Reporting Charge to Another Company, Quirky Question # 105

Quirky Question # 105:

I am a senior manager with a manufacturing company based here in Minnesota.  Several months ago, we received a job application for an open position from an employee of a vendor with whom we work quite closely.  We did not select that person for the open position and he filed a Charge of age discrimination against our company with the EEOC.

A few weeks after the Charge was filed, I happened to get a call from a friend of mine at this vendor.  I mentioned that their employee had filed a Charge against us.  The next thing I knew, the vendor fired the employee.  Then, the employee filed another Charge against our company with the EEOC.  How can this be?

Dorsey’s Analysis:

Your question is an excellent one and reflects conduct I am convinced occurs regularly. Although I don’t have empirical evidence data to support my next observation, I suspect employers commonly respond to inquiries from other companies about an ex-employee who is suing them with a simple, unembellished factual observation to the effect that the ex-employee is pursuing a lawsuit against the company. If the employee has filed a Charge of Discrimination pursuant to the Minnesota Human Rights Act, that factual statement by the employer may be problematic.

Your question involves an even more attenuated factual scenario – the individual who has sued you never was your employee (only an applicant for the job). Moreover, as you pointed out, he was gainfully employed by one of your vendors at the time he sought a job with your company. In an unrelated conversation with your vendor, you made the seemingly innocuous factual observation that the vendor’s employee had filed a Charge of Discrimination against you. You did not ask the vendor to fire its employee or ask for any other punitive action to be taken against him. Nevertheless, the vendor fired the employee and he now has brought a new Charge against your company, this time alleging retaliation.

Although there are many additional facts that need to be developed to flesh out this fact pattern, on its face, your seemingly innocent observation would appear to violate the Minnesota Human Rights Act (MHRA).

The law of retaliation, whether under the federal statutory scheme or (in Minnesota) the parallel MHRA, is based on a fairly simple principle – employers are precluded from taking actions against employees because they have exercised their statutorily protected rights. A corollary to that point is that employers are precluded from taking actions that would likely deter those employees, or other employees, from exercising their statutory rights under the anti-discrimination statutes.

Let’s start with an obvious example: if you fired an employee because that employee accused your company of discriminatory conduct, you would be exposing your company to a legitimate retaliation claim. Indeed, I routinely counsel my clients that they need to be particularly careful not to behave differently towards an employee who has accused them of discrimination, lest they convert an otherwise infirm lawsuit based on imagined discriminatory conduct, into a legitimate lawsuit based on actual retaliatory conduct.

Note my use of the word “because” in the example I used above. If you discharged an employee who had accused your company of discrimination and the basis of your decision was entirely unrelated to the allegations made by the employee, you would not have engaged in retaliation. For example, let’s assume an employee filed a Charge of Discrimination claiming you had discriminated against her on the basis of her sex. If you subsequently learned that the employee had embezzled funds from your company, you certainly are not constrained from terminating this employee because of her acts of embezzlement. She later may try to claim that your real motivation in firing her was her Charge of Discrimination, but your company will have a compelling defense to that retaliation claim.

The question you present, therefore, can be considered in this framework – is it retaliatory for you to reveal that an employee, or in your case, an applicant, has filed a lawsuit alleging discrimination? Is the fact that an employee’s lawsuit might be disclosed to a prospective employer or to his/her existing employer likely to deter that person from pursuing his/her claims in the first instance? I have my opinion on that subject, as well as an employer’s entitlement to share truthful information of this kind. In this instance, however, my opinion is NOT aligned with the collective wisdom of the Minnesota legislature.

The Minnesota Human Rights Act contains a provision addressing this precise context. Under its broad anti-retaliation provision, the MHRA states:

“It is an unfair discriminatory practice for any individual who participated in the alleged discrimination as a[n] . . . employer . . . or employee or agent thereof to intentionally engage in any reprisal against any person because that person:

(1) opposed a practice forbidden under this chapter or has filed a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter; or

(2) associated with a person or group of persons who are disabled or who are of different race, color, creed, religion, sexual orientation, or national origin.”

A reprisal includes, but is not limited to, any form of intimidation, retaliation, or harassment. It is a reprisal for an employer to do any of the following with respect to an individual because that individual has engaged in the activities listed in clause (1) or (2): refuse to hire the individual; depart from any customary employment practice; transfer or assign the individual to a lesser position in terms of wages, hours, job classification, job security, or other employment status; or inform another employer that the individual has engaged in the activities listed in clause (1) or (2).” See MHRA, § 363A.15 (Reprisals) (Emphasis added.)

In short, the MHRA specifically states that it is retaliatory to inform another employer that an individual has “filed a charge” or engaged in other types of protected conduct. By advising your vendor that its now-ex-employee had filed a Charge of Age Discrimination against your company, you violated the statute. Moreover, if your vendor terminated its employee because of your report that he had filed a Charge of Age Discrimination, your vendor also would have engaged in retaliatory conduct.

Even if you have violated the statute, however, you need not despair, at least until you gather more facts. You may be able to establish that the Charging Party did not suffer any damages that were caused by the observations you made to your vendor. For example, as suggested in the example above, there may not have been any causal nexus between your observation to your vendor and its decision to discharge its employee. The employee may have been fired for embezzlement, for theft, for bringing a weapon to work, for sexual harassment of another employee, for poor performance, or for any of a thousand, independent and wholly legitimate reasons. Further, your vendor may be able to advance compelling information that its termination decision with regard to this employee was made well in advance of your observation that he had filed a Charge of Discrimination against your company. Your question does not address any of these related facts, so admittedly, I am speculating. But, it will be important for you to explore carefully with your vendor both the reasons why the vendor terminated its employee, and the timing of its discharge decision.

Of course, if your vendor relates to you that it terminated its employee because it was angry that one of its employees was foolhardy enough to sue a key customer for discrimination and that the employee otherwise was performing in an exemplary fashion, you’ve got a problem. In this factual context, you may want to reassure your vendor that the fact that one of its employees sued your firm will not have any adverse consequences for the business relationship between your two companies. If you could persuade the vendor to rehire the employee, even better. Then, even if your company is found to have violated the MHRA, the Charging Party’s damages, at least with respect to the retaliation claim, will be negligible. You still will have to address both the liability and damages issues associated with your decision not to hire this individual, but presumably you had legitimate, non-discriminatory reasons for that decision.

As alluded to above, I question the appropriateness of the statutory provision in the MHRA that prevents an employer from revealing truthful, public information to another company. Moreover, there are a variety of contexts where this information already may be in the public domain in a manner that discloses this information to another employer. For example, the employee him- or herself may have informed the prospective employer that he/she had filed suit against his/her former employer. Similarly, there may have been a news article about the lawsuit. The statutory provision does not address how this public information affects a prior employer’s obligations to refrain from disclosing this information.

Another potentially problematic issue is that enforcement of this statutory prohibition is impractical. Litigants pursuing claims of discrimination often allege other statutory and/or common law claims in their lawsuits. An employer is not prohibited from revealing to an ex-employee’s prospective employer that the ex-employee has sued for wrongful discharge, for breach of contract, for a violation of the Whistle-blower statute, or for myriad other reasons, so long as the information conveyed is factual and truthful. If one of the claims alleged by the employee is discrimination under the MHRA, is an employer precluded from making any comment about the litigation? The statute would appear to prohibit this disclosure. Could an employer comment that an ex-employee had sued for intentional infliction of emotional distress, or negligent hiring, or other common law claims, so long as no reference was made to the discrimination claim? Or, if allegations of discriminatory conduct are part of the lawsuit, are all comments of any kind prohibited? The statute does not address this issue.

Finally, consider once again the hypothetical at the outset of this analysis. Let’s assume that an employer fired an employee for felonious conduct, such as embezzling funds or assaulting another employee. Let’s also assume that notwithstanding the employer’s legitimate reasons for discharging the employee, the employee filed a Charge claiming that the employer’s real motivation for the discharge was discriminatory animus. If that ex-employee applied for employment elsewhere and the first employer received a call from the prospective employer, I believe that it would be legitimate to reveal that: a) the employer had a sound basis for the discharge; and b) despite that fact, the employee filed a frivolous claim of discrimination. Yet, the latter part of the disclosure would be prohibited by the reprisal provision of the Minnesota Human Rights Act. This does not make much sense to me. But, in Minnesota at least, employers would be prudent to refrain from making any comment at all to another employer regarding a lawsuit in which the plaintiff has brought a claim under the MHRA.

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