Employers Beware: The Customer Is Not Always Right!

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje & Ladik, PLLC

In today’s divisive political and cultural climate, it is not surprising that confrontations between workers and customers are commonplace.

On February 12, 2018, a state trooper who had pulled up to the drive-thru of a Normal, Illinois McDonald’s restaurant was allegedly greeted by an employee with the expletive “F*** the police.” Upon hearing of the incident, the franchise owner made the immediate decision to terminate the offending employee.

In this circumstance, the employer was likely acting within its legal rights in firing the offending employee. After all, the customer did nothing to provoke the employee. The customer was right.

But, what if the circumstances are different? What if a female employee berates or slaps a male customer who gropes her? What if an African American employee curses a Caucasian customer who calls him “boy?” What, if anything, does the employer risk by doing nothing? What, if anything, does the employer risk by disciplining or discharging the employee?

The Risk of Acceding To Customer Preferences

A good starting point for addressing these questions is the clash often faced by employers between customer preferences and employment discrimination laws. The desire to please a paying customer can be a compelling incentive to accede to his or her preferences or demands. However, if the preference or demand is that the employer engage in unlawful employment discrimination, the price of acquiescence can be civil liability.

In Chaney v. Plainfield Healthcare Center, for instance, an African-American healthcare worker challenged, under Title VII of the Civil Rights Act of 1964, a nursing home’s policy of honoring the racial preferences of its residents in assigning health care providers. The nursing home acknowledged it routinely acceded to patient demands for white-only health care providers.

In denying the nursing home’s motion for summary judgment, the 7th Circuit said in a July 20, 2010 opinion: “It is now widely accepted that a company’s desire to cater to the perceived racial preferences of its customers is not a defense under Title VII for treating employees differently based on race.”

In Wilson v. Southwest Airlines, male applicants said they had been rejected for positions as Southwest flight attendants based upon gender, in violation of Title VII. Southwest  admitted its policy of hiring only female flight attendants, but argued their sex appeal was a bona fide occupational qualification.

In rejecting Southwest’s defense, a Texas federal court opined in a June 12, 1981 decision:
“Southwest is not a business where vicarious sex entertainment is the primary service provided. Accordingly, the ability of the airline to perform its primary business function, the transportation of passengers, would not be jeopardized by hiring males. Southwest does not face the situation … where an established customer preference for one sex is so strong that the business would be undermined if employees of the opposite sex were hired.”

To be sure, there may be circumstances where customer preference can be a bona fide occupational qualification. The aforementioned cases, however, show that customer preference cannot always justify otherwise unlawful discrimination against an employee.

The Risk Of Doing Nothing

The issue of customer preference also arises when an employee complains of discriminatory harassment by a customer. The employer may prefer not to upset or lose a customer by taking prompt remedial action. However, if the employer does nothing it risks potential liability to the complaining employee.

In Lockard v. Pizza Hut, another Title VII suit, a female waitress employed by a Pizza Hut franchisee claimed her employer did not respond properly to the inappropriate conduct of “two crude and rowdy made customers” who frequented the restaurant. She specifically testified her employer did nothing when the men made sexually offensive comments to her, such as “I would like to get into your pants”, and one man pulled her to him by the hair, grabbed her breast and put his mouth on her breast.

In denying the employers motion to set aside a jury verdict in favor the female waitress, the 10th Circuit noted in a December 14, 1998 opinion: “An employer who condones or tolerates the creation of such an environment should be held liable regardless of whether the environment was created by a co-employee or a nonemployee, since the employer ultimately controls the conditions of the work environment.”

The Risk Of Firing The Employee

Finally, the behavior of an employee in response to inappropriate conduct of a customer may, viewed in isolation, be considered grounds for discipline or termination. Viewed in context, however, the behavior may arguably be protected opposition under employment discrimination laws. Disciplining or terminating the employee, therefore, may prompt a retaliation claim.

In Folkerson v. Circus Circus Enterprises, Inc., for example. a mime artist punched a casino patron who attempted to embrace her during a performance. For this behavior, the mime was terminated. The mime sued under Title VII arguing her behavior was protected opposition to discrimination.

In an October 16, 1995 opinion, the 9th Circuit agreed that “reasonable defense against physical violence may be protected oppositional activity.” Finding the mime’s reaction reasonable under the circumstances, the court reversed a grant of summary judgment for the employer.

In Van Horn v. Specialized Support Services, Inc., the Title VII plaintiff was a female employee of a company which provides services to developmentally disabled clients.  In her complaint, she detailed the conduct of a client who, over the course of time, said he loved her, and attempted to hug her. Although the female employee complained of the client’s behavior, the employer allegedly did nothing. One day, the client pinched the female employee’s breast. In response, the female employee instinctively slapped the client. For this behavior, the female employee was terminated.

Although the Iowa federal court found insufficient evidence of a hostile work environment, a January 29, 2003 ruling found that slapping the client was protected opposition under Title VII. The Court opined: “when an employer’s failure to act forces an employee to act in self- defense at the workplace, the employee’s defensive conduct is reasonable and the employee cannot be terminated for doing so.”

To be clear, most federal discrimination cases have sided with the employer where an employee responds to perceived discrimination by cursing, shouting or resorting to physical violence. The aforementioned cases, however, show that courts may be more willing to find questionable behavior to be reasonable if it follows inaction by the employer in responding to prior incidents of harassment.

The Risk Of Siding With The Employee

No discussion of the risks arising from confrontations between employees and customers is complete without mention of an employer’s potential liability to customers for discrimination. Federal, state and local laws prohibit discrimination in public accommodations and contracts.  A comprehensive discussion of these laws is beyond the scope of this article. An employer must nevertheless be mindful of such laws before terminating a customer contract or refusing service to a customer based upon a confrontation with an employee.

Takeaway For Employers

When presented with evidence of a confrontation between an employee and a customer, an employer’s first instinct may be to side with the customer. Following that instinct, however, may risk liability under employment discrimination laws. Siding with the employee can also have legal consequences.

As with any unfortunate incident involving an employee, therefore, an employer must  undertake a reasonably diligent and unbiased effort to determine the truth. Sometimes, appearances can be deceiving, and the truth may lie beyond the single incident. Admittedly, a more comprehensive investigation will require more work than a rush to judgment. Still, it is more prudent to work to prevent an unwanted claim, than to work to defend an unwanted claim.

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What Austin Employers Need To Know About New Paid Sick Time Ordinance

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje & Ladik, PLLC.

On Friday, February 16, 2018, Austin became the only Texas municipality to enact a paid sick time ordinance applicable to private employers. There is no corresponding Texas state law which mandates paid sick time in the private sector.

What Employers Are Covered By The Ordinance?

The ordinance applies to any “person, company, corporation, firm partnership, labor organization, non-profit organization or association that pays an employee to perform work for an employer and exercises control over the employee’s wages, hours and working conditions.”

The ordinance does not limit its coverage to employers with a minimum number of employees. For employers with less than six employees, excluding family members, the ordinance is not effective until October 1, 2020.  For all other employers, the ordinance is effective on October 1, 2018.

The ordinance does not apply to (1) the United States; (2) a corporation wholly owned by the government of the United States; (3) the state or a state agency; or (4) a political subdivision of the state, or other agency that cannot legally be regulated by municipal ordinance.

What Employees Are Covered By The Ordinance?

The ordinance covers any “individual who performs at least 80 hours of work for pay within the City of Austin in a calendar year for an employer, including work performed through the services of a temporary or employment agency.”  The ordinance does not apply to independent contractors or unpaid interns.

How Much Paid Sick Time Is Mandated By The Ordinance?

An employer must grant one hour of earned sick time for every 30 hours worked for the employer. Earned sick time is available to an employee as soon as it is accrued. Earned sick time accrues only in hourly increments.

The ordinance does not affect employer policies which allow an employee to donate unused accrued sick time to another employee.

Are There Any Caps to Paid Sick Time Mandated By The Ordinance?

An employee of an employers with 15 or fewer employees , excluding family members, can accrue up to 48 hours of earned sick time in a calendar year. An employee of a larger employer can accrue up to 64 hours of earned sick time in a calendar year. All available earned sick time up to the applicable limit shall be carried over to the following year.

An employer is not required to allow use of earned sick time by an employee for more than 8 calendar days in a calendar year.

For What Absences Can Paid Sick Time Be Used By An Employee?

An employee is entitled to available paid sick time if the employee makes a timely request for used of earned sick time before the employee’s scheduled work time.  There is an exception for unforeseeable absences.

Available paid sick time can be requested by an employee for an absence caused by:

  1. the “employee’s physical or mental illness or injury, preventative health care or health condition”;
  2. the “employee’s need to care for a family member’s physical or mental illness, preventative medical or health care, injury, or health condition”; or
  3. the “employee’s need to seek medical attention, seek relocation, obtain services of a victim services organization”, or to participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or employee’s family member.”

The tem “family member” is defined as an employee’s “spouse, child, parent, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship.”

Can an Employer Require Verification Before Paying For Sick Time?

It depends. An employer may adopt reasonable verification procedures to establish that an employee’s request for earned sick time for more than three consecutive work days is for a qualifying absence. The ordinance makes no mention of absences of other durations.

How Is Paid Sick Time Calculated?

The employer shall pay earned sick time in an amount equal to what the employee would have earned if the employee had worked the scheduled work time, exclusive of any overtime premium, tips, or commissions, but no less than the state minimum wage.

What Does The Ordinance Proscribe?

An employer may not:

  1. require “an employee to find a replacement to cover the hours of sick time as a condition of using earned sick time”;
  2. erase accrued paid sick time upon “an employee’s transfer to a different facility, location, division, or job position”;
  3. “transfer, demote, discharge, suspend, reduce hours, or directly threaten these actions against an employee for requesting or using earned sick time, or for reporting a violation or participating in an administrative proceeding under” the ordinance.

What Records Are Mandated of Employers By The Ordinance?

On at least a monthly basis, an employer must provide electronically or in writing to each employee a statement showing the amount of the employee’s available earned sick time.

An employer that provides an employee handbook to its employees must include therein a notice of employee rights and remedies under the ordinance.

Each employer must display a sign in an conspicuous place or places where employee notices are customarily posted.

Does The Ordinance Provide Employees With A Private Right Of Action?

No. For violations, the ordinance only provides for a civil penalty assessed by the City.

How Is The Ordinance Enforced?

The ordinance is enforced by the City of Austin Equal Employment Opportunity/Fair Housing Office (“Office”).  A complaint alleging a violation must be filed with the Office by or on behalf of an aggrieved employee within two years from the date of the violation.

What Is The Civil Penalty For Violation Of The Ordinance?

For an employer with six or more employees, no civil penalty for a substantive violation may be assessed prior to May 1, 2019.  Thereafter, an employer which fails to cease a violation by the end of the 10th business day after the employer receives notice of the violation by the Office is liability to the City for a civil penalty of up to $500 for that violation.

Civil penalties of $500 per violation for retaliation, however, can be assessed on and after the applicable effective date.

Are Any Affirmative Defenses Available To Employers Under The Ordinance?

The ordinance does not expressly provide any affirmative defense for a failure to pay an employee earned sick time.  Presumably, however, the Office will consider any lawful reason for any adverse employment action taken against an employee who has (1) requested or used earned sick time, (2) reported a violation of the ordinance, or (3) participated in an administrative proceeding under the ordinance.

What Must Austin Employers Be Doing Now?

Depending on the applicable effective date, Austin employers have time to develop policies and procedures to conform to the standards set forth in the ordinance. For planning decisions which must be made long before October 1, 2018, however, larger employers must be cognizant of the unique requirements which will soon be applicable to employees working within the city limits of Austin.