Retaliatory Measures: Boom Times for a New Kind of Workplace Discrimination

When a black employee at Northwest Cosmetic Labs complained about being treated differently than her white colleagues, the company's management took action -- by firing her.

It was an expensive mistake for the Idaho Falls, Idaho-based company, which recently paid $30,000 to settle a lawsuit filed on the fired employee's behalf by the Equal Employment Opportunity Commission (EEOC). The settlement also illustrates the growing role that retaliation claims play in workplace discrimination lawsuits.

Job bias charges in general are at an all-time high: According to EEOC figures, the agency handled 99,992 private-sector workplace discrimination charges during fiscal year 2010. Retaliation claims figured in more than 36,000 of those cases, up 8 percent from 2009, making retaliation cases the single most commonly reported form of workplace discrimination. It also marks the first time since the EEOC was founded in 1965 that racial discrimination did not occupy the top category.

Retaliation on the Rise

Retaliation claims have grown because they're simpler to prove than discrimination cases, according to experts. "It's actually a lower standard," said Ray Peeler, a senior EEOC attorney. "There are actions you could take that might not violate the law if it were a straight discrimination claim, but if it were brought as retaliation, it could."

An obvious case of retaliation may require proving only three elements, according to Rick Ross, a labor attorney at Fredrikson & Byron in Minneapolis. "One is that the individual engaged in protected conduct," Ross said. "The second is they suffered adverse employment action. The third element is there's a causal nexus between those two elements." If an employee complained of discrimination (a protected action) and was fired a week later (the adverse action), then the court generally assumes the causal nexus, or cause and effect, Ross explained.

Although EEOC enforcement, mediation, and litigation programs forced employers to cough up a total of $404 million last year, being accused of retaliation or discrimination isn't always a big deal, especially for smaller businesses. The agency classifies about a third of discrimination cases as being without merit. Only about 300 cases each year are deemed worthy of a federal lawsuit, as happened with Northwest Cosmetic Labs.

Typically, the EEOC sues larger employers, although Peeler says this is not intentional. The EEOC's legal strategy calls for lawsuits to be filed in cases that affect large numbers of people, involve systemic discrimination, or may affect points of law that EEOC deems particularly important. These cases usually involve bigger companies.

In roughly two-thirds of cases, the EEOC issues complainants' letters, which essentially give the plaintiff the right to seek resolution in federal court in addition to state courts. Before issuing these right-to-sue letters, however, the EEOC encourages mediated settlements. It is generally in a smaller employer's interest to mediate successfully, as costs mount rapidly once cases go past mediation, Ross said.

Most EEOC lawsuits result in settlements in which the business pays compensation to the plaintiff. If a case takes years to complete, back pay alone can amount to a large sum. But the financial toll doesn't end there: Legal fees, fines, and costs of remedial programs such as training can easily be much higher. Six-figure costs for small employers that go to court are common, Ross stated.

Such cases can also damage a company's reputation, even though most firms involved in discrimination lawsuits try to say as little as possible about them. Northwest Cosmetic Labs did not respond to requests to discuss its case, and similar requests to other smaller organizations that have been sued by the EEOC were also ignored.

Avoiding the Issue

The best thing to do, of course, is to avoid being charged with discrimination or retaliation to begin with. Yet this isn't entirely within the employer's power. An employee worried about being fired for poor performance could, for instance, file a meritless discrimination charge so that the employer risks the appearance of retaliation if the firing proceeds.

Job bias law is also a fairly complex topic, and it is becoming more so all the time. For instance, genetic information has recently been added to age, disability, national origin, pregnancy, race, color, religion, and sex as a prohibited basis for discrimination. Businesses therefore need to stay on top of the changes to avoid legal missteps. The EEOC's website provides details on how companies can steer clear of discrimination and retaliation, and the agency conducts outreach programs to train employers.

"The simple answer is, before you fire anybody, consult an employment lawyer who knows what they're doing," Ross said. A competent employment attorney will run through a checklist of questions to determine whether the employee is protected by virtue of behavior -- such as complaining about discrimination -- or another characteristic such as race or religion. The attorney will then advise you whether firing, transferring, demoting, or otherwise changing the employee's status is likely to trigger legal trouble.

More generally, employers should simply try to engage in open communication, Ross said. "Treat your employees fairly and consistently, and have clear direction," he stated. "Those are the golden rules. If you do that, the probability of having problems becomes remote."