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Supreme Court Reviews Retaliation Standards

When Sheila White was hired as the only female forklift driver for Burlington Northern & Santa Fe Railway Co.'s train yard in Memphis, Tenn., little did she know she'd become the center of a legal storm that could rock employers nationwide.

Several months after the railroad hired her in June 1997, White complained of sexual harassment and was reassigned from operating a forklift to the more strenuous task of maintaining tracks. A short time later the company suspended her for alleged insubordination.

Burlington Northern's internal investigation concluded that the suspension was unwarranted, and the company reinstated her with back pay. But she wasn't happy with the change in her work conditions. She sued the railroad, claiming her reassignment and pay suspension were retaliatory actions prohibited by Title VII of the Civil Rights Act of 1964.

By most accounts, White's case is a garden-variety retaliation suit. But it made it all the way to the Supreme Court, which heard oral arguments April 17. The resolution of this case could bring much-needed clarity to an area of labor law that's been notoriously murky. How the Supreme Court decides could either help companies limit the number of future retaliation suits or lead to an explosion in retaliation litigation. And with retaliation charges taking up 30 percent of the EEOC's docket, the stakes for employers are high.

A court ruling "will hopefully bring greater clarity and reduced exposure to retaliation claims," says Maureen Mahoney, an appellate partner with Latham & Watkins in Washington, D.C. "As it stands now, a wide array of changes in an employee's day-to-day responsibilities can be characterized as actionable retaliation even if the employee's job classification and compensation remain the same."

Confusing Compliance

Retaliation is a confusing area of employment law because there are three different standards for determining whether a given action constitutes retaliation. Some circuits say that any action "reasonably likely to deter" an employee from engaging in a protected activity is retaliation. Some say the standard is a "material adverse change" in working conditions, meaning, for example, significantly more difficult duties or worse work environment. Other circuits only recognize "ultimate employment decisions" that have economic impact on an employee.

The 6th and eight other circuits use the materially adverse change standard, the 5th and 8th Circuits use ultimate employment decision, and the 7th, 9th and D.C. Circuits use the reasonably likely to deter standard.

"All employers and employees should be closer to working with the same definitions," says Lawrence Stroik, senior general attorney for Burlington Northern. "Under current law there is a vexing mix of standards the courts apply. This translates into greater uncertainty in complying with the law and greater risk in trying to run a business."

Employers hope the Supreme Court will make sense of the varying standards in a way that helps them be more certain about what actions they can take.

"This goes to the core of whether an employer can exercise traditional management prerogatives without risking a retaliation lawsuit," says Ann Reesman, general counsel for the Washington, D.C.-based Equal Employment Advisory Council. "The 6th Circuit made a federal case out of, first, routine changes in job assignments, and second, the very important tool of being able to suspend an employee who is suspected of misconduct, pending the results of an investigation."

National Standard

The middle-of-the-road "materially adverse change" standard seems to be the consensus choice of employers.

"The magic word is material," Reesman says. "Material means that the action is economically adverse. Was the person demoted? Did he lose pay because of the action? Did he lose some tangible employment opportunity because of it? Materially adverse doesn't make it a federal case every time somebody thinks their supervisor looked at them cross-eyed."

The materially adverse standard still involves some ambiguity, however. Some courts may interpret it as involving only those actions that have an economic impact, while others may interpret such actions as those Burlington Northern took as "material." It would be helpful, says Steven Gerber, a member of the Defense Research Institute's Law Institute and partner at Adorno & Yoss, for the Court to clearly define "materially adverse." Anything short of that will continue to impede employers' decision making.

"We need settled language so we can advise our clients on what actions they can take," Gerber says. "There are times when an employee needs to be disciplined."

White's attorney, Donald Donati, favors a more flexible standard.

"I saw a Supreme Court [during oral arguments] that was very concerned about not limiting employees' rights to complain, and therefore undermining the statute," Donati says. "But by the same token, the court does not want to open employers to trivial claims."

The Supreme Court's choice is clear: Choose a single unambiguous standard, or let the waters of retaliation continue to roil for years to come.

"The worst case for Burlington Northern and for employers in general would be adoption of White's proposed standard, which is basically that every workplace action claimed to be actionable retaliation should almost always go to a jury," Stroik says. "That would herald a new expansive, expensive and disruptive increase in Title VII litigation."

Staff Writer

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