Employment Law

Decision Provides Successor Liability Warning for Employers

Why it matters

A federal court sided with the Equal Employment Opportunity Commission (EEOC) on the question of successor liability with respect to an employer who may now be responsible for alleged actions by its predecessor in a Title VII action. The agency’s complaint asserted that Mister Car Wash—through a previous corporation, Maritime Autowash—subjected Hispanic employees to a hostile work environment. The successor began the purchase negotiations during the EEOC investigation, although the extent of its knowledge of the actual facts remains in dispute. Mister moved to dismiss the EEOC lawsuit, but a Maryland federal court denied the motion. Finding both standing by the agency to bring the suit and jurisdiction over the defendant, the court held that Mister had actual and constructive notice of the EEOC’s charges before purchasing Maritime. While the successor made a concerted effort to contract away any liability for its predecessor’s actions, that contract did not include the EEOC, the court said, leaving open the possibility that Mister will be on the hook for Maritime’s actions. The decision provides a cautionary tale for employers about the dangers of successor liability.

Detailed discussion

The dispute began in 2013, when agents from U.S. Immigration and Customs Enforcement (ICE) conducted an audit of Maritime Autowash, which owned two car washes in Maryland. ICE informed Maritime that 39 of its employees were not authorized to work in the country and that, unless they could provide valid identification and employment eligibility documentation, Maritime would face civil—and perhaps criminal—penalties.

According to nine of the former workers, Maritime’s general manager held a meeting and provided each of those employees who lacked proper documentation with $150 to obtain new papers and be rehired under new names. A few months later, the nine workers submitted intake questionnaires to the Equal Employment Opportunity Commission (EEOC). The employees alleged that they were subjected to harassment and discrimination while working at Maritime, required to work longer hours with shorter breaks than their non-Hispanic counterparts, denied proper equipment for their jobs, and paid less than their non-Hispanic counterparts. The EEOC initiated an investigation.

The agency served Maritime with a subpoena and, when the company did not respond, the EEOC went to court to enforce it. Maritime argued that because the charging parties were not legally authorized to work in the United States, they could not seek relief under Title VII and, therefore, the EEOC could not enforce its subpoena. The district court agreed, but the U.S. Court of Appeals for the Fourth Circuit reversed.

While the EEOC’s investigation was occurring, Mister Car Wash began the process of purchasing Maritime’s assets. After signing a letter of intent with a purchase price of $15 million, the parties engaged in due diligence. Mister made every effort to protect itself from potential liability arising from Maritime’s actions, listing all assumed liabilities in a schedule attached to the asset purchase agreement (APA).

The schedule made no mention of any employment discrimination liability matters, although Maritime forwarded the EEOC-related position statements prepared by its counsel in response to the charging parties’ statements and sent a letter stating that it had an insurance policy with $1 million in coverage, adding that it would be a surprise if the charging parties’ damages exceeded that amount.

In January 2015, the parties closed the deal, and Mister took ownership of Maritime’s assets. Maritime subsequently formed a new corporate entity, Phase 2 Investments.

The EEOC then concluded its investigation and sent both Phase 2 and Mister a Letter of Determination stating that Maritime had violated Title VII, inviting the parties to conciliate. When that attempt failed, the EEOC filed suit against both defendants, alleging that Hispanic employees at Maritime were “relegated” to lower-paid positions, denied overtime and their fair share of tips, and subjected to verbal harassment.

Both defendants filed motions for summary judgment. U.S. District Court Judge James K. Bredar began with Mister’s preliminary challenges addressing whether the EEOC had proper standing to bring the suit against them and jurisdiction over them in this situation.

Although Mister argued that it never employed the charging parties, and no traceable connection existed between their alleged injuries and it as the successor, the court was not persuaded. The EEOC brought the case, not the charging parties, the court stated.

“And the EEOC has standing to bring it. The EEOC is bringing this case under the statutory authority granted to it by Title VII, to vindicate the public’s interest,” the court wrote. “The EEOC has named Mister as a Defendant under the theory that it is a successor to Maritime for purposes of liability under Title VII, and thus the injury—Maritime’s alleged violation of Title VII—is fairly traceable to Mister.”

Jurisdiction was similarly not a problem, the court found, because Mister was named as a successor to Maritime and sufficient jurisdictional facts existed to satisfy Title VII. “A federal court has jurisdiction over a Title VII claim against a defendant-employer who was not named in an administrative charge of discrimination when the theory of liability rests on the actions of a different employer who was named in the charge of discrimination, and the defendant-employer had notice of the charge and an opportunity to voluntarily comply prior to the plaintiff bringing the claim in court,” Judge Bredar wrote.

Mister was given “ample notice” of the charges of discrimination underlying the EEOC lawsuit and was provided with an opportunity to conciliate, the court held. Requiring the charging parties or the agency to file an additional, identical charge against Mister “would be simply a useless exercise in technical nicety.”

Turning to the substantive issue of successor liability, Judge Bredar performed a balancing act between the needs of discriminatees and the national policy against discrimination evinced by Title VII on the one hand, and the unfairness of holding an innocent purchaser liable for another’s misdeed and the possible chilling effect on the corporate marketplace on the other hand.

Beginning with notice, the court found that Mister had some notice of the EEOC charges prior to purchasing Maritime’s assets. While the extent of the notice was unclear, Mister “knew that Maritime was facing potential employment discrimination liability,” the court noted. “At the very least, Maritime had constructive notice.”

Further, as “a fairly sophisticated consumer” in the purchase, Mister “could have acted upon the red flags thrown up by Maritime’s counsel,” the court noted. Although the defendant emphasized the lengths it went to protect itself from incurring liability, this argument worked against it.

“Unfortunately for Mister, its evidence and argument demonstrating due diligence, careful contracting and ironclad indemnification does not move the Court in the direction it had hoped,” the court wrote. “First, the APA is an agreement between Mister and Maritime. … Second, the lengths to which Mister went to protect itself from liability, such as structuring the sale as an asset purchase, inquiring into Maritime’s liabilities, listing the assumed liabilities in a schedule and including an indemnification clause, actually demonstrate the fairness of holding Mister liable as a successor. … Mister had the opportunity to protect itself, and, it seems, did so.”

Should the EEOC prevail, Mister may be able to look to the APA to seek recourse against Maritime, the court added, but that did not help Mister vis--vis the EEOC.

Other factors—that Mister had the ability to provide relief while Phase 2 did not and that Mister continued in the car wash business—also tipped in favor of finding successor liability.

“The Court finds that Mister had some actual notice as well as constructive notice of the pendency of the EEOC’s charges against Maritime when Mister purchased Maritime’s assets, that neither Maritime nor Phase 2 is capable of providing all the relief that the EEOC has requested and that Mister is running largely the same business as Maritime,” the court observed. “For these reasons, the Court finds it equitable to hold Mister jointly and severally liable for any liability that Maritime, i.e. Phase 2, may incur in this case.”

Finally, the court answered the question of whether discrimination against an undocumented alien is an unlawful employment practice under Title VII, answering in the affirmative.

“[T]here is nothing in the text of Title VII that precludes application to discrimination against undocumented aliens, and enforcement of the statute in that context does not necessarily undermine the Congressional policy evinced in [the Immigration Reform and Control Act],” Judge Bredar wrote.

“Taking the EEOC’s allegations as true but applying Phase 2’s legal theory, Maritime received a sizable benefit by hiring the Charging Parties—it was able to pay them less, make them work longer hours and make them perform additional duties, all without violating Title VII. Even if Maritime was unaware of the Charging Parties’ immigration status when it hired them, if the Court were to ‘sanction the formation of [that] statutorily declared illegal relationship’ by shielding Maritime (and its successor) from Title VII scrutiny, other employers may well find an incentive to look the other way when potential employees are unable to provide proper documentation.”

However, the immigration status of the charging parties may “cabin the nature of the relief that the EEOC may seek in this case,” the court noted, as the agency cannot seek to have Mister rehire the charging parties or pay them back pay.

To read the memorandum in EEOC v. Phase 2 Investments, Inc., click here.

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NLRB: Termination Over Emails Violated NLRA

Why it matters

Employees who responded in support of a group email complaining about working conditions at a restaurant engaged in protected concerted activity under the National Labor Relations Act (NLRA) and, therefore, their termination violated the statute, the National Labor Relations Board (NLRB) declared. A former employee sent a group email to the managers and owners, as well as former employees, at Mexican Radio restaurant that complained about wages, work schedules, tip policies, working conditions and management’s treatment of employees. When four other workers responded in support of the email, they were fired. An administrative law judge found that their terminations violated Section 8(a)(1) of the NLRA because the employees were engaged in protected concerted activity. On appeal, a three-member panel of the NLRB agreed, additionally finding that the employees’ replies were not so egregious as to cause them to lose the protection of the Act.

Detailed discussion

In August 2015, the owners of New York City restaurant Mexican Radio hired a new general manager (GM). Within weeks, a waitress emailed the owners to complain about the new GM and the way she treated the employees, including her making discriminatory remarks and cursing.

Problems continued, however, with the GM making changes to the scheduling. When the employees objected, she told them, “If you don’t like it, you can go.” Frustrated with the scheduling—and the imposition of a tip pool that the wait staff felt was unfair—several of the employees filed a complaint with the New York City Health Department. After violations were uncovered, another manager threatened to “find out” who had reported the restaurant.

One of the bartenders resigned and sent an email to the managers, the owners and several employees at the restaurant. The email discussed the changes at Mexican Radio, detailing the workers’ repeated complaints about scheduling, wages, the tip pool and the unsanitary conditions, as well as the lack of response on the part of management and ownership.

Four of the employee recipients responded to the email. One stated, “Wow, Anette, gracias, Thank you for standing up for us. We will miss you,” while another wrote, “Just finished reading and I agree. Sad that things have to be this way.” A third answered, “I’m glad you said what you felt was right. I understand your point of view 100%. Thanks [sic] you for being voice for us all!” and the fourth wrote, “I agree a 100% as well.”

The managers and owners then terminated all four of the workers, telling one, “I don’t think you can work here any longer” if she agreed with the contents of the email. When the workers filed for unemployment benefits, the employer objected, telling the Department of Labor that the employees were terminated for insubordination.

After the workers filed charges with the National Labor Relations Board (NLRB), the agency charged the restaurant with interfering, restraining and coercing employees in the exercise of the rights guaranteed in Section 7 of the National Labor Relations Act (NLRA), in violation of Section 8(a)(1) of the Act.

At trial, the employer argued that the email was an expression of the individual author’s personal gripe and not a protected concerted activity. Simply responding to a group message did not merit protection under the statute, Mexican Radio told the administrative law judge (ALJ).

But the ALJ reached a different conclusion. “The email was a culmination of the complaints made by the [employees] to [the managers and owners],” the ALJ wrote. “Concerted activity includes not only activity that is engaged in with or on the authority of other employees, but also activity where individual employees seek to initiate or to induce or to prepare for group action, as well as individual employees bringing truly group complaints to the attention of management.”

If the employee or employees who are acting in concert are seeking to improve terms and conditions of employment, their actions are for mutual aid and protection of all employees within the meaning of Section 7, the ALJ added. “Actions taken by the [employees] were for mutual aid or protection and include activity to ‘improve terms and conditions of employment or to otherwise improve their lot as employees.’”

The ALJ further determined that the workers were not insubordinate and did not lose the protections of the Act, rejecting the employer’s contention that the email was “pretty nasty” and “deeply insubordinate.”

“Here, the four discriminatees merely agreed to a nonpublic email from a former employee,” the ALJ said. The four discharged employees did not add to the email with any negative comments of their own, the email was part of an ongoing dialogue between the workers and managers/owners, the email itself contained little profanity and was not insubordination but “a critique of the management style.” In addition, the nonpublic message did not cause a loss of reputation or business, and there was no disruption of business resulting from the email.

The ALJ ordered the employer to cease and desist from violations of the NLRA, to offer the four terminated employees full reinstatement and to make them whole for any loss of earnings.

Mexican Radio appealed, and a three-member panel of the NLRB affirmed.

“We agree with the judge that [the four employees] engaged in protected concerted activity when they replied in agreement to a group email written by a former employee … that complained about wages, work schedules, tip policies, working conditions and management’s treatment of employees,” the Board wrote.

“We further agree that their replies were not so egregious as to cause them to lose the protection of the Act. As the judge noted, the email was part of an ongoing dialogue between the workers and the Respondent and was a reaction to the Respondent’s failure to correct the problems perceived by the employees; the email contained little profanity and was merely a critique of the Respondent’s management style; the employees did not add to the email with any negative comments of their own; the email was nonpublic and did not cause a loss of reputation or business for the Respondent; and there was no disruption of business.”

Concluding that the employer violated Section 8(a)(1) of the NLRA, the NLRB affirmed the ALJ’s order.

To read the decision and order in Mexican Radio Corp., click here.

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NJ Enacts Pay Equity and Paid Sick Leave Laws

Why it matters

Lawmakers in New Jersey have been busy recently, enacting an expansive new equal pay law in the state, as well as a paid sick leave law. Governor Phil Murphy signed the pay equity bill into law in late April, amending the state’s discrimination statute to forbid discrimination on the basis of any protected class “for substantially similar work when viewed as a composite of skill, effort and responsibilities.” Employers have the burden of proving that any difference in pay is due to a bona fide seniority system, merit pay or other reason not based on a protected classification. The statute also extends the time period for compensation discrimination actions, with each paycheck resetting the statute of limitations going back six years, and makes treble damages available for successful plaintiffs. Just a few days later, New Jersey became the tenth state to enact a paid sick leave statute. Beginning on Oct. 29, 2018, employers will be required to provide workers with one hour of paid sick leave for every 30 hours worked, at the same rate of pay with the same benefits normally earned. Annual accrual, use and carryover of earned sick leave—which can be used for multiple reasons, including care for a family member—are capped at 40 hours each year.

Detailed discussion

Greatly expanding the protections for equal pay in the state, New Jersey Governor Phil Murphy signed the Diane B. Allen Equal Pay Act into law on April 24. The measure amends the New Jersey Law Against Discrimination (NJLAD) to forbid discrimination in “compensation or in the financial terms or conditions of employment” on the basis of any protected class “for substantially similar work when viewed as a composite of skill, effort and responsibilities.”

Pursuant to the law, employers shoulder the burden of proving that any difference in pay is based on the delineated exceptions for, for example, a bona fide seniority or merit pay system, with wages and other compensation compared across “all of an employer’s operations or facilities.”

Under a third exception, employers would need to prove the difference in pay is based on one or more legitimate, bona fide factors other than characteristics of the protected class (such as training, education or experience, or the quantity or quality of production); that these bona fide factors do not perpetuate a differential in compensation based on sex or any characteristic of members of a protected class; that each of the factors is applied reasonably; that one or more of the factors account for the entire wage differential; and that the factors are job-related with respect to the position in question and based on legitimate business necessity.

Employers are prohibited from reducing rates of compensation to higher-paid employees to comply with the statute.

In addition to broadening the scope of protection, the law also extends the time period for plaintiffs to bring suit. Similar to the federal Equal Pay Act (EPA), the state law permits the statute of limitations to reset with each allegedly discriminatory paycheck and then goes one step further, allowing back pay for not just two years (like the EPA) but up to six years.

Successful plaintiffs are automatically entitled to treble damages under the new law, which also forbids the contractual shortening or waiving of any rights provided to employees.

The statute—which takes effect on July 1, 2018—also contains expanded protections for whistleblowers. Employees who share relevant information with governmental entities or legal counsel, or disclose or discuss pay information with co-workers, are protected from retaliation.

Just a few weeks later, Governor Murphy signed a second bill into law impacting New Jersey employers, creating the right to paid sick leave in the state. Effective Oct. 29, 2018, the Paid Sick Leave Act requires employers to provide employees with one hour of paid sick leave for every 30 hours worked, “at the same rate of pay with the same benefits as the employee normally earns.”

Annual accrual, use and carryover of earned sick leave is capped at 40 hours per year.Nothing in the law mandates that employers pay employees for accrued but unused sick leave upon the worker’s separation from employment.

Sick leave may be used for “the diagnosis, care, or treatment of, or recovery from an employee’s mental or physical illness or injury” as well as preventive medical care and care for a family member. “Family member” is broadly defined to include children, grandchildren, parents, grandparents, civil union and domestic partners, and “any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.”

Other permitted uses of sick leave include school-related conferences or functions in connection with a child, circumstances related to domestic or sexual violence, and leave taken when the employee is unable to work because of a public health emergency.

If the use of earned sick leave is foreseeable, employers may require advance notice; if the reason for using earned sick leave is not foreseeable, employers can require notice “as soon as practicable.” Employers may require reasonable documentation that the leave is being taken for a permitted purpose where three or more consecutive days off are requested.

In addition to containing specific recordkeeping and notice requirements, the law also prohibits discrimination or retaliation based on the use of paid sick leave.

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Ninth Circuit Weighs In on Title VII Timing

Why it matters

When does the 90-day period referenced in Title VII for filing a civil action begin—when the aggrieved person becomes eligible to receive a right-to-sue notice from the Equal Employment Opportunity Commission (EEOC), or when the person is actually given the notice? According to the U.S. Court of Appeals for the Ninth Circuit, the time period begins when the individual is actually given notice of the right to sue by the agency. The case before the federal appellate panel involved Taylor Scott, who sued her former employer for sexual harassment and retaliation in violation of Title VII. A district court judge granted summary judgment for the employer, finding her suit to be time-barred because the acts she identified against the employer fell outside the statutory time period for filing suit. The Ninth Circuit partially reversed, writing that a plaintiff’s 90-day time limit to file suit begins when the aggrieved person is given notice of the right to sue by the EEOC, and that claims under the statute may be based on alleged acts outside the relevant time period to the extent that such acts are part of a single unlawful employment practice. Scott could, therefore, base her claims on the employer’s alleged acts occurring after she received notice of her right to sue from the agency only if she could show the acts were part of a single hostile work environment claim. The panel upheld summary judgment in favor of the employer with regard to claims based on discrete discriminatory or retaliatory acts that fell outside the relevant time period.

Detailed discussion

Taylor Scott began working for Gino Morena Enterprises (GME) in April 2011 at a barbershop located on the United States Marine Corps Base at Camp Pendleton. In November 2013, Scott filed a charge with the California Department of Fair Employment and Housing (DFEH), alleging that her manager and general manager sexually harassed and retaliated against her.

On Nov. 25, 2013, the DFEH issued a letter providing Scott notice of her right to sue, giving the reason as “Administrative Dismissal—Waived to Another Agency.” The DFEH right-to-sue letter explained that Scott’s DFEH charge had also been filed with the Equal Employment Opportunity Commission (EEOC) and that Scott had a right to request the EEOC perform a review of the DFEH’s findings of insufficient evidence to support that a violation had occurred. The following month, her manager issued what was, in reality, a first warning but which was described as a “second” warning. Scott subsequently left GME’s employ. Scott did not follow up on her first administrative charge until October 2014, when she reached out to the EEOC.

Scott then hired a lawyer and filed a second charge with the DFEH in November 2014, adding allegations about retaliation that she said was a result of her filing the first DFEH charge. She received a second DFEH right-to-sue letter on the same date and filed suit in California state court on Nov. 20.

GME removed the case to federal court and then filed a motion for judgment on the pleadings, seeking dismissal of the Fair Employment and Housing Act (FEHA) claims as being preempted by federal law. Scott obtained a right-to-sue notice from the EEOC associated with her first charge. Issued on June 3, 2015, the EEOC notice stated that “[m]ore than 180 days have passed since the filing of this charge” and “[t]he EEOC is terminating its processing of this charge.” The EEOC notice also stated that Scott’s lawsuit under Title VII must be filed in federal or state court within 90 days of receipt of the notice.

Scott then filed an amended complaint in court, which included only federal claims arising under Title VII and no state law claims. GME countered with a motion to dismiss, arguing that the Title VII claims were untimely and, therefore, time-barred. Although the court denied that motion in order to allow the parties to pursue discovery, it subsequently granted GME’s motion for summary judgment, ruling that all of Scott’s claims were time-barred. Scott appealed.

The U.S. Court of Appeals for the Ninth Circuit explained that there are effectively two limitations periods for Title VII claims. “First, a claimant must exhaust administrative remedies by filing a charge with the EEOC or an equivalent state agency, like the DFEH, and receiving a right-to-sue letter,” the court said. “The charge must be filed within 180 days after the allegedly unlawful employment practice occurred. Second, after exhausting administrative remedies, a claimant has 90 days to file a civil action.”

This second time limit—found at 42 U.S.C. Section 2000e-5(f)(1)—was the issue GME raised against Scott. If the 90-day period to file a civil action begins when the plaintiff receives a right-to-sue notice from the EEOC, then Scott’s claims were timely. If the period, in contrast, starts 180 days after the charge is filed with the EEOC, regardless of when the agency issues a right-to-sue notice, then her time to file an action expired before she sued.

The Ninth Circuit determined that the former interpretation was a better fit with the statute, which requires the EEOC to give notice to the aggrieved person of the person’s authorization to file a civil action. “The statute does not expressly state when the EEOC must give such notice,” the court said. “However, it clearly contemplates the giving of notice sometime after 180 days have expired from the date the charge is filed.”

Section 2000e-5(f)(1) “plainly ties the 90-day period to the ‘giving of [the right-to-sue] notice,’ not eligibility for a right-to-sue notice,” the panel wrote, finding the contrary conclusion counterintuitive.

“The district court’s conclusion is not only contrary to the language of the statute, it arguably would render right-to-sue notices meaningless. If the mere passage of time triggers not only the claimant’s right to sue … but also the deadline by which the claimant must sue (the district court’s conclusion), the EEOC’s giving of notice after 180 days becomes an idle act.”

To hold that a plaintiff may sue when the EEOC has not acted on a charge for 180 days but is not required to do so until after receiving a right-to-sue notice is entirely consistent with the different purposes of the administrative exhaustion requirement and the statute of limitations, the court added.

“The purpose of the exhaustion requirement ‘is “to provide an opportunity to reach a voluntary settlement of an employment discrimination dispute,”’” the court said. “The purpose of a statute of limitations, on the other hand, ‘is to require diligent prosecution of known claims, thereby providing finality and predictability in legal affairs and ensuring that claims will be resolved while evidence is reasonably available and fresh.’”

Allowing an aggrieved person to wait for the agency’s investigation to conclude—even if it takes more than 180 days—furthers the purpose of the administrative exhaustion requirement without undermining the purpose of the 90-day limitations period, the Ninth Circuit wrote.

GME’s concerns about an indefinitely open limitations period were adequately addressed by existing doctrines, such as laches (undue delay in pursuing), the panel said, and the employer lacked any authority for its position that the issuance of a right-to-sue letter by either the EEOC or the DFEH trigged the 90-day clock.

“Accordingly, the district court erred in concluding that the 90-day clock for Scott to file suit began when she became eligible to receive a right-to-sue notice, rather than when she received her right-to-sue notice from the EEOC,” the court said.

However, the timing did have an impact on some of the allegations in Scott’s complaint. Her retaliation claim was based in large part on later conduct, as she maintained that management retaliated against her by issuing a sham warning in an effort to set her up for termination. She argued that the continuing violations doctrine allowed her to base her retaliation claim on conduct that occurred after she filed her first administrative charge, as her second administrative charge was untimely.

“The applicability of the continuing violations doctrine depends on the nature of the plaintiff’s claim,” the court said. “To the extent Scott’s claims are based on discrete acts occurring after she filed her first DFEH charge—for example, retaliation for filing the first administrative charge—the district court did not err in granting summary judgment. But Scott may base her Title VII claims on GME’s alleged acts occurring after she filed her first DFEH charge to the extent she can show such acts are part of a single hostile work environment claim.”

To read the opinion in Scott v. Gino Morena Enterprises, LLC, click here.

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Inability to Work Rotating Shifts Dooms ADA Suit

Why it matters

Where working rotating shifts is an essential job function, the plaintiff cannot move forward on his Americans with Disabilities (ADA) action for the failure to accommodate his request for a fixed schedule, the U.S. Court of Appeals for the First Circuit recently determined. While making a bank deposit on behalf of his employer, Burger King, Victor Sepulveda-Vargas was attacked at gunpoint, resulting in post-traumatic stress disorder. He then requested a fixed work schedule at a Burger King located in a safer neighborhood. The employer initially granted the request but later told Sepulveda-Vargas he would need to resume working rotating shifts, as all assistant managers at the franchises are required to do. Sepulveda-Vargas sued, alleging that the employer failed to accommodate him with a fixed work schedule in violation of the ADA. Affirming summary judgment in favor of the employer, the First Circuit called the case “a lesson straight out of the school of hard knocks. No matter how sympathetic the plaintiff or how harrowing his plights, the law is the law and sometimes it’s just not on his side.” Sepulveda-Vargas was unable to perform the essential job functions required of assistant managers because he could not work a rotating schedule, the court said, ending his ADA action.

Detailed discussion

An assistant manager for Caribbean Restaurants, LLC, the operator of the Burger King franchise throughout Puerto Rico, Victor Sepulveda-Vargas went to make a bank deposit on behalf of his employer. He was attacked at gunpoint, hit over the head and had his car stolen. As a result, he suffered from post-traumatic stress disorder and major depression disorder.

Sepulveda-Vargas requested a fixed work schedule at a Burger King located in a safer neighborhood. The employer initially acquiesced but later told him he would need to resume working rotating shifts (one from 6:00 a.m. to 4:00 p.m., another from 10:00 a.m. to 8:00 p.m. and the last from 8:00 p.m. to 6:00 a.m.), as all assistant managers are required to do.

Instead, Sepulveda-Vargas resigned and sued, alleging that the employer failed to reasonably accommodate him with a fixed work schedule in violation of the Americans with Disabilities Act (ADA) and that employees of Caribbean engaged in a series of retaliatory actions against him as a result of his request for the accommodation.

A district court granted summary judgment in favor of the employer, and the U.S. Court of Appeals for the First Circuit affirmed, finding that Sepulveda-Vargas was not qualified to perform the essential job functions required of Caribbean assistant managers because he could not work rotating shifts.

The employer explained that the ability to work rotating shifts was necessary for the equal distribution of work among the managerial staff, a point Sepulveda-Vargas conceded in his deposition.

“[A]ccommodating Sepulveda-Vargas permanently would have had the adverse impact of inconveniencing all other assistant managers who would have to work unattractive shifts in response to Sepulveda-Vargas’s fixed schedule,” the court wrote. “We have previously explained that such ‘idiosyncratic characteristics as scheduling flexibility’ should be considered when determining the essentiality of a job function.”

In addition, a newspaper advertisement for the job listed the need to work rotating shifts as a requirement, and the job application the plaintiff filled out and signed when he was hired made clear that all Caribbean managerial employees had to be able to work different shifts in different restaurants, the court noted.

Although the employer initially granted Sepulveda-Vargas the accommodation on a temporary basis, that fact did not mean that rotating shifts was a nonessential function, the court added, as to find otherwise would unacceptably punish employers for doing more than the ADA requires, and might discourage such an undertaking on the part of employers.

Turning to the retaliation claim, the court disagreed with Sepulveda-Vargas that the actions listed were materially adverse. For example, allegedly being accused by his direct supervisor of taking four pills of unnecessary medication, which made him feel embarrassed, was insufficient to sustain an adverse employment action, the court said, while being called a “cry baby” on multiple occasions—even assuming the comments were related to a protected activity—fell into the category of “simple teasing, offhand comments, and isolated incidents.”

To the extent Sepulveda-Vargas argued that the actions should be considered materially adverse when looked at together rather than individually, the court concluded otherwise, finding that the incidents amounted to nothing more than “petty insults and minor annoyances.”

To read the opinion in Sepulveda-Vargas v. Caribbean Restaurants, LLC, click here.

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