2d Circuit Holds That Title VII Claim May Be Based on Subsequently-Revoked Notice of Termination

In Schultz v. Congregation Shearith Israel of the City of New York et al, 2017 WL 3427130 (2d Cir. Aug. 10, 2017), the court addressed the following issue:

whether a cause of action under Title VII can be based on notice to an employee of a termination of employment effective in approximately three weeks, that was revoked before it became effective.

“Yes it can,” says the court.

The facts, briefly: Plaintiff worked as a Program Director for the defendant, a Jewish synagogue in New York City. On July 21, 2015, the day after plaintiff returned (visibly pregnant) from her honeymoon, defendant advised plaintiff that she was being terminated, effective August 14, 2015. The reason given for plaintiff’s termination was that her position was being eliminated as part of a restructuring. On July 30, 2015, plaintiff’s lawyer advised the defendant that she retained counsel. A few days later, plaintiff was presented with a letter stating that defendant “reinstated” plaintiff’s position, and that she would therefore not be terminated. Plaintiff alleges that after she received the rescission letter, she was subject to a “pattern and practice of repeat discrimination.” Plaintiff did not return to work after August 14, 2015, but she continued to be paid.

The law:

To state a claim for employment discrimination under Title VII, a plaintiff must plausibly allege that (1) the employer took adverse action against him, and (2) his race, color, religion, sex, or national origin was a motivating factor in the employment decision. …

A plaintiff sustains an adverse employment action if he or she endures a materially adverse change in the terms and conditions of employment. To be materially adverse a change in working conditions must be more disruptive than a mere inconvenience or an alteration of job responsibilities. A materially adverse change might be indicated by a termination of employment, a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices … unique to a particular situation.

The district court held that “a rescinded termination does not constitute adverse employment action under Title VII,” assuming that there had been no “material change in the conditions of employment.”

The Second Circuit noted that it “has not yet decided whether a notice of termination, which is rescinded before the termination is implemented, qualifies as an adverse employment action.”

However, it noted that the U.S. Supreme Court has held – in Delaware State College v. Ricks, 449 U.S. 250 (1980) and Chardon v. Fernandez, 454 U.S. 6 (1981) – that the statute of limitations on a discrimination claim accrues when notice of termination is given.

Relying on these precedents, the Second Circuit held:

The Supreme Court has not directly addressed whether a rescinded termination constitutes an adverse employment action. But the conclusion that the notice of termination itself gives rise to a claim follows ineluctably from the Court’s rulings regarding the limitations period, because a limitations period ordinarily commences when the plaintiff has a complete and present cause of action[.] …

If the claim accrues at the time of notification of termination, however, rescission of the notice at a point after the cause of action has accrued cannot eliminate the adverse employment action that has already occurred, and negate an accrued claim for relief. Accordingly, we conclude that the notice of termination itself constitutes an adverse employment action, even when the employer later rescinds the termination.

The court noted, however, that the employer’s rescission of a notice of termination is not without legal effect. It may, for example, affect the calculation of damages.

It also underscored that its holding is limited to the facts of this case, and did not decide, e.g., “whether in some circumstances the period of time between a notice of firing and its rescission may be so short as to render the termination de minimis.”

Finally, it reached the same conclusion, on the same basis, with respect to plaintiff’s claim of Interference with Family & Medical Leave Act (FMLA) rights.

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