Employer May Be Liable Where Spurned Co-Worker Takes Action to Get Employee Fired

The Supreme Court has previously ruled on the issue of employer liability premised on a finding of negligence in cases involving hostile workplace. But, yet to be addressed by the Supreme Court is whether an employer can face liability when a co-worker (instead of a supervisor) commits a discriminatory act that influences an ultimate employment decision. The First Circuit recently answered this question in the affirmative, finding that an employer can be liable if it fires an employee based upon complaints that it knew or reasonably should have known were the product of discriminatory animus. Velazquez-Perez v. Developers Diversified Realty Corp., et al., No. 12-2226 (1st Cir. May 23, 2014).

Velazquez was a regional manager for Diversified Realty Corp., later changed to DDR, Corp., a company that owns and manages shopping centers. In his employment with DDR, Velazquez interacted frequently with another employee, Rosa Martinez. Martinez was the Human Resources representative for DDR in Puerto Rico and also had accounting duties. In both of these capacities, she provided advice and gave direction to managers like Velazquez. Early on, Velazquez and Martinez had a flirtatious relationship, but, according to Velazquez, that flirtatious relationship ended in 2008. In April of 2008, both Martinez and Velazquez traveled to a company meeting in the United States. Martinez tried to force her in way into Velazquez’s hotel room, sent emails to Velazquez and another female employee suggesting the two were going to have sex, and called Velazquez’s room multiple times. Afterward, Velazquez told Martinez via email that he had no interest in a romantic relationship and in response, Martinez made statements that indicated that she may have him fired for rejecting her. Velazquez complained to his supervisor Rolando Albino about Martinez. Albino told him to send her a conciliatory email so that she would not get him fired and then joked that Velazquez should have sex with Martinez. Later that year, Velazquez complained further to Albino and Albino’s boss Francis Gonzales about Martinez’s behavior.

Around the same time, Martinez began discussing Velazquez’s job performance with Albino and Gonzales. The three also discussed accusations against Velazquez related to his job performance from sources other than Martinez. Albino subsequently reported verifying some of these issues with Velazquez’s subordinates and concluded that Velazquez should be disciplined and potentially fired. Gonzales did not think termination was appropriate and said he would issue a formal warning memo and recommend that Velazquez be placed on a performance improvement plan. In an email sent in response, Martinez said she would have to refer the matter to two senior officials at DDR’s headquarters in Ohio. On that same day, Martinez saw Velazquez in a hotel where they were both staying for a business meeting. She followed him to his hotel room and told him she didn’t love her husband, that she loved him, and wanted a romantic relationship with him. Velazquez rejected Martinez’s overtures and that night, Martinez sent an email to the representatives at headquarters, recommending that Velazquez be terminated immediately. Four days later, Albino and Gonzales met with Velazquez. Velazquez allegedly gave inconsistent information and Gonzales terminated him.

Velazquez asserted claims against DDR for discrimination based on his sex in violation of Title VII based on his termination and hostile work environment. He also claimed retaliation. The district court granted the employer summary judgment as to all of his claims. The First Circuit affirmed the decision of the district court with regard to the hostile work environment and retaliation claims, but vacated the award of summary judgment as it related to the claim of discriminatory termination. Velazquez-Perez, p. 2.

The First Circuit found that a jury could reasonably conclude that Martinez communicated a threat to Velazquez that he engage in a romantic relationship with her or be fired and that her efforts to carry out this threat served as a proximate cause of Velazquez’s termination. Id., p. 11. The Court pointed out that Gonzalez had significant information about Velazquez’s performance issues at the time he recommended not terminating Velazquez, but giving him a warning and placing him on a performance improvement plan, yet it was after Martinez “balked” at this recommendation that he fired Velazquez. Id., pp. 11-12. The Court concluded that no reasonable jury could find that Martinez was Velazquez’s supervisor. Id., p. 12. However, the Court found, “[o]ur conclusion that Martinez was not a supervisor does not necessarily absolve DDR of potential liability for Velazquez’s discharge.” Id., p. 16. Although recognizing that the Supreme Court has not ruled on the issue of whether employer liability premised on a finding of negligence is limited to hostile work environment claims as opposed to discriminatory termination, the First Circuit also noted that the Supreme Court has indicated that “the distinction between hostile workplace claims and quid pro quo claims is ‘of limited utility.’” Id. (quoting Burlington Indus. v. Ellerth, 524 U.S. 742, 751 (1998)). Thus, the First Circuit found that it sees “no basis for applying that distinction to permit a negligent employer to escape (or incur) liability on one type of claim but not the other.” Id., p. 17. The First Circuit concluded as follows:

In short, an employer can be held liable under Title VII if: the plaintiff’s co-worker makes statements maligning the plaintiff, for discriminatory reasons and with the intent to cause the plaintiff’s firing; the co-worker’s discriminatory acts proximately cause the plaintiff to be fired; and the employer acts negligently by allowing the co-worker’s acts to achieve their desired effect even though it knows (or reasonably should know) of the discriminatory motivation.

Id., p. 18.

What does this mean for employers? If there is a known issue involving discriminatory conduct on the part of an employee, be very careful when implementing discipline based in any way on reports from that discriminatory actor about the victim, regardless of whether there is a supervisory relationship or not. Make sure to have separate sources for any such reports and to carefully separate out any potential discriminatory motive.