Notice Of Termination Constitutes “Adverse Employment Action” Even If the Employee is Never Actually Terminated

The United States Court of Appeals for the Second Circuit has recently held that notice to an employee that she will be terminated is sufficient to form the basis of a Title VII of the Civil Rights Act of 1964 (“Title VII”) and Family and Medical Leave Act (“FMLA”) claim against the employer even if the notice is revoked and the employee is not terminated.

In Alana Shultz v. Congregation Shearith Israel of the City of New York et al. (Docket No. 16-3140-cv), the plaintiff sued her employer, Congregation Shearith Israel of the City of New York, the Spanish and Portuguese Synagogue, for, among other things, sex discrimination in violation of Title VII and the FMLA. Plaintiff alleged that after informing her employer in June 2015 that she was pregnant, her employer notified her in July 2015 that she would be terminated effective August 14, 2015 for an allegedly pre-textual reason. Plaintiff further alleged that the reason she was told she would be terminated was that her employer disapproved that she had gotten pregnant before she married.

Plaintiff informed her employer that she retained counsel and will sue, and on August 5, 2015, her employer told her it would “reinstate” her. Plaintiff alleged that despite the reinstatement, her employer created a hostile work environment, insisted that she complete her tasks before August 14, 2015, and commented negatively on her pre-marital pregnancy. After August 14, 2015, plaintiff ceased appearing at work and depositing her paychecks. She then sued her employer in the United States District Court for the Southern District of New York. The District Court dismissed her case for failure to state a claim.

On appeal, the Second Circuit held that the July 2015 notice of termination was, in and of itself, an adverse employment action despite its revocation on August 4, 2015 before plaintiff’s effective date of termination. The Court relied upon two United States Supreme Court cases to conclude that notification of termination qualifies as an adverse employment action. In both cases, Delaware State College v. Ricks, 449 U.S. 250 (1980) and Chardon v. Fernandez, 454 U.S. 6 (1981), the Supreme Court ruled that the plaintiff’s discriminatory termination cause of action was actionable as of the date he was notified that he was fired, not on the last day of his employment, for statute of limitations purposes. Thus, the Second Circuit deduced that notification of termination qualifies as an adverse employment action for purpose of withstanding a motion to dismiss for failure to state a claim and that “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.”

The Court explained that rescission of the termination notice only “come[s] into play in connection with the calculation of damages.” In that regard, the Court clarified that “whether the rescission of the termination notice was made in good faith, and whether [plaintiff] acted reasonably in refusing to accept the offer to restore her position, are questions for the finder of fact” in the context of the calculation of plaintiff’s damages.

The Court also held that there was “no reason to construe the FMLA differently from Title VII” regarding whether the rescission of the notice of termination may not constitute an adverse employment action sufficient to deter or interfere with the employee’s exercise of FMLA rights.” As such, it directed the District Court to reconsider on remand its decision to decline to exercise supplemental jurisdiction over plaintiffs’ New York State and New York City claims based upon the notice of termination.

The Schultz decision operates as a reminder to employers to tread carefully when deciding whether to discipline or terminate an employee. Once notice of an adverse employment action is served upon an employee, it will not be erased from consideration by a court even if no adverse action is actually taken against the employee. Employers should consult with employment counsel before an impulsive “you’re fired” notice is given to an employee.

For more information about the court’s decision, please contact Jonathan Bruno or Anna Mandel.