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RI Federal Court: Paid Suspension is Adverse Employment Action

by Matthew H. Parkerhr-hero

In an August 16, 2017, decision, Judge John J. McConnell, Jr., of the U.S. District Court for the District of Rhode Island declined to grant summary judgment (dismissal without a trial) in favor of an employer defending against a female employee’s gender discrimination and retaliation claims. Although the employer continued to pay the employee during a suspension, the court held that the suspension was punitive in nature, became part of her permanent employment record, and affected her ability to advance, find future employment, and gain valuable job experience. The court concluded that those facts, combined with evidence that the employee’s job performance went unchallenged until she announced her pregnancy and complained about perceived mistreatment, was enough for a jury to find that the suspension was illegal. Thus, the case was allowed to proceed to trial.

Pregnancy announcement, then complaints

In October 2012, Gina Mosunic began working for Joseph’s Gourmet Co. Pasta Sauce, a subsidiary of Nestlé Prepared Foods Company, as an account manager. Her sales territory included Rhode Island, Connecticut, and Massachusetts. She worked from home and reported primarily to Timothy Healy, who was based in Minnesota.

On March 25, 2013, Mosunic informed Healy that she was pregnant. Almost immediately, she alleged that his treatment of her changed for the worse. Before her announcement, Healy had sent her laudatory e-mails, including a February 2013 e-mail thanking her and a coworker for making Joseph’s “a better company.” Mosunic claimed that Healy became agitated after her pregnancy announcement and started treating her differently. She lodged two complaints with HR: the first on March 27 and the second on May 7. She also met with Healy in person and complained about his perceived discrimination.

Less than a week after Mosunic filed her second complaint with HR, Healy, who lacked the authority to suspend her, submitted a memorandum to HR recommending that Nestlé suspend her. He included a long list of perceived problems with her performance. Several of the alleged issues dated back to her first few months of work, but none of the issues that allegedly occurred before her pregnancy announcement were documented. Nevertheless, Nestlé management approved the suspension on the same day it received Healy’s memo. The company suspended Mosunic with pay, and other members of the sales team picked up her accounts.

Subsequently, Mosunic took disability leave, gave birth, and tendered her resignation. She filed claims against Nestlé for disparate treatment discrimination, hostile work environment, and retaliation.

Employer argues paid suspension is not actionable

After approximately 1½ years of litigation, Nestlé moved for summary judgment on all of Mosunic’s claims. Nestlé argued that even when viewing the evidence in the light most favorable to her, there was not a genuine dispute regarding a material fact and that it was entitled to judgment as a matter of law. Yes, Mosunic had been pregnant, and yes, she was replaced by employees who were not. But Nestlé argued that she had not satisfied her prima facie (initial) burden of showing that she (1) was performing her job satisfactorily and (2) experienced an adverse employment action.

For an employee to proceed with a discrimination or retaliation claim, she must have experienced an “adverse employment action.” Courts around the country have held that a paid suspension does not constitute an actionable adverse employment action, and Nestlé argued that point in an attempt to have Mosunic’s claims dismissed.

Judge disagrees

Judge McConnell denied Nestlé’s attempt to dismiss Mosunic’s disparate treatment and retaliation claims. Judge McConnell held that Mosunic’s receipt of multiple e-mails with positive feedback from Healy and customers before her pregnancy announcement was enough to create a factual dispute over whether she was performing satisfactorily. Furthermore, Judge McConnell held that the fact that Nestlé continued to pay her during her suspension did not preclude the suspension from amounting to an adverse employment action.

The U.S. 1st Circuit Court of Appeals (whose rulings apply to all Rhode Island employers) does not appear to have decided the issue, but at least six other courts of appeals, including the 2nd, 3rd, 4th, 5th, 6th, and 8th Circuits, have held that placing an employee on paid administrative leave is not an adverse employment action. Judge McConnell declined to follow those courts and instead held that a “suspension, regardless of whether it is paid, is adverse to the employee in and of itself.” Judge McConnell noted that any suspension is “punitive in nature and at a minimum becomes part of one’s permanent employment record, affecting one’s ability for advancement, or to find other future employment, or gain . . . valuable job experience.”

Too much remained in dispute

Having concluded that Mosunic had experienced an adverse employment action, Judge McConnell proceeded to the question of whether her job performance was the true reason for her paid suspension or whether pregnancy discrimination or retaliation was the true reason.

Judge McConnell concluded that there remained a genuine dispute over whether Healy’s memorandum, Mosunic’s pregnancy, or her complaints about Healy were the real cause of her suspension. Temporal proximity alone is generally insufficient to prove pretext (an excuse), but Judge McConnell noted that Healy wrote the memorandum just seven weeks after Mosunic’s pregnancy announcement and only six days after her second complaint to HR.

Furthermore, none of the memorandum’s criticisms of Mosunic’s alleged conduct before her pregnancy announcement were documented, and the criticisms were inconsistent with the complimentary e-mails she had received during that period. Judge McConnell concluded that all of the facts could allow a jury to reasonably infer that Nestlé’s stated reasons for suspending Mosunic were pretextual. He suggested that if the contents of the memorandum were true, Nestlé might have warned her or placed her on a performance improvement plan before suspending her. Mosunic v. Nestlé Prepared Foods Co.

Lessons for employers

First and foremost, Nestlé might have avoided the lawsuit altogether if it had gathered better evidence of the alleged issues with Mosunic’s performance before her pregnancy announcement or if it had engaged in progressive discipline (e.g., oral counseling, a written warning, or a performance improvement plan) prior to issuing a suspension. Second, because Mosunic’s suspension came less than a week after her second complaint to HR, Nestlé should have given more scrutiny to Healy’s suggested discipline. Such close temporal connections—although not dispositive—are impossible to ignore.

Third, unless and until the 1st Circuit holds otherwise, employers in Rhode Island should not assume that they can dodge potential discrimination or retaliation claims by simply continuing to pay employees during a period of discipline. Despite the lack of lost wages, an employee may be able to argue—at least in Judge McCon­nell’s courtroom—that discipline short of termination or an unpaid suspension is still enough of an adverse employment action to support a lawsuit. From Judge McConnell’s decision, however, it is unclear where a court should draw the line. Arguably, even a written warning is a black mark on an employee’s personnel rec­ord that could hurt her employment prospects in the future. If lost wages are not necessary to support a discrimination or retaliation claim, it is much easier for an employee to get in front of a jury. Doing away with that requirement could lead to a slippery slope.

To discuss this further, please contact Matt directly at mparker@whelancorrente.com or 401-270-3262.

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