In 2011, the U.S. Supreme Court in Staub v. Proctor Hospital first endorsed the “Cat’s Paw” theory of liability in a USERRA case. Derived from an Aesop Fable, the Court held that an employee termination based on information from a supervisor with discriminatory or retaliatory intent can provide the basis for employer liability even if the biased supervisor did not participate in the adverse employment decision. Following up on this decision, federal courts began applying the theory to Title VII and other federal discrimination laws. Last week’s 2nd Circuit decision in Vasquez v. Empress Ambulance Service, Inc., took the “Cat’s Paw” theory one step further when it upheld an employer’s liability under Title VII when the adverse employment decision was influenced by the retaliatory intent of a low level co-worker who had no supervisory responsibilities.

Here’s what happened in Vasquez: the plaintiff complained to her supervisors about a sexually graphic photograph that a co-worker had sent to her. Afterward, the co-worker somehow manipulated the text messages on his phone to make it appear that the plaintiff was a willing participant in sexual banter and in fact that he had been the victim of sexual harassment. In reliance on the co-worker’s “evidence,” the employer terminated the plaintiff. The plaintiff had offered to show the employer her cell phone in order to refute her co-worker’s account of what happened, but the employer apparently was not interested. The plaintiff then brought this action in federal district court against the employer alleging that she was retaliated against for her complaints about sexual harassment.

The district court dismissed the complaint on the ground that the employer could not be held liable for the retaliatory intent of a low-level employee who had no decision-making authority. However, The 2nd Circuit disagreed, stating that “that an employee’s retaliatory intent may be imputed to an employer where, as alleged here, the employer’s own negligence gives effect to the employee’s retaliatory animus and causes the victim to suffer an adverse employment decision.” In short, the 2nd Circuit faulted the employer for conducting a negligent investigation into the plaintiff’s complaints and concluded that the employer should have known of the plaintiff’s co-worker’s retaliatory intent. Therefore, the court would not permit the employer to escape liability based on the decision-makers’ own purported lack of unlawful intent even though the plaintiff’s co-worker was a low-level employee with no supervisory authority. In other words, the court concluded that the employer’s own negligence provides an independent basis to hold it accountable for its employee’s unlawful conduct.

Takeaways

Although this case arises in the 2nd Circuit (which covers New York, Connecticut and Vermont), all employers would be wise to learn a lesson from the Vasquez decision; that is, they should conduct thorough and impartial investigations, particularly when an adverse employment decision will turn on information being provided by a co-worker. At a minimum, employers will want to consider whether the co-worker might have a discriminatory, retaliatory or other biased motivation for providing the information and will want to test the accuracy and completeness of the information being provided before making any decision. Part of conducting a meaningful investigation necessarily will include obtaining and testing the position taken by the employee under scrutiny. Had the employer in Vasquez permitted the plaintiff to defend herself, it could have avoided what appears to be a nasty lawsuit.