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Thinking of changing your explanation for why you fired or demoted an employee after a lawsuit has commenced? You might want to think again. This case, involving a Utah employee, highlights the risks for an employer in changing its explanation for demoting an employee during the course of the litigation.
Leggo The Prego
Jodi Zisumbo worked for McLeodUSA Telecommunications Services, Inc. (“McLeod”) selling telecommunications services to businesses. Shortly after being hired in 1999, she was promoted to a senior account executive. Her immediate supervisor, Kevin Nelson, who was thrilled with her sales results, expressed concern that she might get pregnant. After a special lunch to congratulate her for being one of the top performers on his team, Nelson asked Zisumbo, “You are not gonna go and get pregnant now, are you, Jodi?”
Zisumbo did just that. When she called Nelson a month later to tell him the happy news, he responded to the call with silence. Zisumbo then reported that Nelson’s attitude and treatment of her changed considerably. One day he announced that her new nickname would be “prego” and referred to her by that crude nickname approximately 75 percent of the time. Whereas, before her pregnancy Zisumbo felt that she “could do no wrong” in Nelson’s eyes, he now became increasingly rude and demeaning to her until he was yelling at her every time he talked to her. When she confronted Nelson about his behavior, he told her that she should quit or go on disability if she couldn’t handle the stress of her pregnancy. She also complained to McLeod’s human resources department on several occasions but McLeod allegedly never investigated her complaints.
When Nelson again approached Zisumbo about quitting work, she told him to quit harassing her. Nelson responded by informing her that she was being demoted from senior account executive to an account executive. A few weeks later, Nelson issued Zisumbo a disciplinary action form indicating that she was being placed on a performance plan because she constantly argued with peers and management, failed to employ a certain method of selling, and failed to arrive at work on time. Additionally, Nelson informed her that she would be required to work out of the office in Farmington rather than their location in Sandy which was near her home.
Zisumbo did not return to work after receiving the disciplinary action. Instead she applied for and was granted paid disability leave. Zisumbo telephoned McLeod to report that one of her disability checks was $1,000 short. She was told that Nelson was responsible for the reduction in pay, but Nelson never returned Zisumbo’s call or corrected the error. When McLeod called Zisumbo to tell her to report back to work, she resigned.
Zisumbo filed charges of sex and pregnancy discrimination with the EEOC. In response, McLeod claimed that Zisumbo had been demoted because of poor job performance, stating that two customers had complained about her performance. However, both customers later submitted letters that they were satisfied with Zisumbo’s performance. McLeod then changed its explanation for the demotion from “poor performance” to “corporate reorganization,” based on the company’s decision to reduce the number of senior account executives in the western region.
After Zisumbo obtained a right-to-sue letter from the EEOC, she filed suit alleging that McLeod had discriminated against her and subjected her to a hostile work environment based on her pregnancy in violation of Title VII of the Civil Rights Act. The district court dismissed the case without a trial and Zisumbo appealed.
Changing Horses Mid-Stream May Get You Soaked
The Tenth Circuit, which covers Utah, reversed the district court’s decision and ruled that Zisumbo was entitled to a trial on her disparate treatment and hostile work environment claims.
The Court decided that there was sufficient evidence for a jury to find that Zisumbo had been subjected to a hostile work environment. For a hostile work environment claim to make it to trial, the employee must show that the workplace was permeated with discriminatory intimidation, ridicule, and insult sufficiently severe or pervasive to alter the conditions of employment and create an abusive working environment. Although the Court was willing to overlook an occasional pregnancy-related epithet, calling an employee “prego” most of the time over a three-month period, coupled with Nelson’s change in behavior towards her, was sufficiently pervasive to convince the judges that a reasonable juror could find that her work environment was hostile.
The Court also decided that Zisumbo should be allowed to take her disparate treatment claim before a jury to prove that she had been treated adversely due to her pregnancy. The critical issue in her disparate treatment claim was whether Zisumbo had created a genuine question as to whether McLeod’s “corporate reorganization” explanation was simply pretext by showing that its original “poor performance” explanation was false. The Court found that Zisumbo had raised enough doubt about McLeod’s explanations to reach a jury. First, the Court rejected McLeod’s argument that both reasons were legitimate explanations of why she had been demoted. The Court found that McLeod had not argued that both reasons were valid before the district court, but had instead specifically disclaimed the original reason. Moreover, the Court found that there was sufficient evidence that the “poor performance” explanation was false based on the letters submitted by the customers. Thus, the Court concluded that a reasonable jury could disbelieve the “corporate reorganization” explanation based on the fact that McLeod had originally offered a false explanation. In other words, just like changing horses in the middle of the stream may get you wet, abandoning one explanation for another in the middle of litigation may get your employee’s case before a jury and end up soaking you in the long run. Zisumbo v. McLeodUSA Telecommunications Services, Inc., 2005 WL 3120640 (10th Cir., Nov. 23, 2005).
Timing May Not Be Everything, But It’s Significant
Interestingly, the Tenth Circuit came to the opposite conclusion and affirmed the dismissal of a case without a trial in Jaramillo v. Colorado Judicial Department, 2005 WL 2865187 (10th Cir., Nov. 2, 2005), a similar Title VII sex discrimination case decided just three weeks before the Zisumbo case. In Jaramillo, a female police office argued that the department’s reasons for promoting a male officer to a position she also sought were pretextual, because the department had initially told her that the decision was based upon the male officer’s higher evaluation scores. In fact, the female police office had slightly higher test scores. Acknowledging this error, the department maintained that the male officer was more qualified, pointing out that he was fluent in Spanish, was certified in drug and alcohol counseling, and had experience working in a detention facility—all qualifications that the female office did not possess.
At first glance, the Jaramillo case and the Zisumbo seem to involve the same scenario with different outcomes: both cases involve a situation where the employer offered an explanation that was later determined to be false. However, the difference in outcomes may be explained in part by when the employers changed their explanations. In Jaramillo the department changed its explanation soon after the employee filed an internal complaint, whereas in Zisumbo the company did not change its explanation until significant discovery had occurred in the lawsuit. Reading between the lines of the two cases, the general rule seems to be that the later an employer “jumps horses” and abandons a false explanation, the more suspicious or “fishy” the explanation becomes and the more likely that a court will let the case go before a jury.
An Explanation on Explanations
So does the Zisumbo case stand for the proposition that an employer should never change “horses,” that is, explanations during a lawsuit? No, you can never ride a dead horse safely across to the other side. What it does mean is that employers are much better off by doing their homework before taking adverse action, and getting the reasons right the first time. Moreover, an employer is not prohibited from having multiple explanations for why an employee was fired, demoted, transferred, etc. However, employers must avoid the shotgun approach of throwing out any explanation that seems good at the time without researching whether there is support to back it up. Otherwise, a case can make it to a jury, not because the employer’s remaining explanations are proven invalid, but because the employer has lost credibility with the court, and possibly with the jury as well, by throwing out unsupportable explanations.
Nix the Nicknames
As a finally point, if you are going to nickname an employee, make sure that it can’t be interpreted as a racial or sexual epithet. Even if the nickname is meant in good fun, it’s no longer fun when you find yourself on the losing end of a lawsuit.