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Case Study - A rescinded Notice of Termination constitutes an "Adverse Employment Action"

Posted by Giovanna A. D'Orazio | Aug 18, 2017 | 0 Comments

On August 10, 2017, the Second Circuit Court of Appeals issued its decision in Shultz v. Congregation Shearith Israel of the City of New York, an employment action based on an employee's receipt of a notice of termination after she returned from her honeymoon visibly pregnant. The decision can be read here.  

There were two significant issues in the case: whether a notice of termination (later rescinded) constitutes an “adverse employment action” and whether the employee was subjected to a hostile work environment permitting her to resign, i.e., a “constructive discharge”.  The Court's decision was a win for employees on the first issue, and not great on the second issue, reiterating how difficult it is for an employee to prove a hostile work environment.

On the first issue, an employee must suffer some “adverse employment action” in order to bring an EEOC charge or lawsuit.  In layman's terms, this means your employer has to actually take some kind of action against you.  Unless your employment situation is bad enough to constitute a hostile work environment (the second issue), generalized unfair treatment without anything actually happening is unlikely to give you an adverse action to sue on.  The most unequivocal example of an adverse employment action is to be fired.  Others include being demoted, being placed on unpaid leave and, in the disability context, being denied a reasonable accommodation.

This case answered the question of whether receiving a notice of termination is itself an adverse employment action even if the employer rescinds the notice before it becomes effective.  So, you get a termination notice that you are fired effective in two weeks and, within that period, the employer changes its mind.  Can you still sue?  The Second Circuit answered, Yes.  This is significant because it means an employee can sue even if he or she did not actually incur any damages.  There is case law out there that, prior to this, would suggest to the contrary – i.e., that if there is no money loss or significant change in job duties to constitute a demotion, there may not be a claim.

But, just because you can sue, doesn't mean you're entitled to significant damages.  The Court was clear that an employer's rescission of the notice of termination would have an impact on the employee's damages just as an offer of reinstatement (i.e., being offered your job back) during a lawsuit can work to cut off an employee's damages. 

The second issue was whether, once the notice of termination was rescinded and the employee continued working at her place of employment, she was subjected to a hostile work environment entitling her to resign (typically referred to as a “constructive discharge”) and then sue for damages.  In a recent Q&A with Herlife New York Magazine, we talked about the difficulty in proving a hostile work environment.  The Court reemphasized the difficulty in proving such a claim when it found that this employee was unable to establish she was constructively discharged with proof of a few negative comments, being removed from the company's newsletter and generally being given the cold shoulder.  In a footnote, the Court did indicate that the relevance of the notice of termination itself on the employee's continued employment might better be evaluated in the context of that adverse employment action as opposed to as a separate hostile work environment/constructive discharge claim. 

If you believe you have been subjected to an adverse employment action for illegal reasons, it is important to contact an experienced employment attorney as soon as possible as there are strict time deadlines in all employment cases – and the deadlines run from the date of the adverse action

About the Author

Giovanna A. D'Orazio

Giovanna has experience litigating, among other things, commercial, general civil, employment, land use and personal injury matters in New York State and federal courts. Giovanna also has experience litigating Article 78 proceedings in New York State court.

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