For years, confusion has surrounded the anti-retaliation provisions of the Massachusetts Fair Employment Practices Act (G.L. c. 151B), which prevent employers from retaliating against employees who testify in, assist in, or file a lawsuit for damages resulting from discriminatory conduct on the basis of race, color, religious creed, national origin, sex, and sexual orientation. While it is clear that employees can sue their employers for conduct that occurs during the employment relationship, until recently it was unclear whether an ex-employee could sue his or her previous employer for retaliatory actions taken after the employment relationship ends under state law. The Massachusetts Supreme Judicial Court ("SJC") cleared up this confusion last month when it handed down its unanimous decision in Psy-Ed Corp., et al. v. Klein, et al. v. Hirsch, et al., 459 Mass. 697 (2011). In this landmark ruling, the Court held that employers may be liable for retaliating against ex-employees even if the wrongful conduct occurs several years after the employment relationship terminated.
A. Factual Background and Procedural History
During the winter of 1997, Psy-Ed Corporation ("Psy-Ed"), a Massachusetts publishing company, terminated two long-time employees, Kimberly Schive and Dr. Daniel Klein. Schive was a deaf employee who required an interpreter at company meetings. The company failed to provide her with an interpreter on several occasions and the CEO of the company was often impatient with her hearing limitations. When Psy-Ed terminated her employment in a corporate restructuring, she filed a charge of discrimination with the Massachusetts Commission Against Discrimination ("MCAD"). Klein, a publisher and co-founder of Psy-Ed, reluctantly submitted an affidavit in support of Psy-Ed. However, he subsequently issued a second affidavit supporting Schive's position after Psy-Ed informed him that it would not renew his employment contract.
After MCAD issued a probable cause finding in favor of Schive, Psy-Ed filed a complaint against both Schive and Klein in Superior Court alleging various tort claims such as defamation and civil conspiracy. Around the same time, the company stopped paying Klein under a separation agreement due to his harmful affidavit in the MCAD proceedings. In response, Schive asserted a retaliation counterclaim against Psy-Ed in the Superior Court action, whereas Klein filed a separate retaliation suit against the company. Schive and Klein received different rulings from their respective trial courts. While Schive succeeded on her retaliation claim, Klein was not so lucky. The trial court entered judgment against him, reasoning that he could not prove retaliation because the alleged conduct occurred when he was no longer an employee. Psy-Ed and Klein appealed the retaliation rulings and the SJC consolidated the cases because they both posed the same question: Can an employer be held liable under M.G.L. c. 151B for retaliatory conduct against a former employee that occurs after the employment relationship has terminated.
B. The SJC's Landmark Decision
The SJC answered this question with a resounding "yes." Justice Margot G. Botsford, writing for a unanimous Court, held that the "broad remedial purposes" of the Fair Employment Practices Act ("the Act") counsel in favor of recovery for ex-employees who suffer post-termination retaliatory acts. The Court reasoned that since nothing in the statute expressly requires that an employer-employee relationship exist at the time of the wrongful conduct, the Act must "necessarily expand beyond current employees to have the intended effect of protecting victims of discrimination from suffering further ill treatment as a consequence of exercising their rights under [the statute]." The Court grounded its pragmatic opinion on facts such as the short period of time between the MCAD filing and the civil suit (two weeks) and the lack of damages evidence presented by Psy-Ed. Ultimately, the Court upheld the trial court's findings that Psy-Ed brought the civil suit to retaliate against Schive for her filing of the MCAD complaint and affirmed the retaliation award. The Court also reinstated Klein's retaliation and remanded for trial.
Notably, the SJC placed an important limitation on an employee's right to recover for post-termination conduct. The Court ruled that where the alleged retaliatory act is the filing of a lawsuit, an employer is only subject to liability if the litigation is "baseless" or a "sham." In other words, employers are not liable for suits that are "reasonably based but unsuccessful." Thus, the courthouse doors remain open for suits by former employers unless the employee can prove that the lawsuit is both "objectively baseless" and that the purpose of the suit is to influence or harm them.
C. The Road Ahead
The net effect of the Psy-Ed decision is that employers may be subject to liability for conduct that occurs long after the employment relationship ends. The takeaway: the end of the employment relationship does not equal the end of the employer's obligation not to retaliate under Massachusetts law. Thus, employers must tread carefully when dealing with ex-employees and should avoid retaliatory action out of frustration or angst. Massachusetts courts are protective of the rights of employees and will not hesitate to punish employers who retaliate.
To prevent liability, employers should take the following steps to ensure compliance with the Act. First, develop an anti-retaliation policy and educate management and staff about the importance of strict adherence to the policy. Second, before instituting a lawsuit against a former employee, evaluate whether the company has a legitimate factual basis for taking legal action. The SJC has made it clear that it will not tolerate baseless lawsuits brought to influence, harm, or intimidate former employees. Third, keep detailed records of all contact with ex-employees. Finally, limit conversations with an ex-employee's prospective employers to necessary details such as dates of employment and train staff about proper procedures for providing job references. If the ex-employee has engaged in protected activity under the statute, do not disclose this activity to potential employers - this could be seen as an attempt to blacklist the employee.
These steps are by no means exclusive and employers seeking to ensure compliance with the anti-retaliation provisions of the Fair Employment Practices Act or its federal counterpart, Title VII of the Civil Rights Act of 1964, should consult with a member of Sheehan Phinney's Labor, Employment, and Employee Benefits Group.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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