, and it dismissed those claims. The lower court also dismissed the post-LCA claims stemming from the employee’s eventual termination, concluding that the employer had a legitimate reason for terminating the employee. 

On appeal, the employee argued that the trial court erred in finding that he had voluntarily waived all claims of racial discrimination regarding situations that arose before he signed the July 2017 LCA. 

The appeals court noted that, under certain circumstances, employers and employees may negotiate a valid release of Title VII discrimination claims. 

In determining whether such a waiver was valid, the court will consider several factors, including:

• The plaintiff’s experience, background, and education.
• The amount of time the plaintiff had to consider whether to sign the waiver, including whether the employee had an opportunity to consult with a lawyer.
• The clarity of the waiver.

The employee graduated from high school in 2002, received an associate’s degree in fashion merchandising and design, and a bachelor’s degree in health care administration from an online university.

The entire meeting in which the employee signed the LCA lasted 10 minutes, and only two of those 10 minutes were dedicated to discussing the LCA. 

The employee did not have an attorney present. The union representative who was in the room told the employee to just sign the LCA and that it was “better to fight with a job than fight without a job.” These statements could indicate that the representative thought that the employee’s discrimination claims would survive his signing the LCA, the court said.  

Furthermore, although the employee holds associate’s and bachelor’s degrees, his education does not provide him with any type of legal, managerial, or contractual background that would have been relevant to interpreting the LCA’s terms in a manner essentially at odds with what the union representative told him, the court said. 

Nor did the employee have any previous experience with this type of agreement. 

In addition, the LCA did not specifically mention the employee’s discrimination claims, stating merely that the employee discharged the company from any liability relating to the employee’s employment with the company. 

The appeals court then concluded that it was unclear whether the employee involuntarily waived his pre-LCA claims. It therefore reversed the lower court’s dismissal of those claims, ruling that the issue of the waiver should be decided by a jury. 

The appeals court also ruled that the trial court incorrectly dismissed the claims that arose after the employee signed the LCA—those related to the employee’s ultimate termination for a positive drug test. The appellate court concluded that, although the employer argued that it had a legitimate reason to terminate the employee, the employee argued that this reason was a pretext for discrimination, and the employee should therefore be allowed to present this argument to a jury as well. 

Moore v. Coca-Cola Bottling Co., 6th Cir., No. 23-3775 (Aug. 22, 2024), rehearing en banc denied (Sept. 26, 2024).

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.