DELAYED REACTION: EMPLOYER’S APPEAL OF UNEMPLOYMENT BENEFIT AWARD GIVES RISE TO TITLE VII RETALIATION CASE
On October 4, the United States District Court for the Eastern District of Pennsylvania issued a rather interesting decision regarding the intersection of Title VII rights and unemployment compensation proceedings. In Stezzi v. Citizens Bank of Pennsylvania, the court held that an employee can base a Title VII retaliation claim on an employer’s termination of unemployment benefits.
Gloria J. Stezzi was a bank teller at Citizens Bank (“Citizens”) of Pennsylvania when several bags of deposit cash were lost on her watch, which Ms. Stezzi admitted. Citizens promptly terminated her employment on October 26, 2007. Shortly thereafter, Ms. Stezzi filed a formal complaint with the Equal Opportunity Employment Commission (“EEOC”) alleging that her termination was motivated in part by age, race, and sex discrimination.
On November 15, 2007, Citizens Bank received notice of Ms. Stezzi’s EEOC complaint. Prior to receiving this notice, Ms. Stezzi had filed for unemployment compensation benefits, and Citizens Bank had taken no action to deal with that application. In fact, Ms. Stezzi had already received three weeks of unemployment benefits. However, on November 20, 2007, five days after receiving notice of the EEOC complaint, Citizens instructed its agent for handling unemployment compensation matters, Talx Corporation, to appeal Ms. Stezzi’s request for unemployment compensation benefits. Talx alleged in its appeal that Ms. Stezzi was discharged for “gross negligence causing a financial loss to the employer.”
Ms. Stezzi subsequently filed a second EEOC charge against Citizens Bank, alleging that it had ordered Talx to appeal her unemployment claim in retaliation for her previous discrimination complaint. According to Ms. Stezzi, the appeal not only stopped her benefits, but made it impossible to find alternative employment. Though the EEOC dismissed both of her complaints, it did issue a right to sue letter on her retaliation claim. Ms. Stezzi subsequently filed a lawsuit, and Citizens immediately moved for a judgment on the pleadings, claiming that Ms. Stezzi failed to show she had suffered an “adverse employment action” – a required element of a Title VII retaliation claim. Essentially, Citizens contended that Ms. Stezzi could not suffer an adverse employment action because she was no longer employed at the time the unemployment compensation appeal occurred.
In support of its position, Citizens relied on another case, Glanzman v. Metropolitan Management Corp., which held that the plaintiff could not sustain her retaliation claim under the ADEA because (1) the plaintiff could not suffer an adverse employment action after she was terminated, and (2) the plaintiff suffered no harm from the alleged retaliatory conduct as she continued to receive unemployment benefits.
The Stezzi Court, however, distinguished Glanzman, and denied Citizens’ motion for judgment on the pleadings. First, the Stezzi court pointed out that there are differences in courts’ application of the ADEA and Title VII in post-employment retaliation cases. Generally, the courts have not allowed ADEA post-employment retaliation claims, while in Title VII cases, courts have generally held that the statute’s anti-retaliation provisions extend beyond the term of employment. Second, Ms. Stezzi explicitly stated in her complaint that she had experienced financial difficulty from the termination of her unemployment benefits and had also experienced difficulty finding employment due to Talx’s characterization of her conduct as “grossly negligent.” The court believed this was enough to show that Citizens’ conduct had adversely affected her future employment opportunities through its appeal.
Employers can learn a few good lessons from the court’s ruling in Stezzi. To begin, termination of an employee does not give the employer carte blanche to take whatever actions the employer wishes against a former employee. Even post-employment actions must be analyzed and considered carefully, as they can be the basis for claims if they deny the former employee future opportunities. Additionally, as in all employment cases, timing is everything. Citizens ran into trouble with the court in part because it did not act immediately to quash Ms. Stezzi’s claim for unemployment benefits. By waiting until after Ms. Stezzi filed her EEOC claim and acting in such close temporal proximity to that claim to appeal her unemployment award, it allowed the court and the EEOC to view its actions as motivated by retaliatory animus. Even when the statements made in an unemployment compensation appeal are true and accurate, as was the case with Ms. Stezzi, employers’ appeals cannot appear to be a reaction to the filing of a discrimination claim against them. As such, it is best to make decisions on whether to appeal unemployment compensation awards early—certainly earlier than any claims can be filed by an ex-employee.