In Vélez v. Thermo King de Puerto Rico, Inc., the U.S. Court of Appeals for the First Circuit found evidence of pretext in an age discrimination case where an employer terminated a fifty-six year old employee without explanation, later disclosed the reason to the Puerto Rico Anti- Discrimination Unit (PRADU), and then added a second explanation to the first when the case was filed in federal court. The First Circuit’s ruling highlights the risks employers take when refusing to explain termination decisions or offering partial explanations.

Jose Vélez had worked for Thermo King for twenty-four years when the company fired him without explanation. At the time of his termination, Vélez was a tool crib attendant with access to expensive tools and supplies. After he filed an age discrimination complaint with the U.S. Equal Employment Opportunity Commission (EEOC) and with PRADU, Thermo King revealed for the first time that it fired Vélez for accepting gifts from suppliers. When Vélez withdrew his claim from PRADU and filed suit in federal court, Thermo King further elucidated its reasons for terminating him—not only had he accepted gifts from suppliers, but he had also sold Thermo King’s tools and supplies to other employees without authorization.

The U.S. District Court for the District of Puerto Rico granted Thermo King’s motion for summary judgment. The First Circuit reversed the decision on appeal, finding that three aspects of the evidence would permit a jury to conclude that Thermo King was motivated by age-based discrimination. First, the Court found evidence of pretext because Thermo King gave different reasons at different times for Vélez’s termination. Second, the Court found the employer’s policies regarding the acceptance of gifts from suppliers was sufficiently ambiguous to make it unclear whether Vélez had violated that policy. While the Court noted that Thermo King was in the best position to interpret its own policies, it held that in conjunction with the shifting explanations, the ambiguous policy added to the suspicion that the company’s explanation for Vélez’s termination had been fabricated.

Finally, Thermo King failed to terminate other younger employees for their complicity in Vélez’s alleged thefts. This evidence was, in the Court’s view, “unusually strong.” While Thermo King argued that Vélez was the ring leader and that none of the younger employees had profited from or made a business out of the sale of company tools and materials, the Court found this distinction “meaningless” because the younger employees had admitted their wrongdoing and were therefore equally worthy of discipline.

While Thermo King never contradicted itself in explaining its reasons for terminating Vélez, the evolving nature of the company’s explanation contributed to the Court finding strong evidence of pretext. In light of the First Circuit’s ruling, employers are well advised to provide employees with complete and accurate explanations for termination decisions, and to be consistent in articulating those reasons to employees, administrative agencies, and courts.