Why it matters

Paid leave is not equivalent to termination, a California federal court told the Equal Employment Opportunity Commission (EEOC) in a case involving a worker alleging discrimination based on national origin. Marcela Ramirez claimed she was on the receiving end of comments including "Mexicans like you would rather lie than tell the truth" and "I never trusted your kind of people" during her time working at Peters' Bakery. She was fired in 2011, but the bakery was later ordered to reinstate her with back pay by a union arbitrator. The EEOC then filed suit on behalf of Ramirez. Last July the federal court judge overseeing the case granted a preliminary injunction preventing the bakery from terminating her employment until the lawsuit was resolved. When the bakery placed Ramirez on paid leave at the end of December, the EEOC filed a motion to show cause why a contempt order should not be granted. But the judge sided with the bakery. Although the plaintiff might prefer to continue working on-site, the court could not find any authority for the proposition that fully paid leave constituted a constructive termination. As long as Ramirez continued to receive her wages and medical insurance, the employer would not be in violation of the injunction, the court said.

Detailed discussion

According to the complaint filed by the EEOC on behalf of Marcela Ramirez, she was subject to years of discrimination and harassment based on her national origin in violation of Title VII while employed by Peters' Bakery, on the receiving end of comments including "Mexicans like you would rather lie than tell the truth" and "I never trusted your kind of people."

In August 2011, Ramirez was fired. She was later reinstated after she filed a union grievance but was subject to retaliation after she later filed a charge of discrimination with the EEOC. After the agency filed its complaint, she claimed the bakery again tried to terminate her employment in July 2015.

On the EEOC's motion, U.S. District Court Judge Beth Labson Freeman granted a temporary restraining order and then entered a preliminary injunction ordering that the employer "is enjoined from terminating Ms. Ramirez's employment pending resolution of this lawsuit or until further order of the Court."

The agency returned to court in January, however, to consider a motion for an order to show cause why a contempt order should not be granted. Ramirez had again been terminated effective December 31, 2015, the EEOC told the court, in violation of the July order.

Bakery owner Charles Peters instructed Ramirez's supervisor not to schedule her for any shifts after December 31 and remove her from the work schedule for any shifts after that date. The owner stated "I don't want her here," adding that Ramirez was "bad for [his] health," the supervisor said in a declaration, explaining that "I am not firing her, I just want you to take her off the schedule."

These instructions were "in clear violation" of the preliminary injunction, the EEOC argued, demonstrating "not just a defiance of the Court's order, but arguably a deliberate and intentional maneuver to circumvent it by not 'terminating' Ms. Ramirez's employment, but rather simply forbidding her supervisor from giving her any hours of work. If an employee is not scheduled to work any hours, clearly that employee's employment is terminated."

The EEOC requested a stay of the removal of Ramirez from the work schedule, reimbursement for any shifts, and sanctions for violation of the court order.

But Judge Freeman sided with the bakery. The employer represented that Ramirez continues to receive her wages and medical insurance despite the fact she will not be scheduled for work hours and will continue to do so pending resolution of the lawsuit.

"While Plaintiff's counsel expressed Ms. Ramirez's preference to continue actually working on-site at the bakery, counsel has not cited any authority for the proposition that placing an employee on fully paid leave constitutes a constructive termination," the court wrote.

The cases the court discovered in its own research held to the contrary, the judge noted, citing a decision from a Nevada federal court where an employee who was initially told she would be terminated and then negotiated paid administrative leave pending an investigation failed to state a claim for constructive termination.

"Based upon the representation of Defendant's counsel that Ms. Ramirez will continue to receive her wages and medical insurance, the Court concludes that Plaintiff has not established a violation of the preliminary injunction," Judge Freeman concluded.

To read the order in EEOC v. Peters' Bakery, click here.