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LEGAL ISSUES

Tennessee Ruling Makes Discrimination Cases Harder for Businesses

A state supreme court breaks from the established federal framework and puts a greater burden on employers to prove a discrimination claim is false.

In a surprise split decision, the Tennessee Supreme Court potentially has made life more expensive for companies sued by current or former employees for discrimination.

The 3-2 decision in Gossett v. Tractor Supply Inc. is a sharp departure from a decades-long precedent that puts the burden on employees to prove their firing was discrimination or retaliation (as opposed to legitimate reasons) before a case can go to trial. The Gossett decision forces employers to do the heavy lifting and prove a worker's allegation is false.

"The initial reaction from some folks in our community is this is egregious,'' Jim Brown, Tennessee director for the National Federation of Independent Business, told the Insurance Journal. "Big businesses will likely settle, but many small businesses will likely go out of business. The consequences of this will be significant."

In the case, inventory control manager Gary Gossett claimed he was fired in 2003 for refusing to manipulate Tractor Supply's inventory mix to improve its quarterly earnings statement, which he says he believed would be illegal under the Securities Exchange Act. Tractor Supply says he was fired because it was trying to reduce its workforce, and asked the courts to dismiss the suit because he couldn't prove his firing was an act of retaliation.

A trial court dismissed Gossett's case but an appeals court overturned that decision. The Tennessee Supreme Court upheld the appeals court decision, meaning Gossett's case will now be heard.

Gossett's lawyer Wade Cowan applauded the decision, saying many lawsuits have been kept from reaching trial because there's rarely much evidence that someone has been fired for discriminatory reasons or in retaliation.

"Rarely do you have somebody who says I'm firing you because you're black or because you're over 40," Cowan told The Tennessean.

More than 40 percent of cases with employees claiming firing for discrimination or retaliation are dismissed before the trial stage, according to the American Bar Association. Until the Gossett decision, Tennessee courts followed the federal framework – in place since the 1970s, and which puts the burden of proof on employees -- for deciding whether to send employment cases to trial. The majority opinion in the Gossett case said that the federal framework favors the employer, allowing the business to show a legitimate reason for a firing without actually having to refute workers' allegations.

Larry Eastwood, a lawyer at Nashville's Baker, Donelson, Bearman, Caldwell & Berkowitz, said the court's decision will probably double the cost of employment lawsuits for businesses.

"Tennessee employers are going to have to think long and hard about doing anything to an employee who has made a complaint," Eastwood told The Tennessean. "It's quite a weapon that an employee can use to deter an employer from making a decision they don't want."

Doug Janney, president of the Tennessee Employment Lawyers Association, which advocates for employees' rights, said the decision isn't an outright win for employees. "It means they get to present their case to a jury and judge and not have their case dismissed. … It's the way the law ought to be," he said.

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Last updated: Sep 29, 2010

COURTNEY RUBIN

Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.




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