Recent Case Sheds Light on Resignations, Harassment Investigations

Employers sometimes breathe a sigh of relief when an employee resigns, particularly if the individual had performance problems, made discrimination complaints, or engaged in other types of protected activity. But what counts as a resignation in the state? Under what circumstances might a resignation not actually be a resignation at all? Additionally, what constitutes an adequate investigation when an employee does make a protected complaint of discrimination, harassment, or some other violation of the law? A recent decision by the U.S. 1st Circuit Court of Appeals (the federal appeals court with jurisdiction in Massachusetts, Maine, New Hampshire, and Rhode Island) provides some important new guidance on the questions but also leaves some matters unanswered.

Facts

Emily Forsythe worked as a senior manager for Wayfair. Around the end of her employment, she complained about sexual harassment by a male coworker. Specifically, she sent an e-mail to her supervisor alleging, among other things, that the coworker touched her inappropriately by placing his hand on her leg and asked her about dating applications and her dinner plans.

The supervisor initiated an investigation into Forsythe’s complaints through Wayfair’s HR division, which promptly interviewed all witnesses identified by the alleged victim. When the investigation concluded, the employer found the complaints to be unsubstantiated. Then, Forsythe sent an e-mail to the company’s investigator stating her direct supervisor was engaging in gender discrimination and retaliation because of her sexual harassment complaints.

Later, during a recorded phone call with the investigator, Forsythe said she would be interested in a “compelling severance package” and proposed that “you guys start, and then I’ll have my lawyer work with you at that point.” Wayfair’s investigator discussed the request with the company’s talent management director and in-house counsel and then sent Forsythe an e-mail stating the company had accepted her resignation and was offering her a severance agreement.

Forsythe later sued claiming sexual harassment, gender discrimination, and retaliation. Ultimately, Wayfair filed a request asking a federal judge to dismiss the case. The judge ruled in the company’s favor and dismissed the case in its entirety.

Forsythe then appealed to the 1st Circuit. In a mixed decision, the appellate court reinstated her gender discrimination and retaliation claims but upheld the dismissal of the sexual harassment claim.

Sexual Harassment Claims

Employers in Massachusetts can be held liable for sexual harassment against an employee by a nonsupervisor only if the company failed to investigate the complaints adequately. Here, the 1st Circuit agreed with the trial judge’s conclusion that Forsythe’s sexual harassment claims against Wayfair failed because the employer adequately investigated them, including by interviewing the employer, her alleged harasser, and all of the other witnesses she identified.

The 1st Circuit determined Wayfair’s investigation couldn’t be deemed deficient for failing to question an outside witness when Forsythe never disclosed the witness to the employer at the time of the probe. Notably, however, the court also implied that if a relevant witness is revealed during an investigation, the person must be questioned for the investigation to be considered adequate. Accordingly, the court upheld the dismissal of the sexual harassment claim finding the company conducted an adequate investigation.

Request for Severance Package

Turning to Forsythe’s other charges, the 1st Circuit disagreed with the trial court’s dismissal of her retaliation and gender discrimination claims. The lower court had ruled in the company’s favor on the claims because it considered the employee’s request for a severance package as an offer to resign, which the employer merely accepted, and a voluntary separation isn’t an adverse employment action taken by the employer. Accordingly, the judge concluded no reasonable jury could find she had been unlawfully terminated based on her sexual harassment complaint or her gender.

The 1st Circuit disagreed with Wayfair’s contention that Forsythe’s request for a “compelling severance package” was an offer to resign. Instead, the court of appeals concluded the request was merely an inquiry into a severance package from the employer to be reviewed by her and her lawyer, not a resignation offer in and of itself. As a result, the court found the company’s purported acceptance of Forsythe’s resignation when she never actually offered to quit was an involuntary termination of her employment.

So, the 1st Circuit reinstated Forsythe’s gender discrimination and retaliation claims, determining a reasonable jury could conclude that not only had Forsythe been involuntarily terminated but also Wayfair hadn’t given a nondiscriminatory reason for her discharge besides saying it reasonably believed she had resigned. Forsythe v. Wayfair (1st Cir., 2022).

Takeaways

In one respect, the Forsythe ruling gives Massachusetts employers cause for relief. The 1st Circuit reaffirmed you can avoid liability for sexual harassment committed by a nonsupervisor by:

• Conducting a prompt investigation;
• Interviewing all persons the alleged victim identifies as potential witnesses; and
• Taking action to eliminate any offensive conduct.

The ruling also creates uncertainty, however, about whether an employee has actually resigned or only solicited an offer to resign. Specifically, the decision makes clear that an inquiry about severance isn’t in and of itself a resignation and suggests that, in the absence of an unambiguous expression of intent on the employee’s part to resign, whether the worker actually resigned can be called into question. The situation creates a potential problem for employers when an employee who asks about severance also has engaged in some sort of protected activity, such as raising concerns about discrimination, harassment, or retaliation.

Indeed, had Wayfair made a severance offer and waited for it to be accepted, or otherwise confirmed Forsythe’s intention to resign, it may have avoided liability. But the fact she engaged in protected activity by complaining about harassment and discrimination shortly before she requested severance, and the employer then treated her inquiry as a resignation notice, kept her case alive.

As a result, you shouldn’t be too hasty when an employee requests severance. Instead, take the time to assess the individual’s intentions before treating the inquiry as a resignation, especially if she has engaged in protected activity.

Trevor R. Brice is an associate at the firm of Skoler, Abbott & Presser, P.C., in Springfield, Massachusetts. You can reach him at tbrice@skoler-abbott.com.

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