Can Employers be Sued for Paid Suspensions?


A federal appellate court on the East Coast recently rejected a claim that an employer engaged in unlawful discrimination by suspending an employee with pay while conducting an internal investigation.  Specifically, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) ruled that a paid suspension “typically does not” constitute actionable discrimination under Title VII of the Civil Rights Act (“Title VII”).  However, the court did not go so far as to “decide whether a paid suspension constitutes an adverse action in the retaliation context.”

Actionable discrimination generally occurs when an employer bases a personnel decision on an employee’s age, disability, gender, race, religion, or some other characteristic that is protected by statute.  Meanwhile, an employer generally may be held liable for retaliation if it somehow punishes an employee for speaking out against unlawful employment practices; e.g., discrimination, harassment, unpaid wages, unsafe working conditions, etc.

The takeaway from the Third Circuit’s decision appears to be that, in many parts of the United States, suspending an employee with pay (rather than without pay) may reduce exposure to liability for actionable discrimination.  While the Third Circuit did not extend its rationale to other claims, its decision suggests that, in some parts of the country, suspending an employee with pay may also decrease the prospect of liability for unlawful retaliation.

Nonetheless, employers should keep in mind that this shield may not hold up to all types of claims or in all courts throughout the nation.  There are advantages and disadvantages to both paid and unpaid suspensions, and it is advisable to discuss them with legal counsel before choosing one or the other.

The Third Circuit’s decision in Michelle Precia Jones v. Southeastern Pennsylvania Transportation Authority, Case No. 14-3814, indicates that federal appellate courts in other parts of the country had previously addressed similar paid-suspension claims.  But the Third Circuit said it was “an issue of first impression” that had not been analyzed by that court, which covers Delaware, New Jersey, and Pennsylvania, as well as the U.S. Virgin Islands.

In reaching its decision on this issue, the Third Circuit said it is aligned with numerous other federal courts; in particular, the U.S. Court of Appeals for the Second, Fourth, Sixth and Eight Circuits.  Collectively, those federal appellate courts cover Arkansas, Carolina, Connecticut, Iowa, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New York, North Carolina, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Vermont, Virginia, and West Virginia.

It would appear that the only federal appellate court to reach an opposite conclusion is the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”).  Under the Ninth Circuit’s decision in Angelo Dahlia v. Omar Rodriguez, Case No. 10-55978, placing an employee on paid administrative leave may be an adverse action for purposes of a free-speech retaliation claim.  The Ninth Circuit covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, as well as Guam and the Northern Mariana Islands.

According to the recent Third Circuit decision, Michelle Precia Jones (“Jones”) was employed as an administrative assistant at Southeastern Pennsylvania Transportation Authority (“SEPTA”) between 2001 and 2011.  The decision states that Jones’ supervisor “discovered apparent fraud in her timesheets” and suspended her with pay on December 1, 2010, pending an investigation.  The decision goes on to note that SEPTA concluded its investigation and suspended Jones (this time without pay) in February 2011, and then terminated her employment in April 2011.

Promptly after being suspended in December 2010, Jones informed SEPTA “that she intended to file a complaint against” her supervisor, according to the decision.  A week later, the decision says, Jones elaborated to SEPTA that her supervisor had “‘sexually harassed’” and “‘retaliated against’” her.  In retracing the history of the case, the decision notes that Jones “continued to press her grievances throughout this process,” and that “she filed a complaint with the Pennsylvania Human Relations Commission.”

In that complaint, the decision says Jones alleged that her supervisor “had sexually harassed her and other female employees, ordered her to do personal work for him during business hours, and retaliated against her for resisting this mistreatment by accusing her of timesheet fraud.”  SEPTA’s own investigation into those allegations concluded that Jones’ supervisor “had engaged in inappropriate behavior by once asking Jones to step on his back to relieve spinal pain,” according to the decision.

After her employment at SEPTA was terminated, Jones filed a lawsuit against her former employer and her former supervisor in the U.S. District Court for the Eastern District of Pennsylvania.  In so doing, she alleged gender discrimination and retaliation in violation of Title VII and the Pennsylvania Human Rights Act (“PHRA”), a violation of the U.S. Constitution, wrongful termination, and retaliation in violation of the federal Family and Medical Leave Act.

The trial court dismissed Jones’ wrongful termination claim and later granted summary judgment in favor of the defendants on her remaining claims.  In her appeal, Jones challenged only the summary judgment on her Title VII, PHRA, and constitutional claims.

Although the Third Circuit refrained from deciding whether a paid suspension can support a retaliation claim, its decision hints that the same result might be likely in many retaliation cases.  In that vein, the Third Circuit held that a paid suspension does not “effect a ‘serious and tangible’ alteration of the ‘terms, conditions, or privileges of employment.’”            Turning to Jones’ retaliation claim, the Third Circuit noted that SEPTA imposed the paid suspension before Jones spoke out against any seemingly unlawful employment practices.  In other words, absent evidence of some ability to see into the future, the Third Circuit agreed that a suspension of any kind cannot be in retaliation for complaints that have not yet been made.  Ultimately, with regard to Jones’ claim that her subsequent unpaid suspension and termination constituted gender discrimination and retaliation, the Third Circuit affirmed the trial court’s conclusion that Jones had failed to provide sufficient evidence to support those conclusions.

It bears repeating that a paid suspension may not shield employers from all types of claims in all parts of the nation alleging that a suspension was unlawful.  Again, cautious employers should discuss the risks and benefits of either option with legal counsel before imposing one type of suspension or the other.

Contributor:  Brendan J. Begley, Attorney at Law | Weintraub Tobin