Diversity & Inclusion, HR Management & Compliance

Tennessee Court Highlights Importance of Keeping Age Out of Termination Equation

The Tennessee Human Rights Act (THRA) prohibits covered employers from discriminating against employees 40 years old or older because of their age. In a recent case, the Tennessee Court of Appeals provided a reminder that other factors often correlated with age (such as salary or years of service) are distinct from age and may not stand as proxies for age in a discrimination suit.

According to the court, evidence the employer was motivated to discharge employees with the highest salaries and/or most seniority was insufficient to show age was a determining factor in the termination.

ageism

Facts

Terry Wallace served four terms as Marshall County Executive, an elected position. But after losing his election in 2006, he applied for the position of city economic development coordinator for the city of Lewisburg.

Wallace, 59 years old at the time, admitted during his interview with the city council that he didn’t have “any computer skills” but was going to take courses at a community college. At the council’s recommendation, City Manager Eddie Fuller hired him and mentioned the city codes inspector, Greg Lowe, could provide some assistance with computer skills.

During three years of employment, Wallace brought in three businesses to the city’s industrial park and worked to retain other employers. Amid the Great Recession, however, the city struggled with budget difficulties and high unemployment numbers.

In July 2009, Fuller called both Wallace and Lowe to his office and asked them to sign a letter stating there was a perception Lowe was doing Wallace’s job and instructing them each to do their own job duties. Lowe later testified that after the incident, he continued to provide Wallace with computer support on large projects but stopped helping him as frequently as he had previously.

After the 2009 election, the city council experienced changeover, and favor for Wallace waned. In fact, the new mayor acknowledged to Wallace that one council member commented he could be “replaced by someone right out of college for $30,000.”

In July 2010, Fuller informed Wallace three of the five council members wanted him to resign. He refused, and the city manager terminated him. The position was filled a couple of months later by Lowe, who was 41 at the time. Fuller filled out Wallace’s separation notice to say the termination was “without cause” and later testified he did so to enable Wallace to receive unemployment benefits, which he did receive.

Wallace filed suit against the city of Lewisburg alleging age discrimination under the THRA. The trial court heard testimony from many witnesses, including Wallace, Fuller, Lowe, the mayor, former council members, and others. It was a bench trial, meaning the judge ruled on the issues of fact, not a jury.

The court concluded Wallace hadn’t shown age was a determining factor in his termination and dismissed the case. Interestingly, it didn’t believe he was discharged either “without cause” or because of poor performance or lack of technological skill, as claimed by witnesses for the city. Rather, it held the evidence showed he was fired because of “subjective disapproval by three of the council members and a need to find a scapegoat for economic sluggishness not related in any way to [his] job performance.”

Wallace appealed the decision to the Tennessee Court of Appeals.

Appeals Court’s Decision

Wallace challenged the trial court’s decision for a number of reasons, including both evidentiary rulings and more generally whether the trial court wrongly determined age wasn’t the cause of his termination. The appeals court sided with the trial court and upheld each of its rulings.

First, Wallace asserted the trial court should have excluded any evidence of poor performance, arguing the statement that his termination was “without cause” on the separation notice should have been conclusive proof of the employer’s reasons for the discharge. The court not only found such a ruling would have inhibited the employer from presenting its defenses, but it also disagreed that a statement filled out by one individual constituted the city’s official, conclusive action.

Wallace also argued Fuller’s testimony about the reasons for termination provided multiple, contradictory explanations that should have “cancelled each other out.” Again, however, the court disagreed that the various reasons for termination—including the “without cause” separation notice and statements about his lack of computer skills, poor performance, and reliance on Lowe to do parts of his job—weren’t inconsistent with one another and were each supported by other witnesses’ testimony.

Finally, reviewing all the evidence, the appeals court affirmed the trial court’s ruling that Wallace failed to show age was a determining factor in the city’s decision. He argued that because the court rejected the employer’s given reasons for termination, they were proof of age discrimination. The appeals court disagreed.

Undermining a given reason for termination by showing it has no basis in fact or wasn’t the true motivation does show the reason was pretextual (or false). Finding the proffered reason was a pretext, however, permits but doesn’t require a finding of intentional discrimination. What ultimately matters isn’t whether the employer is telling the truth about the reason but whether the true reason is discriminatory. Although the council may not have liked Wallace, he hadn’t proved it was because of his age.

The appeals court also rejected Wallace’s contention that evidence showing the city was motivated by budget concerns to terminate him because of his higher salary was sufficient evidence of age discrimination. Emphasizing that courts have refused to allow salary to serve as a proxy for age and noting factors such as seniority—which may correlate with age—remain distinct from age, the court affirmed his salary evidence wasn’t proof of age discrimination. Wallace v. City of Lewisburg, Case No. M2019-01690-COA-R3-CV, 2020 WL 6390139 (Tenn. Ct. App., Oct. 30, 2020).

Bottom Line

Wallace’s case offers both good news and gentle reminders to employers when it comes to age discrimination claims.

First, the ruling provides reassurance that courts will require former employees claiming age discrimination to put forth proof their termination was actually based on their age. You may not fire employees based on age, but their salary, technological knowledge or skill, or seniority are separate concepts that may technically be taken into account when making employment decisions.

Second, even though Wallace couldn’t prove discrimination, the trial court noted the termination was handled “unprofessionally,” making the employer’s position more difficult and costlier to defend. Although salary and seniority are separate from age, if you use them as a proxy for age, they can be grounds for a discrimination claim.

Even when salary and/or seniority aren’t intentionally substituted for age, it’s still important to keep the data points separate. When salary and seniority are often referred to in the same breath as an employee’s age, the lines become blurred, and a decision based on a factor other than age becomes more difficult to defend.

Third, note Wallace’s case was a bench trial, meaning a judge evaluated the evidence and decided the outcome. Had jurors been involved, they may not have seen such an easy distinction between replacing him with someone cheaper or bringing in someone younger.

Finally, at the end of the day, you must be consistent about the reasons for any termination. When you can’t easily state the reason or you provide various explanations in different documents, your position becomes less credible. Although the court didn’t find the reason for Wallace’s termination to be age, it did conclude the employer’s explanation wasn’t the true reason and provide its own alternative reasoning.

Don’t leave it up to judges or juries to provide explanations for a termination because you may not like what they come up with.

Sara Anne T. Quinn is an attorney with Butler Snow LLP in the firm’s Nashville, Tennessee, office. She can be reached at saraanne.quinn@butlersnow.com.