Employer Not Liable For Future Damages Resulting From Mandatory Disclosure



By:  Claudia D. Orr


Seldom does the Michigan Supreme Court publish an opinion involving employment claims.  However, on July 26, 2016, in a 4 to 3 split decision, the court ruled that, given the mandatory reporting requirement, an employer could not be held liable for future wage loss damages in a race discrimination claim brought under the Elliott-Larsen Civil Rights Act, MCL 2101, et seq. Let’s look at this defense from damages as explained in Hecht v National Heritage Academies, Inc.

Plaintiff Craig Hecht was employed as a teacher by defendant National Heritage Academies, Inc. which operates a number of schools in Flint, Michigan.  The students at Linden Charter Academy (where Plaintiff worked) are predominantly African American.  Plaintiff, who is white, worked at the academy for about eight years, mostly with third grade students.

On November 3, 2009, a white library aide returned a computer table she had borrowed from Plaintiff’s classroom.  However, the one she borrowed was white and the one she returned was brown. Plaintiff commented that “you know I want a white table, white tables are better… we can take all these brown tables and we can burn the brown tables.” The library aide and a black paraprofessional assigned to Plaintiff’s classroom called a “foul” as permitted under the school’s personal conduct procedures. Plaintiff later acknowledged that he intended his comments to imply that white people were better than brown. Long and short, the comment eventually became known to management, an investigation ensued and Plaintiff was fired for the comments.

After he was discharged, Plaintiff began to work as a substitute teacher while he looked for a more long term teaching position.  But, every time he got close to securing new employment, the prospective employer/school would request employment information from the Defendant (as required by law) and learn that Plaintiff had made “insensitive racial remarks”.  As a result, Plaintiff was unable to secure full time employment as a teacher.  Eventually, Plaintiff gave up on teaching and became a machine operator at a much lower wage rate.

Plaintiff sued, claiming race discrimination under Michigan’s civil rights law arguing that African American employees had been allowed to make racially insensitive comments without losing their jobs (e.g., “come here light skinned”, use of the “n” word, etc.). The jury agreed that Plaintiff had been treated differently because of his race and awarded past economic damages and $485,000 in future economic losses.

The interesting issue on appeal at the Court of Appeals, and then at the Supreme Court, was the issue of damages. Under civil rights laws, a successful plaintiff is permitted to receive, among other damages, an award for future lost wages.  Here, the Defendant was arguing that, if Plaintiff was unable to secure another teaching position because prospective employers were being told about his inappropriate comment, it should not be held liable for those damages.  The Defendant argued that, as a school, it is required to make such disclosures under MCL 380.1230b and it has immunity from civil liability when it makes the disclosure in good faith.

The Supreme Court agreed, holding that the statute protected the Defendant from the wage loss damages because the only reason Plaintiff was unable to secure another job was because of Defendant’s disclosure. The majority reasoned that there is no textual support in the statute that immunity “depends on the nature of the claim underlying the civil liability.”

What is interesting is that the dissenting justices would have rejected Defendant’s argument because they found the lost wages flowed from the discriminatory discharge, not the disclosure, per se.  In other words, had Plaintiff not suffered from a discriminatory discharge, he would not have suffered any damages.

So, what is the take away? First, do not allow disparaging remarks or slurs about a protected status to be made by anyone, whether a member of a protected status or not. African Americans cannot use the “n” word since you would not tolerate it from a white employee.  An older worker cannot comment about “old geezers” and someone who walks with a limp can’t reference the gimp squad (yes, I had this case once).  Just because the speaker is within the protected status does not mean the comment won’t be offensive to others hearing it. Such comments should not be allowed.

Second, while generally employers only give “neutral” job references, there are times when an employer is required to or should make disclosures about a former employee other than in the education setting. For example, there are mandatory reporting requirements for employers when certain licensed professionals (such as social workers, nurses, etc.) engage in wrongdoing or have substance abuse problems. Also some employers (such as physicians) are mandatory reporters under state law when child abuse or neglect is suspected.  Finally, if an employer has reason to believe that a former employee may pose a safety risk for the prospective employer, it may be prudent to disclose the employee’s prior conduct that gives rise to the concern (such as when the former employee posed a risk of violence).

If you have not recently trained your supervisors or managers about discrimination laws or conducted harassment training for your workforce (which is necessary for your defense of a claim), you should.  Also, consult with an experienced employment attorney, such as the author, whenever there may be a need to give more than a neutral employment reference.

This article was written by Claudia D. Orr, who is Chair of the Legal Affairs Committee of Detroit SHRM, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For more information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. August 2016.