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Employment Law Alert: Three Interesting Cases: One Title VII, One ADA & One That Serves As A Cautionary Reminder Regarding Separation Agreements

On November 30, a jury in Georgia found the chairman and controlling shareholder of “Jocks & Jills,” a chain of restaurant/sports bars in the greater Atlanta area, personally liable for racial and sexual harassment in violation of Title VII. He was ordered to pay $250,000 in compensatory damages and another $750,000 in punitive damages to the plaintiff, Tracey Tomczyk, after the jury found he had engaged in “extensive verbal harassment and vulgarity” stemming from Tomczyk’s romantic relationship with a Black man (Tomczyk is White). The harassment continued for a period of years, culminating in Tomczyk’s termination when she walked out of a meeting in June of 1999 in protest over her boss’s comments. The chain, too, paid a heavy price for the harassment of Tomczyk. It was ordered to pay her $250,000 in compensatory damages and $750,000 in punitive damages on Tomczyk’s emotional distress claim, plus another $50,000 in compensatory damages and $200,000 in punitive damages for continuing to employ the harasser despite evidence that it was “reasonably foreseeable from [his] propensities or tendencies that he could cause the type of harm sustained by [Tomczyk].” Tomczyk’s total award was $2.25 million. Interestingly, the case -- which was originally filed in 2000 -- was initially decided in the employer’s favor, but was appealed and remanded for trial, resulting in this verdict.

Another interesting case recently decided by the Seventh Circuit Court of Appeals is Timmons v. General Motors, which was brought under the ADA. Timmons, who had been employed by GM since 1974, was diagnosed with MS in 1992. Despite this diagnosis, he continued to work full time and was promoted to the position of nationwide customer activities manager in 1999. Timmons was one of only five people to hold this position, which required him to spend approximately 50% of his work time traveling to dealerships and customer call centers in Florida, Texas and California. By 2002, Timmons’ MS had worsened to the point that he was having difficulty walking. GM accommodated him by providing him with motorized scooters, a home office and other equipment. However, after GM managers and field employees began expressing concerns about Timmons’ continued ability to drive (which were substantiated by Timmons having lost control of his scooter, crashing it in a parking lot, missing several dealer meetings and having an assistant drive him to an out-of-state business meeting), GM placed him off work on a medical leave of absence. While on medical leave, Timmons received disability payments which were equal to his manager’s salary. GM also suggested that Timmons consider taking a disability retirement. Timmons sued GM under the ADA, but did not allege that GM had failed to accommodate his disability. Instead, he alleged a disparate treatment claim – that GM treated him less favorably than other, similarly-situated non-disabled workers. The Court rejected this claim because Timmons could not show that he was meeting GM’s legitimate performance expectations at the time he was placed on leave. To the contrary, Timmons’s demonstrated difficulties with driving gave GM legitimate cause for concern as to whether he could continue to perform his duties -- which included frequent driving -- safely. Summary judgment in GM’s favor was affirmed by the Court.

The final case is Avery Dennison Corp. v. Naimo. In that case, the U.S. District Court for the Northern District of Illinois was called upon to decide whether Avery Dennison could still enforce a noncompete agreement against a former employee who had subsequently signed a general release of claims. The noncompete said that the employee would not compete with Avery for 12 months after his employment ceased. The employee’s employment did end two years later, and he signed a release of claims in exchange for a separation payment. The release provided that it was “in full and final settlement of any and all matters relating to or arising out of Employee’s employment and separation from employment.” It also contained language that it embodied the complete agreement of the parties; there was no reference to the earlier noncompete agreement. On this evidence, the Court held that the release barred Avery Dennison from enforcing the noncompete agreement.

Bottom Line

The Tomczyk case is obviously a good reminder of the serious consequences that can come from failing to take an employee’s harassment claims seriously by immediately conducting a thorough investigation and, if the alleged harassment is substantiated, taking prompt and effective remedial action. The employer got hit hard in that case because it continued its relationship with the alleged harasser and, apparently, turned a blind eye to the harassment, allowing it to continue for a period of years. The Timmons case is a good result for employers because it reinforces the fact that employers will not automatically face liability under the ADA merely because they take affirmative steps -- such as offering the employee a disability retirement or placing him/her on a medical leave -- in the face of serious concerns over the employee’s continued ability to perform certain essential job duties in a safe manner. Finally, the Avery Dennison case is a good reminder that severance agreements must be carefully worded to specifically exclude any pre-existing agreements the employer will want to enforce post-termination.

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