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Second Circuit: Notice of Future Termination Qualifies as Adverse Action, Even If Rescinded

Lev Craig

On August 10, 2017, the U.S. Circuit Court of Appeals for the Second Circuit vacated the lower court’s dismissal of the plaintiff’s sex discrimination and FMLA interference claims in Shultz v. Congregation Shearith Israel of the City of New York. The Second Circuit found that the defendant’s notice to the plaintiff of her future termination constituted an adverse employment action, even though the notice of termination was later revoked.

Alana Shultz began working as Program Director at a New York City synagogue in 2004. In June 2015, Shultz, who was pregnant at the time, got married and notified her employer that she was pregnant. Shortly after Shultz disclosed her pregnancy, the synagogue notified Shultz that her employment would be terminated effective August 14, 2015, purportedly due to “restructuring.” Suspecting that the supposed “restructuring” was pretext for terminating her because of her pregnancy and because the synagogue’s leadership “disapproved of the fact that she was pregnant at the time of her marriage,” Shultz retained counsel, who then notified the synagogue of Shultz’s intent to pursue legal claims. Several days later, the synagogue rescinded its notice of termination, telling Shultz that it had “reinstated” the Program Director position and that she would therefore retain her position.

However, according to Shultz, she continued to experience discrimination and harassment after the termination was revoked: Her supervisors allegedly remarked that the synagogue “had a right to disapprove of [her] pre-marital pregnancy,” removed Shultz’s name from the congregation’s newsletters and lists of employees, refused to speak with her, and instructed her to transition her job responsibilities to other employees. Shultz brought suit in the U.S. District Court for the Southern District of New York, alleging sex discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”) and New York state and city laws, as well as interference under the Family and Medical Leave Act (“FMLA”). The synagogue successfully moved to dismiss all of Shultz’s claims. Shultz subsequently appealed to the Second Circuit, which declined to exercise jurisdiction over Shultz’s state and city claims, but vacated and remanded the district court’s decision on Shultz’s Title VII and FMLA claims.

The Second Circuit’s decision relied on two U.S. Supreme Court cases—Delaware State College v. Ricks and Chardon v. Fernandez—in which the Supreme Court held that an employee’s cause of action for discriminatory termination began to accrue when he received a notice of termination from his employer, rather than on the effective date of his termination. This standard, which the Supreme Court described as the “notice rule,” means that “the claim is actionable on the date when the employer notifies the employee he is fired, not on the last day of his employment.” Based on these decisions, the Second Circuit concluded that Supreme Court precedent “necessarily implies that the notification of termination qualifies as an adverse employment action,” regardless of whether that termination is later rescinded or not. As such, Shultz’s Title VII and FMLA claims could proceed.

The court noted that there were “limitations” to its holding and that not all rescinded employment decisions would qualify as adverse employment actions—for example, cases where “the period of time between a notice of firing and its rescission may be so short as to render the termination de minimis,” or cases involving the revocation of “less significant employment actions taken by an employer, such as placing a counseling letter in an employee file.” The court also differentiated between actual terminations and rescinded terminations in the context of damages calculations, such as an employee’s accrual of back pay. However, the Second Circuit left such questions to the finder of fact and remanded Shultz’s claims to the district court.

If your employer has discriminated against you based on your gender, pregnancy, or any other protected characteristic, contact The Harman Firm, LLP.

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