EEOC lands $180,000 settlement with employer who fired an employee for eating chips

The headline sounds crazier than the facts behind this case, which involves a disability discrimination suit on a wrongful termination. The case arose in a California federal district court against the employer, Walgreens. (The case is EEOC v. Walgreens.) The case involves an employee who broke a workplace rule to avoid a diabetic shock and lost her job. Many employer-side employment lawyers thought this case would easily fall in favor of Walgreens. They were wrong.

After the Equal Employment Opportunity Commission prevailed at summary judgment and won the right to take the case before a jury, Walgreens had a change of heart about its opposition to the suit and settled the case for $180,000. Many are dismissing the case as a fluke or as another example of California courts being liberal-crazy but the EEOC is likely to use this case as a

springboard to shape law on this issue in other federal circuits and develop a nationwide consensus among the courts. Let’s get into the facts of this case and talk about why the law favored the employee. If you believe your employer violated your rights under the ADA then you should submit your case to an employment attorney.

The facts in Equal Employment Opportunity Commission v. Walgreens

(Viewed in a light most favorable to the employee.) Josefina Hernandez worked for Walgreens for eighteen years. After five years of employment she was diagnosed with diabetes. Hernandez informed her employer who approved her to carry candy on the sales floor in case her blood sugar dropped.

Additionally, Walgreens permitted her to keep insulin in the break room and take additional breaks to check her blood sugar levels. One day in September 2008, she was returning items to the sales floor from a shopping cart. She began shaking and sweating, both signs of diabetic shock. Hernandez did not have her candy on her so she opened a $1.39 bag of chips that was in the shopping cart and ate them.

She went to the cosmetics counter, where employees were instructed to make in-store purchases, but nobody was there. She put the chips under her cash register at the front of the store and resumed restocking. While she was restocking, the assistant manager found the chips and asked who they belonged to. Hernandez admitted they were hers. The assistant manager told the manager. Hernandez then went on vacation for two weeks.

When she returned she met with the loss control supervisor. She wrote a statement about the events with the chips, in which she stated her blood sugar was low and she did not have time to pay for the items first. The employer fired her under its no-grazing policy. Then she contacted an employment lawyer.

Reasons for the employer’s policy

Walgreens, like many stores, suffers financial losses due to employee theft. Walgreens claims a $350 million loss from employee theft. In response, Walgreens instituted a no-grazing policy that requires employees to prepay for food before eating it. The store manager in this situation claims the policy is consistently enforced with no consideration of the merits of the particular employee and no discretion is included within the policy.

Hernandez filed a charge of discrimination with the EEOC, who in turned filed suit under the Americans with Disabilities Act and Title VII. Walgreens moved for summary judgment on the basis that the termination was not in violation of the law and the EEOC countered that the theft was a failure to reasonably accommodate Hernandez’s disability.

The EEOC’s Americans with Disabilities Act arguments and the court’s application of the law

The EEOC brought two ADA-related claims; one claim for discrimination “because of” Hernandez’s disability and one claim for failure to reasonably accommodate her disability. Under the ADA employers cannot discriminate against employees by taking adverse employment actions when the employee is a qualified individual with a disability because of that person’s disability.

The ADA also requires employers to make reasonable accommodations to an employee’s disability.

On the “because of” discrimination claim, the EEOC asserted that Hernandez was an individual with a disability within the meaning of the ADA who was capable of performing the essential functions of her job (with or without a reasonable accommodation) and she was terminated because she is disabled. Walgreens naturally defended that the manager made a decision based on the theft and the theft was consistent with the company’s neutral anti-theft policy.

However, the judge disagreed with Walgreens because in the Ninth Circuit, which oversees California federal courts, an employee’s disability-related misconduct is connected to the employee’s disability and cannot be used as a basis for the employer’s employment decisions. That may be a surprising and disagreeable result to some.

Legal rationale for the Ninth Circuit’s position

After all, the employer manages its no-grazing policy in an even manner for a very reasonable purpose and Hernandez did take the chips without paying for them. Here’s two reasons why it makes sense.

First, the ADA’s objective to protect a disabled employee’s right to be treated equally with non-disabled employees would be thwarted if the employer could merely craft misconduct rules that target the disabled employee’s disability and then discharge the employee for violating rules specifically aimed at the disability.

Second, the no-grazing policy aimed at stopping employees from intentionally stealing. That was not Hernandez’s goal. She was trying to prevent a serious medical emergency, not rip off her employer. Perhaps Walgreens had a different argument if Hernandez had not tried to pay for the chips or denied they were hers.

The ADA requires employers to provide reasonable accommodations to a disabled employee that allow the employee to perform the essential functions of the job (or enjoy the same access to the workplace and benefits of employment as other employees). Typically, an employee must request an accommodation and engage in an interactive process. Here, there was a unique situation. The employee needed an accommodation but could not make the request at the time she needed the accommodation.

Under Ninth Circuit precedent, the court found that the failure to accommodate was tied into the unlawful termination and the employer could have accommodated Hernandez by not discharging her. After review of EEOC guidance, the court held Walgreens must show it had a business necessity in applying the no-grazing rule in this situation. Whether it was necessary for Walgreens to do so was a question of fact for a jury. The employment lawyers would have to take the case to settlement or trial.

And then the settlement and beyond

After the judge said these issues were to be resolved by a jury, Walgreens settled in the amount of $180,000. That is 129,496 times the price of the chips that Hernandez paid for. That was a bad deal for Walgreens although probably much less than it would have paid after a jury verdict. Plus punitive damages, attorney fees and interest could pile on.

Whether this case will result in nationwide agreement among the courts on the legal premise is not certain. Disability discrimination plaintiffs often do not fare well in federal courts. Seeing federal judges agree on this point under the ADA is a stretch.

However, the factual premise that the employee had to choose between her job and potentially her life would probably persuade a greater number of federal judges that Walgreens should have cut her a break, especially when she immediately tried to pay for the chips and paid for them before she left the store.

I believe most federal judges would have reached a similar conclusion on the “because of” discrimination; but not necessarily the reasonable accommodation claim. These cases are few and far between. It will likely be years before enough cases exist to shape a majority approach.

What employees should take away from this case

Where there is no ambiguity is the lesson for employee-plaintiffs in this case. Employers will go to great lengths to defend their decisions, even bad decisions, in the face of  employment litigation. Here you have a sympathetic plaintiff with almost two decades of service who faced a potentially life or death situation. After the threat passed immediately tried to do the right thing and pay for the chips.

Management rigorously applied a rule in a situation where it was unnecessary. It discharged her over a $1.39 bag of chips she had already paid for. It is rare that so many facts sit on the side of a plaintiff. Walgreens dug their heels in and spent well over that $180,000 settlement over a $1.39 bag of chips. That is a tremendous commitment to prove yourself right. Plaintiffs should not see the dollar signs by overlooking the six years and the hard work of the EEOC attorneys.

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