HR pro on trial: ‘Cat’s paw’ individual liability under Section 1981

Section 1981, which prohibits race discrimination and retaliation in contractual relationships, is a law that provides for individual liability. The 7th Circuit recently considered for the first time whether an employee can be individually liable under a “cat’s paw” theory of retaliation under Section 1981.  

The cat’s paw theory of liability is named after an ancient fable in which a monkey convinces a cat to pull chestnuts out of a fire and then gobbles them up without leaving any for the cat. It refers to a biased supervisor who discriminates against an employee based on a protected characteristic and influences an unbiased decision-maker to fire the employee under legitimate pretenses.  

In Smith v. Bray (No. 11-1935, 7th Cir., 2012), the 7th Circuit held that an employee could sue an HR manager individually for retaliating against him by influencing the decision to fire him.  

Race, retaliation, litigation

Darrel Smith alleged that his direct supervisor James Bianchetta subjected him to race-based discrimination and harassment. Smith complained to HR. Then Smith was subsequently terminated for being absent without leave.  

Smith claimed that Denise Bray, the HR manager, persuaded her supervisor to terminate him in retaliation for his complaints.  

Smith sued his employer, as well as Bianchetta and Bray. The employer was discharged from the lawsuit due to bankruptcy and Smith settled his claims with Bianchetta.

But Smith proceeded in his lawsuit against Bray in an individual capacity under a Section 1981 retaliation claim. Smith claimed that, although Bray did not make the final decision to fire him, she had retaliated against him for his complaints by influencing her supervisor’s termination decision.  

The district court granted summary judgment for Bray, finding there wasn’t sufficient evidence that Bray had participated in the termination decision and—even if she had contributed to Smith’s termination—there was no evidence that she did so because of his complaints.  

‘Cat’s paw’ in the courts

Smith appealed. The 7th Circuit held that under the cat’s paw theory, an in­­dividual subordinate employee who is acting with a retaliatory motive may be liable under Section 1981, even if he or she did not make the ultimate decision.

The court noted that the Supreme Court had previously held that Section 1981 authorizes retaliation claims and had recently endorsed the cat’s paw theory of liability in Staub v. Proctor Hosp. (131 S. Ct. 1186, 2011).  

In addition, several circuits have applied the cat’s paw theory to impose vicarious liability on employers under Sections 1981 and the related Section 1983. Five circuits have held that the cat’s paw theory supports imposing individual liability under Section 1983 when em­­ployees with unlawful motives cause decision-makers to retaliate.  

Section 1981 is appropriate

Because the same standards govern intentional discrimination claims under Title VII, Section 1981 and Section 1983, the court reasoned that recognizing individual cat’s paw liability under Section 1981 was consistent with the parallel approaches to these statutes.  

The court also decided that, as a matter of basic fairness, an em­­ployee who intentionally causes a decision-maker to take adverse action against another employee in retaliation for protected activity should be liable.

Thus, the 7th Circuit held that Bray could be held individually liable under Section 1981 for retaliating against Smith by participating in the termination decision.

However, the court ultimately found that Smith failed to establish that Bray had acted with a retaliatory motive and, therefore, dismissed the Section 1981 retaliation claim against her.

What employers can learn

Smith v. Bray expands liability under Section 1981 to managers, HR staff or any other employees who are involved in the decision-making proc­ess, even if they are not the ultimate decision-makers.

The decision shows the importance of providing adequate training to managers and HR professionals—especially those involved with complaint investigations and termination decisions—to ensure they conduct thorough and impartial investigations and base their employment decisions on relevant, unbiased evidence.  

Taking such precautions will allow the employer and decision-makers to show the adverse employment action was based on legitimate reasons, free from unlawful discrimination or retaliation.

How to reduce ‘cat’s paw’ liability

Here’s what you can do to reduce the risk that you’ll be burned by “cat’s paw” liability:

  • Review employee/supervisor relationships. Be alert for any history of potential adversarial dealings be­­tween employees and their bosses.
  • Avoid relying on recommendations from anyone who may harbor potentially improper motives.
  • Have somebody who is neutral in­­dependently evaluate any reports or recommendations that will be the basis for employment decisions.
  • Include a review process to en­­sure that neutral decision-makers aren’t simply rubber-stamping im­­proper recommendations.
  • Completely document neutral decision-makers’ independent reviews and the factors they weighed when making their decisions.