The Tenth Circuit Court of Appeals recently held that an employer established a legitimate, non-discriminatory reason for declining to rehire a former employee based upon the terms of a settlement agreement — entered into years earlier to resolve a previous claim under Title VII of the Civil Rights Act of 1964 (“Title VII”) — in which the employee waived her right to reemployment or reinstatement. Jencks v. Modern Woodmen of America, 479 F.3d 1261 (10th Cir. 2007).
Karen Jencks was first employed by Modern Woodmen of America (“MWA”) in 1990 as a district manager. After accepting one demotion and being presented with another, Jencks sued MWA for gender and race discrimination, sexual harassment and retaliation. Jencks prevailed at trial and the court ordered her reinstated as district manager. MWA and Jencks then entered into a settlement agreement in which Jencks waived any entitlement to reemployment or reinstatement with MWA.
A number of years later, as part of several mass mailings, Jencks received solicitations from MWA to apply for a sales agent position. When Jencks applied, she first met with the MWA manager who was her former supervisor. During this meeting, she was told that because of the settlement agreement and her “history” with the company, a decision would be made by the corporate office. A few days later, she received a letter in the mail, stating that she would not be hired because of her past insufficient sales numbers and the terms of her settlement agreement.
Jencks sued MWA, claiming that the refusal to hire her constituted prohibited retaliation for her prior lawsuit for sex and race discrimination against the company. MWA argued in response that Jencks had made insufficient sales during her previous employment and that the waiver of reinstatement or reemployment in the settlement agreement gave MWA a right not to rehire Jencks. The Tenth Circuit held that an employer’s reliance on a former employee’s waiver of any right to reemployment or reinstatement in settling a Title VII claim constituted a legitimate and nondiscriminatory reason for the employer’s decision not to consider the former employee for a subsequent position.
Significance of the Court’s Holding for Employers:
- The Jencks decision constitutes judicial recognition that an employer may use a waiver of reemployment or reinstatement as a basis for a non-discriminatory and non-retaliatory decision not to rehire an employee who previously raised claims against the employer.
- Employers must be careful to ensure that it is the contractual waiver — and not the previous lawsuit or complaint itself — that is the basis for not considering a former employee for a subsequent position.
- Employers may wish to include a waiver of any right to reemployment or reinstatement in separation and settlement agreements whenever possible to prevent future lawsuits in the event the complaining employee seeks re-employment.
- Employers may continue to use more traditional rationales for refusing to rehire a former employee under Title VII, including (i) the former employee’s poor performance; (ii) lack of training or other insufficient qualifications for the position; and (iii) past excessive absence, lateness or noncompliance with the employer’s policies. Employers may combine these types of explanations with a waiver of reemployment or reinstatement signed by the former employee to justify a refusal to rehire.