A recent decision by the U.S. Circuit Court of Appeals for the First Circuit has given employers reason to abandon the practice of terminating employees without providing a reason. In Velez v. Thermo King de Puerto Rico, 555 F.3d 441 (1st Cir. 2009), the court reversed the trial court’s grant of summary judgment to the employer; holding that the employer’s failure to state a reason for termination was evidence of age discrimination.
Jose Velez had worked for the defendant, Thermo King, for 24 years. At the time of his termination, Velez was a “tool crib attendant” in charge of maintaining, dispatching, and safeguarding company tools, as well as issuing purchase requisitions for new tools. Until shortly before his discharge, Velez’s employment record was spotless. However, when it was learned that more than $1,000 worth of equipment had been stolen from the tool crib, Thermo King launched an internal investigation of the loss. During the investigation, several employees reported that they had purchased company property from Velez. Employees also reported that other co-workers had stolen company tools and equipment. When interviewed, Velez denied that he had stolen company property. However, he admitted that several company vendors had given him items of nominal value as gifts, which he had periodically sold to co-workers. Ultimately, Thermo King terminated Velez’s employment without any explanation. He was 56 years. No other employees were terminated.
Velez filed a charge of discrimination with the Equal Employment Opportunity Commission, alleging that he was fired because of his age in violation of the Age Discrimination in Employment Act. Thermo King responded by claiming that Velez had been fired for accepting gifts from company vendors. Velez then sued Thermo King for age discrimination in the U.S. District Court for the District of Puerto Rico. In defense, Thermo King asserted that Velez had been fired for accepting gifts from suppliers in violation of company policy, as well as for selling Thermo King property to other employees. Granting summary judgment to Thermo King, the court held that these were legitimate non-discriminatory reasons for termination.
Overturning the district court’s grant of summary judgment, the First Circuit found that three specific aspects, taken together, are “more than sufficient” to support a conclusion that Thermo King terminated Velez on the basis of his age: (1) Thermo King’s “shifting explanations” for its termination of Velez; (2) the ambiguity of Thermo King’s company policy and the resulting uncertainty as to whether Velez violated it; and, most significantly, (3) Thermo King’s failure to discipline other employees, younger than Velez, who had admitted to having purchased company property from Velez.
Velez underscores three lessons for employers: (1) provide employees with a comprehensive explanation for employment decisions, such as termination, at the outset; (2) review and confirm the particulars of a company policy before acting upon it; and (3) treat similar employee situations in the same way. In light of Velez, an employer is wise to make a careful and rational decision prior to terminating an employee. In this regard, different supervisors will often have different motives for terminating the same employee. Therefore, an employer should make sure that its story is straight, and provide the terminated employee with a coherent, consistent, and clear explanation. Otherwise, the employer could suffer consequences.
Should you desire a full text of Valez v. Thermo King de Puerto Rico, Inc., or have any questions regarding these issues, please contact one of our Employment and Labor Law Group Members.
