Waitresses’ Assignment to Areas with Lower Tip Potential Is Sufficiently Adverse to Support Discrimination and Retaliation Claims

The United States Court of Appeals for the Seventh Circuit recently revived discrimination and retaliation claims asserted by two African-American cocktail waitresses under Title VII of the 1964 Civil Rights Act in Alexander v. Casino Queen, Inc., 7th Cir. Case No. 12-3696, 2014 WL 57947. The United States District Court for the Southern District of Illinois has dismissed such claims on the basis that the plaintiffs failed to show an “adverse action” necessary for a Title VII claim. The Seventh Circuit reversed that determination, finding that the lost tip potential alleged to have been suffered by the plaintiffs was sufficient to constitute an adverse action to support the discrimination and retaliation claims.
In Alexander, the plaintiffs were paid $7 to $8 an hour in salary, totaling approximately $60 per day. They also earned $40 to $160 per day in tips depending on their floor assignment. As such, tips compromised approximately 40% to 73% of the waitresses’ total compensation. Due to their seniority, the plaintiff waitresses were allowed to bid on assignments to areas of the casino known to generate higher tips. The plaintiffs alleged, however, that their supervisor would frequently reassign them to less lucrative areas, while Caucasian waitresses (often with less seniority) were reassigned to cover the more desirable areas. The plaintiffs alleged that these assignments occurred up to twice a week and cost them $50 per day.  

To be actionable, an employment action must be a significant change in employment status (i.e. demotion or termination) or must cause a significant change in benefits. Here, the Seventh Circuit concluded that the floor reassignments constituted an adverse employment action sufficient to sustain the plaintiffs’ discrimination and retaliation claims because of the relative importance that tips had for these cocktail waitresses under their compensation structure. The Court reasoned as follows: 

“Here, tips compromise anywhere from 40% to 73% of plaintiffs’ compensation. It is true that patrons pay these tips, not the employer; thus, the causal connection is not immediate. Nonetheless, Casino Queen’s alleged ‘decision caused a significant change in benefits’ through a clear causal relationship.”  

The Seventh Circuit further rejected the lower court’s characterization of plaintiffs’ claims as speculative, finding instead that the plaintiffs were able to quantity the loss of tips based on their first-hand experience working at the Casino for 15 and 18 years respectively. While the plaintiffs’ losses were admittedly estimates, the Court concluded that such estimates were based on the valid grounds given the plaintiffs’ extensive experience. Accordingly, the Court concluded that the plaintiffs asserted sufficient evidence of an adverse action to get to the jury on their discrimination and retaliation claims.  

Contact: Emily Wilcheck


Sixth Circuit Holds That Voluntary Job Transfer Can Be an Adverse Employment Action

On January 14, 2014, the Sixth Circuit Court of Appeals (Ohio, Michigan, Kentucky, Tennessee) ruled that transferring an employee to another position constituted an adverse employment action, despite the fact that the employee requested the transfer. In doing so, the Sixth Circuit reversed the District Court’s decision that granted summary judgment to the defendant on the plaintiff’s race, national origin, and age discrimination claims. 

In Deleon v. Kalamazoo County Road Commission, the facts indicated the plaintiff applied for a job transfer to an Equipment and Facilities Superintendent position in November 2008 because he viewed the new position would provide better potential for career advancement. The posting for the open position described the working conditions as “primarily in the office and in garage where there is exposure to loud noises and diesel fumes.” The plaintiff did not receive the position, but the individual who did left the position shortly thereafter. When he did not originally receive the job transfer, the plaintiff complained to his supervisors about not getting the job. In 2009, the plaintiff was transferred to the Equipment and Facilities Superintendent position.  Shortly after his transfer, he began to complain about the diesel fumes and alleges suffered from bronchitis and sinus headaches. 

The plaintiff then had a contentious meeting with his supervisor that involved a disagreement on the redesign of a truck. Four days after this meeting, the plaintiff was hospitalized for five days, which he attributed to work-induced stress and a stress-related mental breakdown. The plaintiff then took eight month’s leave under FMLA. When he was cleared to return to work by his psychiatrist, the plaintiff learned he had been terminated for exhausting all his leave. He then filed charges for race, national origin, and age discrimination. He asserted the job transfer was an adverse employment action and he was set up to fail. The District Court disagreed and granted the defendant summary judgment because it determined that transferring an employee to a position the employee applied for was not an adverse action.
The Sixth Circuit began its analysis by noting that generally reassignments without changes in salary, benefits, or title usually do not constitute an adverse employment action. The Sixth Circuit noted, however, that a job transfer may qualify as an adverse employment action where it constitutes a constructive discharge. In order for an employee to be constructively discharged, the working conditions must be objectively intolerable to a reasonable person. The Sixth Circuit took it a step further and determined that a job “transfer may constitute a materially adverse employment, even in the absence of a demotion or pay decrease, so long as the particular circumstances present give rise to some level of objective intolerability.” 

The Sixth Circuit determined that the plaintiff demonstrated his working conditions were objectively intolerable. For support the Sixth Circuit, cited to the diesel fumes plaintiff was exposed to in his new position. The Sixth Circuit disregarded, or gave little credence, to the fact that the job posting for this position specifically stated diesel fumes were present and plaintiff was aware of the presence of diesel fumes when he voluntarily applied for the position. The Sixth Circuit addressed the fact that plaintiff applied for the job transfer but stated, “Accordingly, we conclude that under certain circumstances, a voluntary or requested transfer may still give rise to an adverse employment action.”

Judge Sutton’s dissent points out the untenable position employers are now placed in: “Whatever the correct interpretation of the employment retaliation laws may be, they surely stop at this line: imposing liability on employers whether they grant or deny an employee’s request for a transfer.” As Judge Sutton suggests, the majority’s decision sets up a proverbial Catch-22 situation for employers. In this case, the employee got exactly what he wanted, a job transfer; yet, the majority determined he still had a cognizable claim. According to Judge Sutton, “It follows under the majority’s analysis that, when the employer denies what the employee wants, he also has a cognizable claim.” 

The Sixth Circuit’s decision leaves employers in the unenviable position of potentially facing liability when they refuse to transfer an employee to a position for which they applied, or when they actually do transfer an employee to a position for which they applied.  

Contact: Jon Secrest


Sixth Circuit Clarifies Use of Joint-Employer Doctrine in Title VII Cases

The Sixth Circuit Court of Appeals in Maurice Knox v. Skanska USA Building, Inc., 6th Cir Nos. 12-5967; 12-6236 (Dec 10, 2013), held that a defendant can be liable under the Joint-Employer Doctrine in a Title VII case.
In Knox, a general contractor, Skanska USA Building (“Skanska”), subcontracted with C-1, Inc. (“C-1”). C-1 went on to hire several hoist operators, including Maurice Knox, to work at a Memphis, Tennessee, construction site. While employed at the site, Knox was subjected to repeated acts of discrimination. He was called a “monkey”, “n----r”, and other racial slurs. Racially charged graffiti was sprayed around the worksite. At one point, the contents of a porta-potty were thrown on him. Knox repeatedly complained to his supervisor, but was told that his complaints would need to be made directly to Skanska. Knox eventually left the worksite. The Equal Employment Opportunity Commission then sued Skanska under Title VII, alleging that Skanska subjected Knox to a hostile work environment and then retaliated against him for complaining about the harassment. The EEOC and Knox, assuming the Joint-Employer Doctrine applied, moved for partial summary judgment on the grounds that Skanska was the operators’ joint-employer and thus liable under Title VII. Skanska cross-moved for summary judgment under the same assumption. The district court denied the EEOC’s and Knox’s motions and granted Skanska’s motion.
In reviewing the case, the Sixth Circuit noted that it has previously assumed, in dicta, that a defendant can be liable under Title VII pursuant to the Joint-Employer Doctrine. The Court also went on to note that other circuits, notably the Third, Ninth, and Eleventh Circuits, have all applied the Doctrine to determine if an entity is liable under Title VII.  Therefore, although neither party briefed the applicability, the Court firmly applied the Joint-Employer Doctrine to Title VII cases. In doing so, the Court found that Skanska exercised sufficient control over Knox to be considered a joint-employer, and reversed the district court’s judgment.
The Court’s decision in Knox is an important one for employers, as it provides a steadfast precedent for the imposition of the Joint-Employer Doctrine in Title VII cases, making it one more potential pitfall for employers to avoid.

Contact: Marcus Pringle
216. 696.7077


NLRB Gives Up Poster Rule Fight

On January 6, 2014, the National Labor Relations Board (“NLRB”) threw in the towel on its fight to require all employers to post an official notice informing employees of their right to unionize.  The NRLB announced it would not seek a review of two appeals court decisions that struck down the “poster rule,” which was originally issued on August 26, 2011 and originally set to take effect on November 14, 2011. The rule would require employers to post an 11 x 17 inch notice  informing workers of their right to join a union, bargain collectively, discuss wages and benefits with co-workers, strike and picket, and to attempt to improve working conditions. The NLRB’s decision not to seek review from United States Supreme Court means the appellate court decisions stand and the “poster rule” will not go into effect. The successful challenges to the “poster rule” were brought by the U.S. Chamber of Commerce, National Federation of Independent Businesses, and National Association of Manufacturers. 

Although the NLRB lost this battle, it “remains committed to ensuring that workers, businesses and labor organizations are informed of their rights and obligations,” according to a statement issued by the NLRB. As such, expect the NLRB to continue its efforts to require employers to inform employees of their rights under the National Labor Relations Act.

Contact: Jon Secrest