Paid Suspension No ‘Adverse Action' Under Title VII

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Kevin McGowan

Aug. 12 — A female Southeastern Pennsylvania Transportation Authority employee who was suspended with pay pending an investigation and ultimately fired for time-sheet fraud lacks a sex discrimination claim under Title VII of the 1964 Civil Rights Act, the U.S. Court of Appeals for the Third Circuit ruled Aug. 12.

On an issue of first impression for the circuit, the court ruled a suspension with pay isn't an adverse employment action within the meaning of Title VII and the Pennsylvania Human Rights Act.

“Although we need not consider and do not decide whether a paid suspension constitutes an adverse action in the retaliation context, we hold that such a suspension generally does not constitute an adverse action in the substantive discrimination context,” Judge Thomas M. Hardiman wrote.

Other federal circuit courts have unanimously reached the same conclusion, the Third Circuit said. “Like the district court, we think this chorus is on pitch,” the court said. Title VII prohibits discrimination in hiring,, firing and “compensation, terms, conditions, or privileges of employment,” the court said.

“A paid suspension is neither a refusal to hire nor a termination, and by design it does not change compensation,” Hardiman wrote. “Nor does it effect a ‘serious and tangible' alteration of the ‘terms, conditions, or privileges of employment,' because ‘the terms and privileges of employment ordinarily include the possibility that an employee will be subject to an employer's disciplinary policies in appropriate circumstances.' ”

“We therefore agree with our sister circuits that a suspension with pay, ‘without more,' is not an adverse employment action under the substantive provision of Title VII,” the court said, affirming summary judgment for SEPTA.

No Inference of Sex Bias 

To the extent former administrative assistant Michelle Jones's bias claims are based on her subsequent suspension without pay and termination, the court said her Title VII claim fails because she can't show “some causal nexus” between her sex and her adverse treatment by SEPTA.

“The record is devoid of evidence that Jones's suspension without pay and termination were products of discrimination instead of the natural result of SEPTA's investigation into the allegations of timesheet fraud,” Hardiman wrote.

Jones argued a jury could infer sex discrimination because SEPTA allegedly declined to punish male employees for the same offense. She cited evidence supervisor Alfred Outlaw permitted at least one male employee to underreport his vacation time to compensate him for unpaid overtime hours.

“But even if this practice was against SEPTA rules, it was materially different from Jones's misconduct because [comparator John] Solecki did not fraudulently claim pay for work he never performed,” the court said. “Because of this distinction, the treatment of Solecki could not support an inference that Jones's suspension without pay and termination were motivated by discrimination rather than by SEPTA's good-faith conclusion that Jones submitted false timesheets.”

Affirmative Defense to Harassment 

Jones alleged that for 10 years, she was subjected to “severe and pervasive” sexual harassment by Outlaw, her supervisor in SEPTA's Revenue Operations Department. The agency investigated and ultimately disciplined Outlaw for inappropriate conduct for one incident in which he asked Jones to step on his back to relieve spinal pain.

But the Third Circuit said even if Jones had evidence of severe and pervasive harassment, her Title VII claim fails because SEPTA proved the affirmative defense set out in Faragher v. City of Boca Raton, 524 U.S. 775, 77 FEP Cases 14 (U.S. 1998), and Burlington Indus. Inc. v. Ellerth, 524 U.S. 742, 77 FEP Cases 1 (U.S. 1998).

Under the Faragher/Ellerth defense, if no tangible job action has resulted from a supervisor's alleged harassment, an employer isn't liable if it “exercised reasonable care to avoid harassment and to eliminate when it might occur” and the complaining employee failed “to take advantage of the employer's safeguards and otherwise to prevent harm that could have been avoided.”

SEPTA can assert the defense because any sexual harassment of Jones by Outlaw didn't culminate in a “tangible employment action,” the court said.

“Regardless of whether this term means precisely the same thing as ‘adverse employment action,' we think it clear that neither phrase applies to Jones's initial paid suspension, which is the only action that Jones can link to the alleged harassment,” Hardiman wrote.

The transit agency also satisfied both prongs of the affirmative defense, the court said.

Once Jones complained about Outlaw's alleged harassment, SEPTA conducted an investigation, made findings, required Outlaw to attend a counseling session and placed a “demerit” on his personnel record for the inappropriate conduct, the court said.

Jones objected that Outlaw received only ‘a slap on the wrist,” but the court said a showing that discipline was imposed isn't required to prove an employer's remedial action was adequate. “Indeed, a light punishment may have been suitable in view of SEPTA's finding that Outlaw's only proven misconduct was the spine-stepping incident,” the court said.

Meanwhile, Jones didn't take advantage of the employer's available safeguards by not complaining for 10 years even though Outlaw allegedly was engaging in harassment for that entire period, the court said.

Jones concedes she never made a harassment complaint until after Outlaw accused her of time-sheet fraud, even though she knew SEPTA's equal employment opportunity office fielded such complaints, the court said. Indeed, Jones previously had worked in the agency's Office of Civil Rights, the predecessor to the EEO office, the court said.

“Even if Jones could offer evidence of severe or pervasive sexual harassment by Outlaw, therefore, her hostile work environment claim fails because no reasonable jury could hold SEPTA liable for such harassment,” the court said.

No Causal Link for Retaliation 

Jones also alleged that Outlaw suspended her in retaliation for her informal complaints about his alleged harassment and that SEPTA terminated her in retaliation for her formal harassment complaint to the EEO office.

But Outlaw's suspension of Jones with pay wasn't actionable retaliation absent any evidence that Jones's alleged informal complaints caused that suspension, the court said.

“Therefore, we must focus on whether a reasonable jury could conclude that SEPTA's decisions to suspend Jones without pay and then terminate her were acts of retaliation,” the court said. “Jones's claim fails because there is no evidence that her complaints of harassment caused SEPTA to discharge her, and her efforts to establish a causal connection go nowhere.”

Jones argued a reasonable jury could find retaliation based on a “cat's paw” theory of liability, which the Supreme Court in Staub v. Proctor Hospital, 562 U.S. 411, 111 FEP Cases 993 (U.S. 2011), endorsed for discrimination claims based on military status. The Third Circuit subsequently has applied Staub in Title VII cases.

But even if Jones produced evidence that Outlaw's time-sheet fraud charge was based on retaliatory animus, such discrimination wasn't the “proximate cause” of either her unpaid suspension or her termination, the court said. Instead, the SEPTA inspector general's independent investigation, which concluded Jones had falsified her time sheets, was the proximate cause of the adverse action, thereby wiping out any potential liability based on the “cat's paw” theory that Outlaw engineered her discharge, the court said.

Judges Joseph A. Greenaway Jr. and Cheryl Ann Krause joined in the decision.

Olugbenga O. Abiona in Philadelphia and Brian M. Rhodes in Springfield, Pa., represented Jones. Stradley Ronon Stevens & Young represented SEPTA and Outlaw.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

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

Text of the opinion is available at http://www.bloomberglaw.com/public/document/MICHELLE_PRECIA_JONES_Appellant_v_SOUTHEASTERN_PENNSYLVANIA_TRANS.