Littler Lightbulb – August Employment Appellate Roundup

Contrary to the EEOC and Other Circuit Courts, the Sixth Circuit Limits Employer Liability for Third-Party Harassment 

In a case that has garnered quite a bit of attention, Bivens v. Zep, Inc., 147 4th 635 (6th Cir. 2025), the Sixth Circuit limited liability of employers for harassment of an employee by a third party. In contrast to the EEOC, and decisions by the First, Second, Eighth, Ninth, Tenth and Eleventh Circuits, the Sixth Circuit rejected the negligence standard for company harassment liability and instead held that to be liable for harassment of an employee by a third party, the employee must show that the employer “intended” for the harassment to occur.

The case involved a female sales representative who complained to her supervisor that she felt uncomfortable after a male motel manager client locked her in his office and asked her for a date. When she refused, he unlocked the door, and she left. The employer reassigned the client to another sales team. Several months later, when the employer conducted a reduction in force, eliminating the positions of 23 sales representatives serving small territories, the employee was terminated from employment. She filed suit, alleging a hostile work environment in violation of Title VII, among other things, claiming that the client’s actions subjected her to a hostile work environment and that she was fired because she complained about the client’s advances and because she is Black. The district court granted summary judgment to the employer on all claims, and the plaintiff appealed.

Emphasizing that employer liability for co-worker harassment is imputed “due to the agency relationship between the perpetrator (an employee) and the employer,” the Sixth Circuit held that the agency-law-based negligence standard does not apply when the harasser, as in this case, is not an agent of the employer. In those circumstances, the court held, it is only an employer’s intentional “decision to expose women to [discriminatory] working conditions” that would give rise to liability of the employer. An employee can satisfy this standard by providing evidence that the employer either “desire[d] to cause” her harassment or was “substantially certain” that it would “result from” its actions. Because there was no such evidence in this case, the Sixth Circuit affirmed summary judgment for the employer.

Sixth Circuit Assesses “Stray Remarks” and Affirms District Court Decision Vacating a $2.3 Million Jury Trial Award in an Age Discrimination Case 

In another Sixth Circuit case, Lowe v. Walbro LLC, 147 4th 601 (6th Cir. 2025), the court reviewed the district court’s decision granting judgment as a matter of law to the employer and vacated a $2.3 million jury trial award to the plaintiff on his claim that he was terminated from employment based on age discrimination.

Although the plaintiff had claimed, in opposition to summary judgment at the district court, that during the termination meeting his supervisor told him he was being let go because he was “kind of getting up there in years, you’re at retirement age, you go one way and the company’s going the other,” there was no direct evidence of this at the trial.  Rather, the statement was included in a report by a forensic psychiatrist, which was read to the jury at trial. The Sixth Circuit concluded that the psychiatric experts’ report was hearsay, which under Rule 801(c) of the Federal Rules of Evidence, was only used to impeach the employer’s witness and was therefore “not substantive evidence.” There was also trial testimony of age-related remarks by the plaintiff’s supervisor outside of the termination meeting, but the Sixth Circuit found they were “stray remarks” unrelated to the decision-making process and could not be used as direct evidence of discrimination. 

As to indirect evidence of age discrimination, the court applied the burden-shifting framework set forth by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), which requires the plaintiff to establish, among other things, that the “adverse employment action occurred under circumstances giving rise to an inference of discrimination.” In this case, the Sixth Circuit found, there was no evidence that someone outside the protected class was treated differently, nor was the plaintiff’s position filled by anyone else. In addition, there was uncontested testimony that about the time of the plaintiff’s termination, his supervisor hired several people close to the plaintiff’s age as managers. Because the plaintiff “did not present sufficient evidence for a jury to find that age discrimination was the reason, or even one of the reasons, for his termination,” the Sixth Circuit affirmed the district court’s decision.

Seventh Circuit Adopts New Standard for Issuing Notice in Collective Actions

In Richards v. Eli Lilly & Co., --- 4th ---- (7th Cir. Aug. 5, 2025), the Seventh Circuit rejected the more lenient standard for issuing notice in collective actions under the FLSA, the Age Discrimination in Employment Act (ADEA), and the Equal Pay Act, set forth in Lusardi v. Xerox Corp., 118 F.R.D. 351, 361 (D.N.J. 1987), which has been followed by most district courts. In so doing, the Seventh Circuit noted that two circuit courts have also recently rejected Lusardi in favor of a heightened standard of proof. In Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430, 434 (5th Cir. 2021), the Fifth Circuit held that plaintiffs must demonstrate, by a preponderance of the evidence, that notice recipients are “actually similar to the named plaintiffs.”  In Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003, 1011(6th Cir. 2023) the Sixth Circuit held that notice may issue only where plaintiffs can show a “strong likelihood” that employees are similarly situated. 

In contrast to these courts, the Seventh Circuit “chart[ed] a different path.”  At the first step, the court held, a plaintiff seeking notice of a collective action to potential plaintiffs must produce some evidence that they and the members of the proposed collective are victims of a common unlawful employment practice or policy, and defendants must be permitted to submit rebuttal evidence. If the district court finds that the evidence to resolve the commonality issue is likely in the hands of the potential plaintiffs, it may issue notice to the proposed collective plaintiffs and postpone the final determination as to whether plaintiffs are similarly situated until the plaintiffs move for collective certification after opt-in and discovery. Alternatively, the district court may authorize expedited narrowly tailored pre-notice discovery, and issue or deny notice based on the evidence discovered. “This flexibility promotes efficient case management,” the Seventh Circuit stated, “enabling a district court to tailor its approach depending on the issues and complexities of the case before it.” It also allows defendants that oppose notice the opportunity to challenge commonality through affidavits and other evidence.

Ninth Circuit Overturns District Court and Holds Religious Organization Exempt from Title VII Sex Bias Claims

The defendant in McMahon v. World Vision Inc., 147 4th 959 (9th Cir. Aug. 5, 2025), is an international religious relief and development organization. Its standards of conduct prohibited, among other things, “sexual conduct outside the Biblical covenant of marriage between a man and a woman.” Almost immediately after extending an employment offer to the plaintiff as a customer service representative (CSR), the organization learned that the plaintiff was in a same-sex marriage and rescinded the employment offer because of the plaintiff’s “inability” to comply with its standards of conduct.

The plaintiff sued for discrimination based on sex, sexual orientation, and marital status under Title VII and the Washington Law Against Discrimination. The district court initially granted summary judgment for the defendant based on the church autonomy doctrine, which protects the right of religious institutions to govern themselves, including the right to select their members and choose their employees. After the plaintiff moved for reconsideration, the court reversed and granted summary judgment for the plaintiff holding that the church autonomy doctrine did not apply because the organization had acted under a “facially discriminatory hiring policy.”

On appeal, the parties did not dispute that the defendant is a religious organization. The issue was whether the CSR position qualified as an exception to the principle that churches and other religious organizations abide by neutral and generally applicable state and federal employment laws. To qualify for this ministerial exception, the Ninth Circuit stated, employees must perform “‘vital religious duties’ in light of the core missions of their respective organizations.” Examining the role of the CSRs within the defendant’s organization, the Ninth Circuit found the CSRs were the face of the organization, and the position was crucial to the organization’s religious functions not only because the CSRs solicited donations, but also because they interfaced with donors, inspiring donors to share the organization’s faith. Although the position also involved secular administrative and customer service tasks, the court determined that without the CSRs, the organization would be severely hindered in pursuing its central religious mission. 

The Ninth Circuit also distinguished the CSRs from the secretaries, accountants, and custodians at the organization. Although these employees also had the same religious obligations as the CSRs, such as attending chapel, they would not qualify for the ministerial exception because, unlike CSRs, they are not charged with conveying the organization’s message to its donors, a “vital religious function” that “lie at the very core of [the organization’s] mission.” Thus, holding that the ministerial exception applied to the CSRs, the Ninth Circuit reversed the district court and granted summary judgment to the defendant.

Seventh Circuit Affirms Summary Judgment for Employer on Claims of Gender and Age Discrimination, and Retaliation 

Ontiveros v. Exxon Mobil Corp., --- 4th ---- (7th Cir. Aug. 5th, 2025), involved a complaint alleging gender and age discrimination, and retaliation, by a customer service analyst who was terminated from employment following documented performance issues and refusal to agree to a performance improvement plan. The district court granted summary judgment for the employer and the plaintiff appealed.

As to plaintiff’s gender discrimination claim, the Seventh Circuit found that the plaintiff failed to provide evidence of similarly situated male employees who were treated more favorably, or any other evidence sufficient to establish that she was terminated because of her gender. Similarly, the court held that the plaintiff failed to provide any evidence to establish that her age, 42, was the “but for” cause of her termination. In addition, the court noted that a year before her termination the plaintiff had contacted the human resources hotline to complain of excessive workloads and a hostile work environment. The final report issued by HR following its investigation concluded that none of the witnesses interviewed, including the plaintiff, “were experiencing or facing or brought forward any issues around age discrimination, gender discrimination, or sexual harassment.”

Regarding plaintiff’s retaliation claim, the court found that even before she complained to HR, the plaintiff received several warnings about her work performance, including poor time management, communication, and service request investigation effectiveness. Her performance continued to deteriorate and on the last annual performance review before her termination, the plaintiff received a “D” rating. Like all employees who received a D rating, the plaintiff was placed into the “Management of Lower Relative Performance” program, which gave her the option to enter a performance improvement plan or resign with salary continuation payments. The plaintiff became very aggressive, never informed management of her decision, and was terminated. Examining the facts, the court concluded that there was insufficient evidence to establish a causal link between the plaintiff’s HR complaint and her termination, which was the result of her poor performance, which began before her complaint to HR and continued until her termination.

Based on all the facts and evidence, the Seventh Circuit affirmed summary judgment for the employer on all the plaintiff’s claims.

Ninth Circuit Affirms Summary Judgment for Employer on Truck Drivers’ Pay Plan Finding the Company Complied with the “Safe Harbor” for Hybrid Compensation Plans 

In Williams et al. v. J.B. Hunt Transport Inc., --- 4th ---- (9th Cir. Aug. 12th, 2025), a putative class action, truck drivers alleged the employer violated California Labor Code §226.2, which requires workers who are compensated on a piece-rate basis to be paid for “rest and recovery periods and other nonproductive time.” Examining the company’s driver pay plan, the Ninth Circuit agreed with the district court that the company complied with the “safe harbor” for hybrid compensation plans, §226.2(a)(7), which requires that an employer “pay an hourly rate of at least the applicable minimum wage for all hours worked” in addition to paying any piece-rate compensation.

In this case, the court found, the company paid its employees an hourly wage for all hours worked, which was always at or above the applicable minimum wage, regardless of whether those hours were “productive” or “nonproductive.” In addition, it supplemented that pay, for eligible employees, with a piece-rate-based bonus calculated by subtracting hourly pay from eligible bonus activities, which would be added onto the base hourly pay. Accordingly, the Ninth Circuit held, the company satisfied its obligation to “‘pay no less than the minimum wage for all hours worked’ while ‘still keeping any promises it has made to provide particular amounts of compensation for particular tasks or periods of work,’” and affirmed summary judgment for the employer.

Fourth Circuit Enforces Injunction Against Former Employees for Violation of the Non-Solicitation and Confidentiality Provisions in Their Employment Agreements

Salomon & Ludwin, LLC v. Winters, --- F.4th ---- (4th Cir. Aug. 12, 2025) involved several employees of a financial services firm who left to start a competing firm and then began contacting their former clients. The employees had signed employment agreements with their former employer prohibiting the solicitation of clients and the use of confidential client information. The former employer had also signed an industry-wide document called the Protocol for Broker Recruiting, which allowed departing financial advisors to take certain client information with them but prohibited their new firm from “raiding,” which was not defined in the Protocol. The former employer filed suit in federal district court against the former employees and their new company seeking a preliminary injunction barring any contact between the former employees and their former clients and the use of the former employer’s confidential information. The district court granted the injunction, and the former employees appealed.

The Fourth Circuit declined to enforce the injunction as to the Protocol, finding that the prohibition against raiding applied to companies only, not employees, and that the new firm did not engage in raiding because it did not lure employees or clients away from the former firm. However, the court enforced the injunction under the employment agreements against the former employees, finding the employees violated the non-solicitation and confidentiality provisions of the agreements by taking with them client information, considered trade secrets under the federal Defend Trade Secrets Act as well as the Virginia Uniform Trade Secrets Act. 

Seventh Circuit Holds Termination of Prison Warden for Posting Racially Offensive Memes Did Not Violate First Amendment

The plaintiff in Schneiter v. Carr, --- F.4th ---- (7th Cir. July 31, 2025) was terminated from employment as a prison warden after he posted memes on his Facebook page denigrating Muslims, Blacks, liberals, and the LGBTQ community. He filed suit claiming he was fired in violation of his First Amendment right to freedom of speech and his Fourteenth Amendment right to due process. The district court granted summary judgment to the employer on both claims and the plaintiff appealed.

Applying the balancing test for assessing First Amendment claims established by the Supreme Court in Pickering v. Board of Education of Township High School District 205, 391 U.S. 563 (1968), the Seventh Circuit concluded that the Department of Corrections’ interests in maintaining order, safety, and discipline in its correctional facilities outweighed the plaintiff’s interest in posting these memes on social media. Among other things, the court considered that the posts risked causing “increased distrust, unrest, or even violence” in its correctional facilities, and called into question the plaintiff’s ability to treat staff fairly and impartially. Most importantly, the court emphasized that greater deference is owed to the decisions of law enforcement agencies “where safety and order are paramount concerns.” 

With respect to due process, the plaintiff complained that the Department lacked a specific policy about social-media use by employees. Stating that the Constitution does not require that degree of specificity, the Seventh Circuit also affirmed summary judgment on this claim.

Seventh Circuit Also Holds Termination of Teacher for Racially Offensive Posts Did Not Violate First Amendment

Another Seventh Circuit First Amendment decision, Hedgepeth v. Britton, --- F.4th ---- (7th Cir. Aug. 26, 2025) involved a public high school teacher who was terminated from employment after posting a series of inflammatory and racially insensitive messages on her Facebook page, which prompted numerous complaints and media inquiries to the school district.  The teacher, who had previously been suspended twice for use of extreme vulgarity with students, filed suit against the school district in federal court alleging violation of her First Amendment rights. The district court granted summary judgment for the school district, and the plaintiff appealed.

Applying the Pickering balancing test, the Seventh Circuit held that, in the public education context, the level of disruption caused by the speech is a critical issue in assessing First Amendment protection. The court recognized, “employers enjoy ‘more leeway in restricting the speech’ of a public-facing employee like a classroom teacher who must maintain public trust and respect to be effective.” 

The court also noted that the school district had received more than 110 emails about the posts from students and parents, including many questioning the plaintiff’s fitness as a teacher. In addition to disruptive classroom discussions, there was extensive newspaper and television coverage that required the school district to engage in costly and time-consuming public relations responses to address widespread concerns from the community and the press. Accordingly, the Seventh Circuit held, the posts were not entitled to First Amendment protection, and the plaintiff did not lose her job because she expressed her views on a matter of public concern, but rather because the undisputed evidence demonstrated that the posts caused substantial disruption in the community, among students and faculty, and even attracted media attention. 

Fifth Circuit Affirms Summary Judgment for the Employer in Reverse Discrimination Case

In Stelly v. Dep't of Pub. Safety & Corr. La. State, --- F.4th ---- (5th Cir. Aug. 15, 2025), the Fifth Circuit examined a white police officer’s claim that he was passed over for a captain position 31 times because of his race. Among other things, the plaintiff sought to introduce statistical evidence in a report he had put together analyzing captain promotion panels. The district court did not mention the report or its findings in its decision granting summary judgment for the employer, which the plaintiff claimed was error.  

The Fifth Circuit disagreed for several reasons. First, the report aggregated hiring decisions across panels, rather than considering each panel’s individual composition. “It could be, for instance, that Black candidates were primarily promoted out of panels where they represented a majority of the candidates, in which case there would not be a disparity between their representation and promotion rate,” the court stated. Also, the plaintiff limited the date parameters for analysis to avoid unfavorable but relevant data.

Ultimately, considering all the evidence, the Fifth Circuit affirmed summary judgment for the employer finding the plaintiff failed to produce evidence to rebut the employer’s legitimate, nondiscriminatory reasons for failing to promote him.