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If an employer violates discrimination statutes when discharging an employee, can the employee be barred from relief if after the discharge the employer discovers evidence of wrongdoing that would have led to termination on lawful, legitimate grounds?

This question recently was addressed by the United States Supreme Court. In the case McKennon v. Nashville Banner, the Supreme Court concluded that evidence or information that the employer finds after the alleged discriminatory decision has been made:

• cannot serve as a complete bar to discrimination lawsuits,
  
• can be used to limit the remedy for the discriminatory acts, and
  
• can bar reinstatement and front pay awards.

The Case: Terminated Employee
The case arose when the employer, Nashville Banner Publishing Company, terminated a 62 year old employee, Christina McKennon, who had worked for the company for 30 years. The Company claimed that the discharge was part of a reduction in force necessitated by cost considerations. Ms. McKennon thought otherwise and claimed it was because of her age.

After Ms. McKennon filed a lawsuit alleging age discrimination, the Company, during the course of conducting discovery in the lawsuit, learned for the first time that Ms. McKennon had copied and taken home several confidential documents describing the Company's financial condition. Ms. McKennon testified that she did so because she believed that the she would be fired because of her age and wanted copies of the documents as "insurance" and "protection." Shortly after learning that Ms. McKennon had taken copies of these documents, the Company sent her a letter in which it terminated her again and wrote that if it had known of her misconduct, it would have discharged her at once.

The Company conceded that it had terminated Ms. McKennon because of her age but argued that her misconduct constituted supervening grounds for termination and served as a complete bar to any relief for its discriminatory conduct. The Supreme Court disagreed.

Congressional Intent-Discrimination Statutes
The Supreme Court reached this conclusion by examining Congress' intent in enacting discrimination statutes, i.e., to eliminate discrimination in the workplace through:

1. use of deterrence; and
   
2. compensation for injuries.

If after-acquired evidence served to bar all relief for violations of these discrimination statutes, the Court reasoned, this scheme would be frustrated.

Employee Liable for Wrongdoing
But, just as the employer cannot escape liability for wrongdoing, neither can the employee. Although the after-acquired evidence may not bar a discrimination claim, it can serve to limit the appropriate remedy. The Supreme Court held that, as a general rule, acquiring evidence of wrongdoing after the fact can bar reinstatement and front pay.

Conceding that back pay is a more difficult problem, the Supreme Court acknowledged that an employer cannot be expected to ignore information about wrongdoing, even when acquired during the course of a lawsuit. Thus, the beginning point for a court in formulating a remedy should be the calculation of backpay from the date of the discriminatory discharge to the date the new information was discovered.

Wrongdoing Must be Severe
If an employer wishes to use after-acquired evidence, it must establish that the employee's wrong doing was severe enough to warrant termination and that the employer would have terminated the employee if it had known of wrongdoing.

Employer Tip: Use Timely and Thorough Discovery in Employment Cases
In this case, the wrongful conduct (which limits an employer's liability), was uncovered in the course of discovery through the plaintiff's deposition and a document request. If the employer, or its attorney, had not conducted the appropriate discovery, the damages would have grown unchecked.