Supreme Court Rules On Employer Retaliation

WASHINGTON-Thursday's U.S. Supreme Court ruling establishing a clear standard for what constitutes employer retaliation is unlikely to cause any seismic changes for the insurance industry, according to experts.

Robert Hartwig, chief economist for the Insurance Information Institute, noted that from an employment practices liability standpoint, the ruling is “generally consistent” with the court's decisions in similar matters, and with prior Equal Employment Opportunity Commission enforcements.

“This won't have any major impact” for insurers, he said. “It really just clears up some ambiguities in the lower courts.”

Employer retaliation against workers who bring or support discrimination allegations is expressly prohibited under the Civil Rights Act of 1964. That law, however, did not provide specific guidance as to what exactly would compromise a retaliatory act, leading to a wide array of standards established in lower courts.

In its decision handed down Thursday in the case of Burlington Northern & Santa Fe Railway Co. v. White, the definition was clarified to include any material action that could serve as a disincentive against a reasonable employee filing a complaint.

“We conclude that the anti-retaliation provision does not confine the actions and harms it forbids to those that are related to employment or occur at the workplace,” wrote Justice Stephen Breyer in the court's opinion, adding that the court also determined that the statute only applies to employer actions that would be “materially adverse” to a “reasonable” employee or person seeking a position.

“In the present context that means that the employer's actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination,” Justice Breyer wrote.

While the decisions may have cleared the picture for insurers, Mr. Hartwig said the ruling sends a “loud and clear” signal to employers that “employees need not to necessarily be fired for retaliation to hold.”

Karen Harned, executive director of the National Federation of Independent Business Legal Foundation, said this signal will leave employers unclear as to whether any actions they take could be perceived as retaliatory.

“Instead of limiting actionable retaliatory conduct to specific acts such as hiring, granting leave, discharging, promoting and compensating, each potentially actionable act will now need to be brought to court to determine if it passes or fails the 'materially adverse to a reasonable person' standard,” she said. “As the court noted, this means each action will need to be evaluated on an individual basis–which leaves employers in the dark as to what actions they can take when handling discrimination claims.”

Despite the objections of employers, Dr. Hartwig said the ruling represented a clear statement from the court, especially given its unanimous nature. “It's very unusual for this divided Supreme Court to be unanimous on anything, but they were on this,” he said.

In fact, Dr. Hartwig expressed some surprise the case went as far as it did, given that the damages awarded in the original complaint amounted to less than $50,000.

“I'm not clear on what grounds Burlington thought they were going to win,” he said. “Obviously it wasn't clear to the court, either.”

In the case at hand, Sheila White, an employee at a Burlington train yard in Tennessee, filed a complaint against her superior, which the company acted on. Subsequently, Ms. White was transferred to from forklift operator to more difficult duties within her job category and put on unpaid leave. After filing a union grievance, she was reinstated back to the forklift and given back pay for the leave.

Although concurring with the resulting decision of the court, Justice Samuel Alito dissented on the reasoning behind it. He argued that the majority's standard of discrimination as a material action that could dissuade an employee from making or supporting a complaint was improper.

Justice Alito noted that the decision's inclusion of off the job actions was largely unnecessary, as the job site is far more likely to serve as the setting of a retaliatory act, and that retaliatory acts committed elsewhere would likely already be criminal.

Additionally, he ruled that anti-retaliatory language was designed to protect the employee from any harm due to their complaints.

“Under the majority's test, however, employer conduct that causes harm to an employee is permitted, so long as the employer conduct is not so severe as to dissuade a reasonable employee from making or supporting a charge of discrimination,” Justice Alito wrote.