Responding to retaliation lawsuits after Vance and Nassar

Two recent Supreme Court decisions have changed the landscape for employers versus employees when it comes to harassment cases.

In June, the US Supreme Court gave employers two significant victories: Vance vs Ball State University and University of Texas Southwestern Medical Center vs Nassar. These have changed the landscape for employers versus employees when it comes to harassment cases. Vance narrowed the scope of who a ‘supervisor’ is for purposes of bringing a discrimination claim, and Nassar heightened the evidentiary standard an employee must meet to successfully prove retaliation.

Employers definitely came out ahead in these decisions, but there are still issues they should be concerned about. These Supreme Court decisions will not lead to fewer harassment cases being filed, but they will enable employers to resolve far more cases with a dispositive motion rather than risk a jury verdict. In addition, employers might be surprised to find that these decisions reinforce, rather than weaken, the need for robust training and compliance programs.

The Supreme Court shifts perspective

Gregory Keating, co-chair of the whistleblowing and retaliation practice group at Littler Mendelson, says Nassar and Vance are important not only on their own merits, but also because of what they say about the current Supreme Court. ‘We’ve seen a fundamental and very significant shift in the high court’s approach to what constitutes actionable retaliation,’ he notes. ‘Now companies are going to have a chance to knock these claims on a dispositive motion.’ 

Winning a dispositive motion becomes practical in retaliation cases because ‘but for’ causation – the higher standard imposed by Nassar – is a clear line employers can prove they did not cross if they had other legitimate reasons for the ‘retaliation’. By contrast, the previous standard of ‘a motivating factor’ was nearly always a factual question for the jury.

Keating says this is a profound shift for the court. ‘There have been a half-dozen cases going back to the 2006 Burlington Northern decision in which the court, at every juncture, had been given the opportunity to rein in the prima facie case of retaliation,’ he says. ‘Not only did it refuse to do so, but it also instead adopted the most liberal standard, making these claims virtually immune from dismissal on a dispositive motion.’ Now it seems the court has moved in the other direction. Having a chance to win on a dispositive motion is very helpful to employers because ‘a claim would expose the company to the high degree of cost to go to and through a trial, and a trial is risky,’ Keating adds.

How risky? ‘Juries don’t like retaliation by employers or managers,’ Keating points out. ‘There’s been a number of cases in which the jury has exonerated the employer of the underlying discrimination claim, but whacked it for retaliating when the employee asserted discrimination – and there’s been a number of awards in seven figures.’ Rather than take that risk, he suggests, companies would often prefer to settle these cases ‘for more than the claims are really worth.’

The court’s effort to aid employers was explicit in Nassar, Keating says: ‘On pages 18 and 19 of his opinion, Justice Kennedy expressly acknowledges that these claims are out of control. He recognizes and describes a situation that is common among employers today, where an employee with performance issues recognizes his/her days are numbered and goes to legal or HR to complain he/she is being discriminated against.’ 

Prior to the Nassar decision, Keating adds, ‘when the employee made that complaint, he/she effectively wrapped him/herself in a bubble, such that he/she was immune from discipline or termination in the near future.’ But now, ‘if an employer has good documentation and other objective evidence of deficiencies, an employee’s complaint of discrimination will no longer keep him/her protected.’ 

Amanda Fugazy of law firm Fugazy & Rooney says the decision in Vance also makes it easier for employers to win. Fugazy says defending against discrimination and harassment claims is easier when the allegedly illegal actions were committed by co-workers rather than supervisors. ‘When the offender is a co-worker, a victim can prevail when he or she shows the employer was negligent in permitting the harassment to occur,’ Fugazy says. But an employer can straightforwardly show that ‘it was not negligent and took appropriate action to protect its employees’ by having ‘adequate policies and training.’ Defending a claim when a supervisor is involved, Fugazy notes, is more difficult. But narrowing the definition of who a supervisor is will not prevent cases from being filed; it just means ‘many, many cases will now be decided on the more employer-favorable standard related to co-workers.’

More lawsuits coming

Ingrid Fredeen, vice president of ethics and legal compliance training at NAVEX Global’s Ethical Leadership Group, says these court decisions do not mean retaliation lawsuits are going to decrease. Instead, she maintains retaliation cases are ‘an ever-increasing risk across so many compliance areas. It’s not just in the employment arena; there are more than 50 federal statutes and many state laws providing protection from retaliation to those who report suspected violations of the law.’ 

Fredeen stresses that ‘regardless of the legal standard that’s in place, what matters in the workplace is how an employee perceives his or her treatment. If the employees feel they’ve been mistreated, they’re not going to be concerned about that legal standard.’ That’s particularly true of retaliation claims, notes Fredeen, as they are the number one charge type with the Equal Employment Opportunities Commission. ‘They beat out race and sex discrimination as the most common charge type,’ she says. 

While the most effective strategy for minimizing litigation, according to Fredeen, is to prevent retaliation and harassment in the first place, the bottom line is that ‘litigation is still going to happen, and a defense is still going to have to be made.’

Training provides protection

Keating, Fugazy and Fredeen all stress that employers need to have in place robust training and compliance policies and programs to take full advantage of these easier standards. In fact, Fugazy says, ‘employers would have been well advised for the last 15 years to have strong policies on discrimination, harassment and retaliation and to have provided training on those policies.’ 

Fredeen says there is evidence companies are increasingly being proactive regarding compliance in this area. ‘The trend I have seen emerge in the last 12 to 18 months is companies looking at retaliation prevention programs that are designed to stop retaliation, to make sure it isn’t happening in their workplace. That’s a big shift away from being reactive and defending [any incidents] in litigation.’ 

By showing they have put real thought into creating compliance programs that can root out the problem and by committing to regular reinforcement of that training, firms can begin establishing the idea that any perceived harassment or retaliation was unintentional. 

‘In today’s landscape, it is critically important to set up and commit to concrete measures that will foster a culture of compliance,’ says Keating, who notes that companies should not establish good practices purely for prevention. ‘Nassar should give companies real comfort that if they do the right things on the front end, they will prevail in litigation down the road.’ 

Best practices

When it comes to specific steps companies can take to help win future retaliation lawsuits, Keating’s suggestions include ‘making revisions to codes of conduct and anti-retaliation policies, training at all levels – from boards of directors down to frontline managers – and implementation of an integrated complaint procedure so that the company is prepared to respond effectively when a complaint of discrimination is presented.’ Taking these steps, he says, will ‘enable a company to document its commitment to not tolerating retaliation and to fostering a culture of compliance, a commitment that will help it in future litigation.’

Fredeen has several recommendations for companies looking to prevent retaliation and related misconduct:

‘First, you must have a very good approach to policy and policy management. It’s not enough to bury retaliation language in a harassment policy, for example. It really needs to be part of the entire structure of your policies in general.’

‘You also need to focus on building an authentic culture of trust. Authenticity is the key here. Employees must feel empowered to speak up without fear of retaliation.’ Fredeen further emphasizes that ‘the policies have to be enforced against everybody regardless of whether [the perpetrator] is the best performer or a struggling performer.’

‘A third tactical factor that feeds this culture of trust is training. A few years ago training on reporting and retaliation was not something companies were even willing to talk about. Today it is increasingly part of the core curriculum for a compliance program.’ Fredeen notes that ‘We are seeing an uptick in what we call ‘burst learning’ on this topic – short, five-minute video-based training sessions that go out several times a year and remind people about their company’s values, policies, expectations and position on the issue.’

A final recommendation from Fredeen may be a bit more complex to implement, but could yield considerable results. ‘Another prevention tactic is the emerging trend of the integration of the compliance function with human resources,’ she explains. ‘Compliance is overseeing and evaluating HR data to see that retaliation has not occurred.’ Fredeen thinks this can be a very smart move, and says ‘companies should consider examining the relationship between these two departments.’

Lest anyone think that simply drawing up good plans for a compliance program and putting them in place will be sufficient, beware: it may not be. Effective implementation and maintenance of these programs matters. ‘Setting up a potentially terrific system and not implementing it well makes things worse, because it angers the employee and makes it more likely he or she will sue, erodes your credibility at trial, and strengthens the case against you,’ Keating says. 

Armed with the two recent Supreme Court decisions and revamped compliance programs, many companies will be better able to defend themselves against the retaliation lawsuits that almost every employer is likely to face. ‘There will be a raft of employers breathing a sigh of relief now,’ Keating concludes.


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