Sexton v. Panel Processing, Inc. is a recent Sixth Circuit case that highlights that all anti-retaliation provisions are not created equal. And while not equal, there certainly are a lot of them. In fact, there are at least 40 federal anti-retaliation laws, and this does not even include all the various state statutory and common laws that prohibit an employer from taking adverse action against an employee for complaining about all sorts of various conduct. While the result in Sexton was a win for the employer, it should not give employers confidence against retaliation claims; rather, it should serve as a caution to employers to be very careful about what actions they take against an employee who has lodged a workplace complaint.
Facts
Brian Sexton worked as a general manager for Panel Processing and served as a trustee for the company’s employee retirement plan. In 2011, Sexton and another trustee, Robert Karsten, campaigned on behalf of two employees running for the company’s board of directors. The employees won the election, but the board refused to seat them on the grounds that it would violate the company’s bylaws, which limited the number of inside directors. At the same time, the board removed Sexton and Karsten as trustees of the retirement plan. Two days later, Sexton emailed the chairman of the board:
I believe that your actions … in refusing to seat [the employees] as directors of the company and removing Rob Karsten and me as Trustees of the [retirement plan] are violations of ERISA and [other] state and federal laws. I plan to bring these violations to the attention of the U.S. Department of Labor and Michigan Department of Licensing and Regulatory Affairs unless they are immediately remedied.
Neither the chairman nor anyone else responded to the email, and Sexton took no further action. About six months later, the company fired Sexton from his job as a general manager.
Sexton sued the company in state court for violating Michigan’s Whistleblower Protection Act and for breaching his employment contract. The employer removed the case arguing that ERISA pre-empted Sexton’s state-court claims and re-characterized Sexton’s state whistleblower claim as an ERISA claim. Sexton did not dispute this re-characterization (although he probably should have and he might not have had his claims thrown out) and the parties litigated in federal court as an ERISA retaliation claim.
The parties accepted the position that Sexton was fired because of his email to the chairman of the board and left the court to decide a single issue: Does ERISA’s anti-retaliation provision protect unsolicited employee complaints?
The issue is not a simple one. In fact, as the dissent pointed out, the Fifth, Seventh, and Ninth Circuits have interpreted ERISA’s anti-retaliation provision as protecting an employee’s “unsolicited internal complaint,” but the Second, Third, and Fourth Circuits have used a “plain meaning” reading of the statute to find that such complaints are not protected.
In agreeing with the Second, Third, and Fourth Circuits “plain reading” methodology, the Sixth Circuit threw out Sexton’s case.
The Court’s decision
The court’s decision focused on the exact words of the anti-retaliation provision at issue, which provides in relevant part:
It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this chapter or the Welfare and Pension Plans Disclosure Act.
29 U.S.C. § 1140.
The parties agreed there was no proceeding in place, nor did either side claim the email constituted testimony—that Sexton “testified” or was “about to testify” in an “inquiry” or “proceeding” by sending the email. This left only one other possible reading under a plain reading of the statute: Did the email amount to “giv[ing] information[?]”
The second part of the question: Was information given “in any inquiry or proceeding relating to” ERISA? Since Sexton’s email neither asked nor answered a question, the court found that Sexton’s email did not amount to “giv[ing] information … in any inquiry” as covered by ERISA’s anti-retaliation provision.
Seems simple enough, right? Wrong. If it were, then why are six circuit courts (well now seven) split on the issue and what does this mean?
Sexton highlights the fundamental difference between statutory anti-retaliation provisions and, more to the point, that they are not all created equal. In fact, after taking a sample of many anti retaliation claims, the court noted that most statutes contain two distinct types of prohibitions: (1) opposition, which protects employees who oppose, report or complain about unlawful practices; and (2) participation, which protects employees who participate, testify or give information in inquiries, investigations, proceedings or hearings. Examples of these statutes include the Fair Labor Standards Act, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Occupational Safety and Health Act, most of which were law before ERISA became law in 1974.
There are, however, some laws that only protect opposition, including the Clean Air Act, the International Safe Container Act, and other non-employment specific laws.
This is where the words Congress chose to include when it passed ERISA become very important. In enacting the anti-retaliation provision in ERISA, Congress included only a clause protecting people who give information or testify in inquiries or proceedings. Meaning, ERISA only protects those who actually participate in some type of inquiry or proceeding. ERISA does not include the broader opposition protection for those employees who oppose, report or complain about unlawful practices. The court essentially found that if Congress had wanted to include an opposition clause, it certainly had enough sample language from other statutes to choose from but chose not to.
The court ended its decision by noting its “decision has few if any consequences beyond [ERISA] [since] [m]ost federal statutes that prohibit retaliation, like Title VII and the Fair Labor Standards Act, do include separate clauses protecting employees who complain about or oppose unlawful practices.
Takeaways
All anti-retaliation laws are not created equal, but there are a significant number of them that employers need to be aware. While this particular ruling was in the employer’s favor, the employer was still subjected to expensive litigation and, had the anti-retaliation clause at issue mirrored some of the others, the employer might have been found liable.
This case made me wonder about the type of anti-retaliation provision the Affordable Care Act contains. Turns out, the ACA’s anti-retaliation provisions prohibits an employer from retaliating against an employee who:
- Receives a health insurance tax credit or subsidy through the “Marketplace” or “exchange”;
- Reports potential violations of protections afforded under Title I of the Act, which provides guaranteed availability protections among other things;
- Testifies in a proceeding concerning such violation;
- Assists or participates in a proceeding concerning a violation; or
- Objects to, or refuses to participate in, any activity, policy, practice or assigned task that the employee reasonably believes to be in violation of any provision of Title I of the Act.
Needless to say, the ACA’s anti-retaliation provision is far broader than ERISA’s, not to mention many other statutes, especially the part that prohibits retaliation for an employee “object[ing] to, or refus[ing] to participate in any activity, policy, practice or assigned task that the employee reasonably believes to be in violation … of Title I of the A[CA],” which includes:
- Elimination of lifetime and annual limits on benefits by 2014;
- Prohibition of rescissions of health insurance policies;
- Elimination of pre-existing condition exclusions; Coverage of preventive services and immunizations;
- Extension of dependent coverage up to age 26;
- Development of uniform coverage documents; and
- Implementation of appeals processes for consumers.
The procedures, burdens of proof, and multi-level review process, which are all also part of the ACA in conjunction with the broad retaliation provisions in the ACA, provide expansive protection for purported whistleblowers.
Employers should become familiar with the various anti-retaliation provisions and implement procedures to minimize risks. Unlike some other forms of whistleblowing, almost any employee, regardless of seniority level, can assert an Affordable Care Act whistleblowing claim.
With these laws in mind, employers should also remember to be extremely cautious in taking any adverse action against an employee who makes a complaint, asserts an opposing stance, participates in any type of investigative process, or engages in any of the other various forms of protected conduct; it could be statutorily protected or it might be protected by state statutory or common law.
The bottom line, there are so many anti-retaliation protections that make this area of employment law a legal minefield. Since employers never know when they might step on an anti-retaliation landmine, they are advised to proceed with extreme caution.
