The owner/operator of 10 McDonald’s franchises in Vermont and New Hampshire agreed to pay $1.6 million and take significant other steps to end a lawsuit that accused it of subjecting employees to sexual harassment at work.
The case has some important lessons for employers.
Among them: Don’t get fooled into thinking that federal caps on damages always represent the maximum potential monetary liability for harassment. Though Title VII caps damages at $300,000, adding supplemental claims can effectively negate that limitation.
In addition, though most sexual harassment cases don’t result in seven-figure payouts, they may do just that if the harassment is sufficiently severe and/or endures for a significant time period.
The defendant in this suit was Coughlin, Inc., which owns and operates 10 McDonald’s restaurants in Vermont and New Hampshire.
The Equal Employment Opportunity Commission sued Coughlin in late March of 2021, focusing it case on the alleged behavior of just one employee: a second assistant manager at a Coughlin McDonald’s in Randolph, Vermont.
According to the suit, the assistant manager created a sexually hostile work environment for a period of time that extended from late 2014 all the way to late 2019.
The suit said that many of the manager’s alleged victims were high-school aged employees or young adults in entry-level positions.
It alleged that the manager made unwelcome sexual comments and engaged in other harassing conduct with respect to several employees. For example, it claimed that he grabbed or tried to grab their breasts and buttocks.
The complaint specifically described the manager’s alleged conduct toward employee Jennie Lumbra. It said that the manager harassed Lumbra and that instead of taking appropriate remedial steps when she complained, it revoked her previously granted accommodation of a flexible work schedule. That change to her schedule, which she had worked under for more than three years, forced her to resign, the agency alleged.
The EEOC alleged unlawful discrimination and retaliation under Title VII. Its suit sought back pay, compensatory damages, punitive damages and other relief.
Significantly, the Vermont Attorney General intervened in the case, and claims were added under the Vermont Fair Employment Practices Act. The state attorney general sought a declaratory judgment that Coughlin violated the state law. He further sought civil penalties and injunctive relief.
Private counsel for the estate of Lumbra, who died while the case proceeded, also joined the litigation.
In late June, the parties announced that they had entered into a consent decree that resolves the litigation.
First, Coughlin agreed to pay $1.6 million in monetary relief.
Of that amount, $275,000 is designated for the estate of Lumbra. The consent decree says that amount represents what she would have earned “had she not been terminated and includes compensation for all damages … costs, and attorney’s fees.”
Another $125,000 will go to the state of Vermont, with that amount representing civil penalties, costs and attorney’s fees.
The remaining bulk of the monetary payment — $1.2 million – will be used to establish a settlement fund that will be used to provide individual monetary awards to other aggrieved class members. The EEOC will determine in its sole discretion how much to give individual class members, and Coughlin expressly agreed in the consent decree not to object to any of the agency’s determinations in that regard.
The consent decree also calls for the provision of significant other relief.
It permanently enjoins Coughlin from allowing any further sexual harassment and from retaliating against any person who files a Title VII complaint or who opposes any practice that is unlawful under the statute.
Further, Coughlin agreed to post notices regarding sexual harassment and the settlement of this case, and to establish an EEO telephone hotline for its employees.
It will also issue revised anti-discrimination policies and procedures and appoint a compliance monitor who will be responsible for monitoring its compliance with the terms of the settlement.
Finally, it will provide live training to employees on an annual basis.
EEOC v. Coughlin, Inc., No. 2:21-cv-00099-wks (D. Vt.).