Some recent court rulings have referred to the “cat’s paw theory” of liability for discrimination. Employers should be aware of these recent decisions because:

  • Employers can be held liable under this theory, even if there is no evidence that the ultimate decision-maker acted in a discriminatory manner;
  • Supervisors who wrongly influence a termination decision can be personally liable in a race case under Section 1981; and
  • This is a terminated employee’s answer to the employer-friendly “honest belief” rule.

The “cat’s paw theory” borrows from an old fable in which a conniving monkey convinces a cat to reach into a fire to get roasting chestnuts. The cat is duped, burns its paw, and the monkey enjoys the chestnuts with no harm.

In the discrimination context, the theory means that an employer – like the duped cat – can be liable:

  • If an ultimate decision-maker was “duped” by a biased manager who reports an employee for misconduct and
  • The reports from the biased manager were not truthful.

In this way, an employer can be liable even though the ultimate decision-maker was not biased and did not act on any unlawful bias, because that decision-maker was “duped” to rely on biased and untruthful reports. Hence, the decision is tainted with bias.

This theory is the terminated employee’s answer to the employer-friendly “honest belief rule.” Under that rule, an employer does not have to be correct in deciding an employee engaged in misconduct. Rather, the employer need only have an “honest belief” that its assessment was correct, after reasonable investigation. Of course, what makes an investigation “reasonable” is decided on a case-by-case analysis, but it is clear that the investigation must be more than superficial but not so thorough as to leave “no stone left unturned.”

Two recent rulings under the “cat’s paw theory” are of note.

In Davis v. Omni-Care, Inc., the Sixth Circuit Court of Appeals explained that the misconduct reported from the biased manager must be untruthful for the cat’s paw theory to apply. That is, if the reported misconduct is accurate (i.e., the employee really did engage in the misconduct), there is no “cat’s paw” liability – even if there is evidence that the “tattling” was motivated by unlawful bias.

  • Note that an employer still acts with some risk if it relies on the report of a subordinate who has been the subject of a complaint of unlawful bias;
  • In that instance, the employer “better be right” – i.e., the misconduct better have happened;
  • Most cat’s paw decisions indicate that the employer can still be liable even if the unbiased decision-maker does not know that the manager reporting the misconduct is biased (or is alleged to have been biased);
  • This reality also leads some terminated employees to claim the following:
    • Yes, I may have done it; and
    • But others have done the same thing and this manager did not report them
    • This analysis is a more traditional “comparable employee” analysis.
  • These risks put a premium on an independent review of termination decisions (rather than relying solely on a manager’s report).
  • The employer should adopt a process or practice of such an independent review of the alleged misconduct and
    • The independent review should include discussion with other witnesses (if any) and with the employee accused; and
    • The independent review should ask the accused employee:
      • if he or she knows of any reason someone would have to make up such a report;
      • if he or she knows of any reason someone would have to want to get him or her in trouble; or
      • if he or she knows of others who have engaged in similar behavior but were not reported.

In Smith v. Bray, the Seventh Circuit Court of Appeals ruled that the biased manager who helped persuade the employer to terminate the former employee can be held personally liable for damages under Section 1981. As most employers know, Title VII of the 1964 Civil Rights Act does not provide for personal liability of individual employees. However, the Reconstruction Era federal law known as Section 1981, which prohibits race discrimination in the formation of contracts, is another avenue some employees use to challenge a termination on race grounds.

This ruling

  • Should likewise encourage policy or practice change identified above; and
  • Should add a meaningful “punch” to management and supervisory training in prohibiting unlawful discrimination and harassment.