The Tennessee Human Rights Act prohibits covered employers from discriminating against employees forty years old or older because of their age. In a recent case, the Tennessee Court of Appeals provided a reminder that other factors which often correlate with age, such as salary or years of service, are factors distinct from age and may not stand as proxies for age in an age discrimination suit. The court held that the plaintiff's evidence that the employer was motivated to terminate its employees with the highest salaries and/or most seniority was insufficient to show that his age was a determining factor in his termination.
Terry Wallace served four terms as Marshall County Executive, an elected position. But after losing his election in 2006, Wallace 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 did not have "any computer skills" but was going to take courses at a community college. At the recommendation of the City Council, Eddie Fuller, the city manager, hired Wallace and mentioned that the city codes inspector, Greg Lowe, could provide some assistance with computer skills.
During his three years of employment, Wallace brought in three businesses to the city's industrial park and worked to retain other employers. However, amidst the Great Recession, the city struggled with budget difficulties and high unemployment numbers. In July 2009, Mr. Fuller called both Wallace and Lowe to his office and asked them to sign a letter stating that there was a perception Lowe was doing Wallace's job and instructing them to each do their own job duties. Lowe later testified that after this 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 change-over and favor for Wallace waned. In fact, the new mayor acknowledged to Wallace that one of the members commented that he could be "replaced by someone right out of college for $30,000." In July 2010, Mr. Fuller informed Wallace that three of the five Council members wanted Wallace to resign. Wallace refused, and Fuller terminated him. The position was filled a couple of months later by Greg Lowe, who was 41 at the time. Mr. Fuller filled out Wallace's separation notice to say the termination was "without cause," and later testified that he did so to enable Wallace to receive unemployment benefits, which indeed Wallace did receive.
Wallace filed suit against the City of Lewisburg alleging age discrimination under the Tennessee Human Rights Act ("THRA"). The trial court heard testimony from many witnesses, including Wallace, Fuller, Lowe, the mayor, former Council members, and others. The trial was a bench trial, meaning the judge ruled on the issues of fact, not a jury. The trial court concluded that Wallace had not shown that age was a determining factor in his termination and dismissed his case. Interestingly, the trial court did not believe that Wallace was terminated either "without cause" or due to poor performance or lack of technological skill, as claimed by witnesses for the City. Rather the trial court held that the evidence showed Wallace was terminated due to "subjective disapproval by three of the Council members and a need to find a scapegoat for economic sluggishness not related in any way to Wallace's job performance." Wallace appealed the decision to the Court of Appeals of Tennessee.
Court of Appeals' Decision
Wallace challenged the trial court's decision for a number of reasons, including both evidentiary rulings and more generally whether or not the trial court wrongly determined that age was not the cause of his termination. The Court of Appeals sided with the trial court and upheld each of its rulings.
First, Wallace asserted that the trial court should have excluded any evidence of poor performance, arguing that the statement that his termination was "without cause" on the separation notice should have been conclusive proof of the employer's reasons for termination. The court not only found that such a ruling would have inhibited the employer from presenting its defenses, it disagreed that a statement filled out by one individual constituted the official, conclusive action of the City.
Wallace also argued that Mr. Fuller's testimony regarding the reasons for termination provided multiple, contradictory reasons for his termination which should have "cancelled each other out." However, again, the Court disagreed that the various reasons for termination, including the "without cause" separation notice and statements regarding Wallace's lack of computer skills, job performance, and reliance on Lowe to do parts of his job were not inconsistent with each other and were each supported by other witnesses' testimony.
Finally, reviewing all the evidence, the Court of Appeals affirmed the trial court's ruling that Wallace failed to show that age was a determining factor in the City's decision. Wallace argued that because the court rejected the employer's given reasons for termination, they were proof of age discrimination. The Court of Appeals disagreed. Undermining a given reason for termination by showing it has no basis in fact or was not the true motivation does show that the reason was pretextual. However, finding that the proffered reason was a pretext permits, but does not require, a finding of intentional discrimination. What ultimately matters is not whether or not 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 had not proved it was because of his age.
The Court also rejected Wallace's contention that evidence which showed the City was motivated due to 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 that factors like seniority, which may correlate with age, remain distinct from age, the Court affirmed that Wallace's evidence regarding his salary was not proof of age discrimination. Wallace v. City of Lewisburg, No. M2019-01690-COA-R3-CV, 2020 WL 6390139 (Tenn. Ct. App. Oct. 30, 2020).
This case offers both good news and gentle reminders to employers when it comes to age discrimination claims. First, this case provides reassurance to employers that courts will require former employees claiming age discrimination to put forth proof that their termination was actually based on their age. While employers may not terminate employees based on age — an employee's salary, technological knowledge or skill, or seniority are separate concepts which may, technically, be taken into account when making employment decisions.
At the same time, there are lessons to glean from this case. Even though Wallace could not prove discrimination, the trial court noted that the termination was handled "unprofessionally," a fact which made the employer's position more difficult and costlier to defend. It is important that although salary and seniority are separate from age, if they are used by the employer as a proxy for age, they can be grounds for a discrimination claim. Even where they are not intentionally substituted for age, it is still important to take care to keep these data points separate. Where 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. It also must be noted that this case was a bench trial, meaning at all points, a judge evaluated the evidence and decided the outcome. Had a jury been involved, they may not have seen such an easy distinction between replacing Wallace with someone cheaper and replacing him with someone younger.
Finally, at the end of the day, employers must take care to be consistent about the reasons for any termination. Where an employer cannot easily state the reason for termination, or provides various reasons in different documents, the reasons become less credible. While the court did not find the reason for Wallace's termination to be age, it did find that the employer's reason was not the true reason and provided its own, alternative explanation. Employers should not leave it up to judges or juries to provide explanations for the termination, because you may not like what they come up with.
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