Relief for Missouri Employers with New Discrimination Legislation

May 10, 2017

After 10 years as an outlier, Missouri is now poised to rejoin the mainstream of employment discrimination law. On May 8, 2017, the Missouri General Assembly gave final approval to Senate Bill 43 (SB 43), which brings the Missouri Human Rights Act (MHRA) in line with federal discrimination law in a number of employer-friendly ways. As explained below, these changes are comprehensive and include raising employees’ standard of proof, capping damages, and consolidating common law whistleblowing claims. Governor Eric Greitens is expected to sign SB 43 in the coming weeks, and its provisions will take effect on August 28, 2017.

Raising the Bar from Contributing Factor to Motivating Factor

In 2007, the Missouri Supreme Court held that an employee could survive an employer’s attempt to dismiss an MHRA claim before trial – known as summary judgment – if the facts showed that discrimination on some protected basis (sex, race, age, etc.) merely contributed to an adverse employment action. This is an easier standard for an employee to meet than under federal law, where he or she must show that the prohibited consideration motivated the adverse employment action. As a result, employers lost an important defense tool, and even factually weak cases were guaranteed to make it to trial. To make matters even more difficult, the Missouri Supreme Court also established a jury instruction confirming the lower, “contributing factor” standard. With these two changes, employers lost the ability to get claims dismissed before trial, and faced longer odds to win at trial.

SB 43 changes everything. It raises the burden of proof from contributing factor to motivating factor, like under federal law and the laws of many other states. And SB 43 explicitly encourages courts to apply the same burden-shifting analysis used under federal employment discrimination laws. This means that to prevail on summary judgment, an employer now only has to articulate a non-discriminatory reason for the adverse employment action (i.e. termination or demotion) before the burden then shifts back to the employee to provide admissible evidence that the employer’s decision was “motivated” by discrimination. Likewise at trial, employees will now need to convince a jury that discrimination was the motivating factor behind their termination or other adverse action.

Imposing Damage Caps

Before SB 43, the MHRA contained no damage caps, leading to runaway jury verdicts of seven or eight figures, even where an employee could only prove modest “actual” damages like lost wages and emotional distress. SB 43 sets graduated caps on damages based on an employer’s size. For covered employers with up to 100 employees, the sum of actual damages and punitive damages cannot exceed back pay and interest plus $50,000. This cap increases gradually, with employers of 501 or more facing a maximum of back pay and interest plus $500,000.

Practically speaking, these caps on total damages may be the most consequential change in SB 43, since they may give plaintiffs’ attorneys less financial incentive to bring employment discrimination claims, and without the prospect of unlimited punitive damages, plaintiffs are more likely to settle for reasonable sums.

Note, however, these changes do not mean that employment discrimination claims will now be painless. After all, the MHRA still allows a prevailing plaintiff to recover attorneys’ fees, which can easily reach six figures in a case that goes to trial.

Protecting Individual Supervisors

Prior to the enactment of SB 43, the definition of “employer” included supervisors in their individual capacities.  Plaintiffs would often add supervisors as defendants simply to ensure that an employer headquartered elsewhere could not remove the case to federal court. SB 43 narrows this definition to exclude individuals. Thus, supervisors will no longer be sued under the MHRA, and more cases will head to federal court (a forum generally preferred by employers) based on diversity jurisdiction.

Reinstating the Business Judgment Rule

SB 43 reinstates an employer-friendly jury instruction common in other jurisdictions, telling jurors: “You may not return a verdict for plaintiff just because you might disagree with the defendant’s action or believe it to be harsh or unreasonable.” This provision helps to shield employers' legitimate, nondiscriminatory business decisions from second-guessing by a jury.

Codifying Common Law Whistleblowing Claims

Currently, Missouri plaintiffs can bring a claim for wrongful discharge that is not subject to any statutory limitations. SB 43 creates the Whistleblower’s Protection Act (WPA), which corrals these common law claims into a statutory one, where employees can recover if they are discharged (1) for reporting an unlawful act of their employer to proper authorities or reporting serious misconduct of their employer that violates a clear mandate of public policy or (2) for refusing to carry out a directive of their employer that would violate the law. Like the amended MHRA, the WPA employs the stricter “motivating factor” standard. Damages under the WPA are limited, such that recovery in even the most egregious cases is limited to double the sum of an employee’s back pay and medical bills incurred due to mental anguish.

In sum, SB 43 marks a long-sought victory for Missouri employers. It ushers in a new era in which employers will have greater success getting unmeritorious cases dismissed before trial, greater likelihood of a defense verdict at trial, and greater chances of obtaining a reasonable settlement.

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