We’ll See Your Bid and Raise (Our Exposure)

Contributed by Terry Fox

If you weren’t playing Texas hold’em, would you ever raise the stakes?  Or, as an employer would you ever promise to do more than the law requires to comply with anti-discrimination law?  Costco Wholesale Warehouse provided language in its employee handbook that was found to provide more protection for employees than the law requires.

Peter Marini worked as a baker’s assistant at a Costco Warehouse in Connecticut.  He suffers from Tourette’s syndrome, which causes involuntary twitches and other unusual physical manifestations and verbal utterings.  Unfortunately, he was assigned to work with a co-worker who never rose above junior high taunting.

When the co-worker unmercilessly taunted Marini for years, Marini complained. He then started secretly recording his interactions with co-workers and customers.  When Costco discovered this recording (brought out in an EEOC investigation), Costco terminated Marini for violating rules against recording customers/employees without their consent.  Marini sued Costco, asserting claims for violation of ADA, Connecticut Fair Employment Practices, breach of contract and common law claims. The ADA claims were found time-barred.

On December 1, 2014, the United States District Court granted Costco’s motion for summary judgment on all claims except the breach of contract claim. Why? Because the employee handbook at issue stated that:

. . . employees are expected to be sensitive to and respectful of their co-workers and others with whom they come into contact with while representing Costco.  We prohibit all forms of harassment based upon any protected status, including . . . disability . . . or on the basis of any other protected status.

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Examples of conduct we prohibit [includes] . . .[e]pithets, slurs, negative stereotyping or threatening, intimidating or hostile acts that relate to the above-mentioned protected groups.

Marini v. Costco Wholesale Corp., 3:11-cv-00331-JAM, Slip Op. (12/1/14), at p.14.  Further, the employee handbook provided additional broad definitions of harassment and investigative duties, as well as a statement that corrective action will be taken regardless if any handbook violation actually violates the law. Slip op., p.15.

The district court labeled the policies “super anti-harassment provisions” and rejected the employer’s argument that the ADA pre-empted any contractual provisions that offered parallel protections.  The employee handbook did not contain any contractual disclaimers, allowing Mr. Marini to proceed to trial on a breach of contract theory that the employer did not protect him from harassment by reason of his disability.

Important Lesson:  Consult counsel when drafting your employee handbook to avoid providing protections broader than that required by “background law,” a term utilized by the Marini court to gauge whether the employee handbook offered more protection than required. If the protections are broader, the employer may face breach of contract exposure from its employees even where the conduct at issue doesn’t violate the law.