Legal View: 'Cat's paw' liability theory becomes the law of the land

By Howard Rubin and Don Stait

The Daily Record Newswire

A monkey convinces a cat to stick his paw into the fire and pull out the chestnuts roasting there, or so the fable goes. While the cat is nursing his wounds, the monkey makes off with the chestnuts. The monkey gets what he wants and the cat, who didn't particularly care about the chestnuts, is left smarting. There is a lesson here -- one that should not be lost on employers. Those convinced by others to take an ill-advised action may suffer consequences.

Under the "cat's paw" liability theory, an employer may be liable for unlawful employment discrimination when a biased non-decision maker (the monkey) convinces an unbiased decision maker (the cat) to take action based on the bias of the non-decision maker. Although lower courts have recognized this liability theory for some time, the U.S. Supreme Court had yet to weigh in until now.

In a recent decision, the court upheld the theory and expanded an employer's liability in discrimination cases. The court found that employers can be held liable under the Uniformed Services Employment and Re-employment Rights Act for the discriminatory intent of non-decision makers who influence, but do not make, the decision to engage in an adverse employment action.

In Staub v. Proctor Hospital, Staub, a member of the U.S. Army Reserve alleged that his two immediate supervisors were openly hostile to his military obligations, and actively sought to have him fired. To that end, the supervisors issued a corrective action to Staub and later accused him of violating the corrective action. Staub denied both charges.

Relying on the corrective actions and complaints by the supervisors, and with no knowledge of the supervisors' animosity to Staub's military service, the hospital's vice president of human resources made the decision to fire Staub. The U.S. Supreme Court held that if a supervisor performs an act motivated by anti-military sentiments that is intended by the supervisor to cause an adverse employment action, and if that act is the ultimate cause of the employment action, then the employer is liable under USERRA, regardless of whether the actual decision maker had any knowledge of the supervisor's intent.

The court's decision makes it clear that the opinion goes beyond USERRA to include at least discriminatory actions under Title VII of the Civil Rights Act. What remains to be seen is whether the decision applies to influence by nonsupervisory personnel as well.

The court noted that "both (supervisors) acted within the scope of their employment when they took the actions that allegedly caused (the vice president of human resources) to fire Staub." It is possible that a court would apply this reasoning and conclude that nonsupervisory personnel also would be acting within the scope of their employment if they took action to get a coworker fired. The court's opinion focuses on the decision maker's responsibility to investigate rather than the supervisor's discriminatory actions.

Where does the Staub decision leave an employer? Before taking any adverse employment action against an employee, the employer should interview the employee and thoroughly investigate the allegations to uncover hidden biases. If the employer finds evidence of discriminatory intent, it should ensure that the decision has no basis in that discrimination.

In addition, employers should conduct mandatory antidiscrimination training for supervisors and managers, to reinforce existing policies.

Congress seeks to extend COBRA coverage to domestic partners

Both the Senate and the House last month introduced legislation that would extend the right to continuation of group health coverage under COBRA to certain same-sex spouses and domestic partners who are covered under an employer's existing group health plan, if the covered spouse or partner became unemployed. The bills allow the plans' definition of covered spouses and partners to determine COBRA coverage.

Under current law, COBRA does not apply to domestic or same-sex partners, regardless of what the applicable health care plan says.

For existing collectively bargained health care plans, the amendments would begin to apply if such plans were still in effect three years after the amendment became effective.

Repeal of expanded 1099 reporting requirements likely

An expanded requirement to report 1099 payments over $600 for goods and services (requiring reports of payments made to corporations) became law with the passage of the Health Care Reform Act of 2008 and will, if left intact, go into effect starting in 2012. This will vastly increase the obligation to report payments made by most businesses.

In February, the Senate voted to repeal the expanded 1099 reporting requirements. Last month, the House passed a similar bill. President Obama is expected to sign the bill into law when it reaches him.

Video surveillance of concerted activity may be unfair labor practice

Employers that use video surveillance to monitor employees and job applicants in the workplace may be committing an unfair labor practice under the National Labor Relations Act, if that surveillance has the effect of "intimidating individuals exercising their right to engage in concerted activity."

A recent NLRB decision held that photographic or video surveillance may constitute an unfair labor practice even if the mere observance of the protected activity does not violate the act, or the surveillance takes place in full view of third parties.

In contrast, the NLRB has held that it is not an unfair labor practice to continue to use existing surveillance equipment in the usual manner, even if the cameras happen to record concerted activity, provided that the cameras are used for the employer's legitimate business interests (such as property protection). Redirecting cameras to record unlawful conduct probably would not violate the act, but redirecting cameras to record peaceful picketing or other legal activities may be a violation.

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Howard Rubin is a shareholder in Littler Mendelson's Portland, Ore., office. Contact him at 503-221-0309 or hrubin@littler.com.

Don Stait is Special Counsel in Littler Mendelson's Portland office. Contact him at 503-221-0309 or dstait@littler.com.

Published: Mon, Apr 11, 2011

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