High Court Nixes ‘Last Discriminatory Act' Ruling

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By Lisa Nagele-Piazza

May 23 — The limitations period for an employee to bring a constructive discharge claim under Title VII of the 1964 Civil Rights Act begins when the employee resigns, the U.S. Supreme Court ruled.

The U.S. Court of Appeals for the Tenth Circuit had ruled that former Postmaster Marvin Green waited too long to file his race-related constructive discharge claim under a 45-day limitations period applicable to federal sector Title VII claims (146 DLR A-2, 7/30/14).

But the federal appeals court incorrectly ruled that the claim accrued on the date of the employer's last allegedly discriminatory act, the Supreme Court said in a May 23 opinion.

Writing for the court, Justice Sonia Sotomayor said the claim doesn't accrue until the employee resigns. The court remanded for consideration of when Green actually gave notice of resignation.

“This is an unusual ruling in the sense that it’s a win-win for employers and employees,” said management attorney Douglas D. Haloftis of Barnes & Thornburg LLP. “Employers and employees can breathe a sigh of relief that the Supreme Court didn’t adopt the Tenth Circuit’s ruling,” Haloftis told Bloomberg BNA.

“There was uncertainty in determining what was the last discriminatory act,” Haloftis said. “It made this area very murky.”

Theodore A. Schroeder, a shareholder with Littler Mendelson PC, said the ruling provides clarity. It is an understandable and administratively manageable rule for the limitations period to begin at the time of resignation, Schroeder told Bloomberg BNA May 23.

“It's an important decision,” R. Scott Oswald, managing principal of the Employment Law Group PC, told Bloomberg BNA.

“For employees, the decision means that the statute of limitations isn’t going to start ticking until the employee gives definitive notice of resignation,” said Oswald, who represents employees.

The Supreme Court clarified that the limitations period begins to run on the day the employee tells his employer he is resigning, not on his last day of work.

Dissenting, Justice Clarence Thomas said he would hold that only an employer's actions may be discriminatory. “Because the only employer action alleged to be discriminatory here took place more than 45 days before petitioner Marvin Green contacted EEOC, his claims are untimely,” Thomas said.

Employee Signed Settlement Agreement

Federal employees like Green have 45 days to initiate contact with an equal employment opportunity counselor regarding a discrimination complaint.

“The facts in this case were very unusual,” Haloftis said.

Green was a postmaster in Englewood, Colo., and claimed that his supervisors retaliated against him for filing a race discrimination complaint after he was overlooked for a job opening in Boulder, Colo.

Green was investigated for allegedly delaying the mail, which is a criminal offense.

On Dec. 16, 2009, Green signed a settlement agreement providing that the USPS would drop the investigation if he immediately left his job and used his accrued annual and sick leave through the end of March 2010.

He was given the option to retire or accept a significantly lower-paying position in Wyoming after his accrued leave expired.

On Feb. 9, 2010, Green informed the U.S. Postal Service that he was resigning at the end of March.

Forty-one days after he gave notice of his resignation, but 96 days after he signed the settlement agreement, Green made a constructive discharge complaint to an EEO counselor.

The Tenth Circuit found that Green's claim was time-barred because the 45-day limitations period began at the employer's last allegedly discriminatory act.

The claim accrued when the Postal Service gave him a choice between retiring or taking a lower-paying job 300 miles away, not on the date that he formally resigned a few months later, the appeals court said.

But the high court disagreed.

“The standard rule for limitations periods requires us first to determine what is a ‘complete and present cause of action' for a constructive-discharge claim,” the majority said. “We hold that such a claim accrues only after an employee resigns.”

Circuit Split Resolved

In addition to the Tenth Circuit, the Seventh and District of Columbia circuits also applied the “last discriminatory act” rule.

But five appeals courts have ruled that the claim accrues on the employee's resignation date.

Rejecting the Tenth Circuit's rule, the Supreme Court said an employee must resign before bringing a constructive discharge claim.

“A plaintiff must prove first that he was discriminated against by his employer to the point where a reasonable person in his position would have felt compelled to resign,” Sotomayor wrote. “But he must also show that he actually resigned.”

It would put an employee in a difficult situation to force him to make a complaint before he can bring a constructive discharge claim, Sotomayor wrote. An employee may wait until he can afford to resign or a teacher may wait until the end of the school year, she said.

The decision is in line with the Supreme Court’s guiding principle that employees should be able to understand Title VII, Paul Mollica of employee-side Outten & Golden LLP told Bloomberg BNA May 23.

“Justice Sotomayor recognized that you shouldn’t have to be a lawyer to preserve your rights,” Oswald said.

“We now have a rule that is consistent with the statute-of-limitations period that is used for a regular discriminatory discharge claim,” Haloftis said. “It makes a lot of sense and isn’t surprising considering the way oral argument went” (229 DLR AA-1, 11/30/15).

The court remanded the case for the Tenth Circuit to decide whether Green resigned when he signed the settlement agreement or when he gave his resignation notice several months later.

Implications for Private Sector

The 45-day limitations period in this case applies only to federal employees, but the ruling likely will be applied to private-sector claims as well, attorneys said.

Attorneys interviewed by Bloomberg BNA pointed to a footnote in which the high court said, “Although the language is different, the EEOC treats the federal and private-sector employee limitations periods as identical in operation.”

“While the majority doesn’t expressly say this will apply in the private sector, we should assume at this point that it will,” said Schroeder of Littler Mendelson.

Schroeder said he thinks the ruling will result in more claims, but he doesn't think it will have too much of an impact on the day-to-day management of the workforce.

“As far as the bigger picture is concerned, everyone is trying to predict whether the Supreme Court’s composition has changed since Justice Scalia’s death,” Brian Netter, co-leader of Mayer Brown’s Supreme Court and appellate practice, told Bloomberg BNA.

The decision notably has a practicality aspect to it, Netter said. “But it’s too soon to know for certain if that has to do with the peculiarities of the case or if it points to a greater movement of the Supreme Court.”

Chief Justice John G. Roberts and Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer and Elena Kagan joined the majority. Justice Samuel A. Alito wrote a separate concurring opinion.

To contact the reporter on this story: Lisa Nagele-Piazza in Washington at lnagele@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com