U.S. Supreme Court approves “cat’s paw” theory of liability in employment discrimination cases.

In Staub v. Proctor Hospital, the Supreme Court ruled that an employer may be held liable for employment discrimination based on the conduct of an employee who influenced – but did not make – the ultimate employment decision.  Commonly called the “cat’s paw” theory of liability, the Supreme Court’s decision means an employer may be liable for discrimination when an independent decision maker, such as a human resources manager, relies upon the biased comments or reviews of another, such as a shift supervisor, in making an adverse employment decision.  Previously, many courts had found that as long as the decision maker did not rely solely on the biased supervisor’s account of the employee’s performance or conduct, the employer could not be held liable for discrimination.  The holding in Staub clarifies that the acts of a biased mid-level supervisor can be sufficient to establish liability.

Staub was a member of the United States Army Reserve and was required to miss work to attend military training exercises.  His direct supervisors were openly hostile to his military service, and wrote him up for minor, or in some cases fabricated, infractions.  After one such write up, Staub was placed on probation for allegedly leaving his work area without authorization.  Staub was subsequently written up again for the same infraction, and his direct supervisors recommended his termination.  The hospital’s human resources manager reviewed the file, accepted the recommendation and terminated Staub’s employment.

The Supreme Court found the hospital liable for discriminating against Staub because of his military service, which is prohibited by the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”).  Noting USERRA is very similar to Title VII, the Supreme Court ruled that when an independent decision maker relies on the biased report of a mid-level supervisor, “the employer is at fault because one of its agents committed an action based on discriminatory animus that was intended to cause, and did in fact cause, an adverse employment decision.”

The practical impact of this ruling is that employers cannot defend against claims of discrimination by proving that an independent decision maker – who is not accused of bias – conducted an independent investigation or review of the file in reaching an adverse employment decision.  If the decision maker relies on the fact finding of the biased supervisor, the company as a whole can be liable for discrimination.  Employers can avoid this result by training supervisors at all levels on the legal prohibitions against discrimination to ensure that reviews or disciplinary actions are not based on bias or animus, and by training human resources professionals to spot red flags when reviewing a termination recommendation, and conducing a truly independent investigation into the employee’s performance rather than relying on a supervisor’s recommendation.

Justice Scalia delivered the opinion of the Court on March 1, 2011.  Justice Alito filed a concurrence, which was joined by Justice Thomas.  Justice Kagan did not take part.