Retaliation Blunder: C-Suite’s Mistake Cost Company $137K

As an HR professional, you know some conversations must be handled carefully to avoid a retaliation lawsuit.  

But sometimes your managers, including company leaders in the C-suite, may not realize that – and their words can end up costing the company a pretty penny. Case in point:

Is Former Employee Eligible for Rehire?

In 2023, a former employee reapplied to work at Cinergy Entertainment Group Inc., a Texas corporation operating movie theaters in several states.  

According to the EEOC’s lawsuit, the former employee had worked as a bartender at one of the theater locations in 2022 when she became pregnant. After she informed her manager about her pregnancy, she was let go.

When the employee reapplied in 2023, a company vice president told her she was not eligible for rehire. Why not? Because she filed a discrimination charge with the EEOC after she got fired from the bartending position the previous year, the lawsuit alleged.

The former employee then filed a second complaint with the EEOC.

EEOC: Retaliation Violates Title VII

In the EEOC’s view, the alleged conduct violated Title VII, which protects individuals from workplace retaliation. 

The EEOC filed a lawsuit after unsuccessfully attempting to reach a pre-litigation settlement through the agency’s voluntary conciliation process. 

“When an employer takes an adverse employment action against an employee because the employee exercised her right to file a charge of unlawful discrimination, it has a chilling effect. Other employees are then hesitant to come forward to report discrimination,” Melinda C. Dugas, regional attorney for the Charlotte District, said in a statement. “Resolving issues involving unlawful retaliation is a priority for the EEOC.”

EEOC Trial Attorney Nick Wolfmeyer said, “Employees should never suffer from reporting allegations of discrimination to a federal agency. The EEOC takes allegations of retaliation seriously, and we will step in to protect employees’ rights.”

Ultimately, the employer agreed to settle the case. Under a two-year consent decree resolving the dispute, Cinergy Entertainment Group must:

• Pay $137,000 in damages to the former employee
• Implement a revised anti-discrimination and retaliation policy
• Provide training to all managers at each of its local entertainment centers nationwide
• Provide training to managers and HR at the corporate level, and
• Post an employee notice at its Charlotte location.

Lessons for HR

This case highlights that everyone – even the company’s senior leaders – needs HR’s guidance when it comes to:

• Handling sensitive conversations: Many managers have made errant remarks that have landed companies in court and resulted in hefty payouts. That’s why HR needs to be specific in outlining what managers can – and can’t – say when dealing with any type of employment law issue. 
• Making rehire decisions: The company should have an established procedure in place to determine whether a former employee is eligible for rehire and HR should be involved in rehire decisions to help hiring managers avoid mistakes like the one in this case. For more help, check out Should you rehire old employees? 4 pros and cons.
• Avoiding retaliation after federal complaints: Regardless of how frustrated they might be, managers absolutely cannot retaliate against employees who file a complaint with a federal agency, like the EEOC or the DOL. And HR needs to help them resist the urge to get in that last jab that might feel good at the moment – but will undoubtedly cost the company in the long run. In this case, the company VP allegedly commented on the former employee’s previous EEOC filing. In another case, an employer dumped 500 pounds of oily pennies on the driveway of a former employee who complained to the DOL after he didn’t receive his final paycheck. What do the two cases have in common? Both employers paid significant sums to resolve claims of retaliation after former employees filed complaints with federal agencies.