Good News for Missouri Employers: New legislation should make climate more business-friendly

A decade of employee-favorable judicial opinions in Missouri has been undone by sweeping amendments to the Missouri Human Rights Act and codification of employee whistleblower claims. On Friday, Gov. Eric Greitens signed into law Senate Bill 43, which takes effect on August 28. The new law includes more protection for employers by raising the causation standard for employment discrimination and whistleblower claims, placing limits on compensatory and punitive damages, and eliminating individual liability for members of management.

MHRA changes

First, the law changes the causation standard from “contributing factor”—which was judicially created—to the more familiar and rigorous “motivating factor” standard. Under the contributing factor standard, trial lawyers were able to argue for liability if an employee’s protected characteristic played any part in the adverse employment action. Now, employees must prove that their protected characteristic was “the motivating factor”—which requires that the characteristic “actually played a role in the adverse action or decision and had a determinative influence on the adverse decision or action.”

Second, the law places limits on the damages that can be awarded. An employee may recover actual back pay, and interest on back pay. In addition, an employee may recover damages for future pecuniary losses, nonpecuniary losses, and punitive damages, but recoveries of this latter category of damages are capped on a per-plaintiff basis as follows:

• For employers with 5 to 100 employees, not to exceed $50,000
• For employers with 101-200 employees, not to exceed $100,000
• For employers with 201-500 employees, not to exceed $200,000
• For employers with 500+ employees, not to exceed $500,000

A prevailing employee may still be awarded court costs and attorneys’ fees.

Third, the law ends personal liability for supervisors and managers accused of discrimination, harassment, or retaliation—meaning that individual managerial employees can no longer be named as defendants in litigation. The law amends the definition of employer to specifically exclude individuals “employed by an employer.” This change is significant for employers based outside of Missouri because employees will no longer be able to add individual Missouri-based managers as defendants to defeat removal to federal court based on diversity of citizenship.

Other significant changes to the MHRA include the following:

• Trial courts will be required to issue a business-judgment jury instruction, which informs jurors that they may not find an employer liable just because they disagree with the employer’s decision or find it to be harsh or unreasonable.
• In indirect evidence cases, trial courts will be required to use the McDonnell Douglas burden-shifting framework in ruling on summary judgment. This framework had been eliminated from MHRA cases by judicial opinion.
• The law makes timely filing of a charge of discrimination (within 180 days of the alleged adverse action) a jurisdictional prerequisite to filing an MHRA lawsuit, and it prohibits the Missouri Commission on Human Rights from issuing right-to-sue notices based on charges that were untimely.

Whistleblower Protection Act

This new law also codifies the public policy wrongful discharge exception to at-will employment.  Now, an employee is a “protected person” only if he or she has reported the employer’s alleged misconduct to a governmental or law enforcement agency, the employee’s supervisor, an officer of the employer, or the employee’s human resources representative. Moreover, an employee is not a “protected person” if he or she is a supervisor, manager, executive, or officer and the misconduct reported concerns matters which it is the employee’s job to report or provide professional opinion (such as in-house counsel, compliance professionals, finance or accounting professionals, etc.). Further, an employee who claims to have made his or her complaint to the alleged wrongdoer is not protected.

Additionally, as with the MHRA changes, the WPA changes the causation standard from “contributing factor” to “motivating factor.” Damages are limited to back pay, reimbursement of medical bills directly related to the wrongful discharge, plus liquidated damages for outrageous conduct by the employer based on evil motive or reckless indifference to the employee’s rights, which must be shown by clear and convincing evidence. Unfortunately, the law allows prevailing employees to recover attorneys’ fees, which were not recoverable under the common-law claim.

Conclusion

It is likely that some of these new provisions will be challenged in court on separation of powers grounds, particularly those provisions potentially invading the authority of the courts on jury instructions or application of persuasive case law. But it is clear that the new law is designed to make employment claims in Missouri more defensible for employers and help to improve Missouri’s overall business climate.

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