Massachusetts: No, a request for a severance package is not a resignation. Yes, non-supervisory sexual harassment claim can be defeated by adequate investigation.

By Trevor R. Brice - Skoler, Abbott & Presser, P.C.

March 24, 2022

Employers in Massachusetts sometimes breathe a sigh of relief when an employee resigns, particularly if those employees had performance problems, made complaints of discrimination or engaged in other types of protected activity.  But what counts as a resignation in Massachusetts? Under what circumstances might a resignation not actually be a resignation at all?  Additionally, what constitutes an adequate investigation when an employee does make a protected complaint of discrimination, harassment or some other violation of law? A recent decision by the First Circuit Court of Appeals provides some important new guidance on these questions, but also leaves some questions unanswered.

In Forsythe v. Wayfair, the Plaintiff, Emily Forsythe, worked as a senior manager for Wayfair. Around the end of her employment, she complained of sexual harassment by a male co-worker. Specifically, Forsythe sent an email to her supervisor which included, among other things, allegations that the co-worker touched her inappropriately by placing his hand on her leg, and asking her about dating applications and her dinner plans. The supervisor initiated an investigation into Forsythe’s complaints through Wayfair’s human resources division, which promptly interviewed all witnesses identified by Forsythe. When the investigation concluded, Wayfair found Forsythe’s complaints to be unsubstantiated. Then, Forsythe sent an email to Wayfair’s investigator stating that her direct supervisor was engaging in gender discrimination and retaliation due to her complaints of sexual harassment. Later, during a recorded phone call with the investigator, she said that she would be interested in a “compelling severance package” and proposed that “you guys start, and then I’ll have my lawyer work with you at that point.” Wayfair’s investigator discussed Forsythe’s request with Wayfair’s Director of Talent Management and in-house counsel, and then sent Forsythe an email stating that Wayfair had accepted her resignation and was offering her a severance agreement.

The employee later sued, claiming sexual harassment, gender discrimination and retaliation.  Ultimately, Wayfair filed a motion asking a federal judge to enter judgment in its favor.  The judge ruled in favor of Wayfair and dismissed the case in its entirety.  In a mixed decision, however, the First Circuit disagreed, and reinstated Forsythe’s claims for gender discrimination and retaliation.

Sexual Harassment Claims against a Co-worker in Massachusetts Can be Defeated by Adequate Investigation

Employers in Massachusetts can only be held liable for sexual harassment against an employee by a non-supervisor if the employer failed to adequately investigate the employee’s complaints. In Forsythe, the Court of Appeals agreed with the trial judge’s conclusion that Forsythe’s claims of sexual harassment against Wayfair failed because Wayfair adequately investigated them, including by interviewing Forsythe, her alleged harasser and all of the other witnesses she identified.  The Court of Appeals determined that Wayfair’s investigation could not be deemed deficient for failing to question an outside witness when Forsythe never disclosed this witness to Wayfair at the time of the investigation. Notably, however, the Court also implied that if a witness such as this is revealed during an investigation, that witness must be questioned for the investigation to be considered adequate.

A Request for a Severance Package is Not a Resignation

Turning to the employee’s other claims, the Court of Appeals disagreed with the District Court’s grant of summary judgment to Wayfair on both Forsythe’s retaliation and gender discrimination claims.  

The District Court found in Wayfair’s favor on those claims because it considered Forsythe’s request for a severance package as an offer to resign, which Wayfair merely accepted, and a voluntary separation is not an adverse employment action taken by the employer.  Accordingly, the judge concluded that no reasonable jury could find that Forsythe had been unlawfully terminated based on her sexual harassment complaint or her gender.

The Court of Appeals, however, disagreed with Wayfair’s contention that Forsythe’s request for a “compelling severance package” was an offer to resign. Instead, the Court of Appeals concluded that Forsythe’s request was merely an inquiry into a severance package from Wayfair to be reviewed by her and her lawyer, not an offer of resignation in and of itself. As a result, the Court concluded that Wayfair’s purported acceptance of Forsythe’s resignation when she never actually offered to resign was an involuntary termination of her employment.

This determination, in turn, led the Court of Appeals to overturn the District Court’s grant of summary judgment for Wayfair on Forsythe’s gender discrimination and retaliation claims, as the Court determined that a reasonable jury could conclude not only that Forsythe had been involuntarily terminated but also that Wayfair had not given a non-discriminatory reason for her firing, besides saying that it reasonably believed Forsythe had resigned.

Takeaways

In one respect, the Forsythe ruling gives Massachusetts employers cause for relief.  The First Circuit reaffirmed that employers can avoid liability for sexual harassment committed by a non-supervisor by conducting a prompt investigation, interviewing all persons the alleged victim identifies as potential witnesses, and taking action to eliminate any offensive conduct.   They are not required to actively seek out other witnesses that the employee does not identify.

However, the Forsythe ruling also creates uncertainty around whether an employee has actually resigned or only solicited an offer to resign. Specifically, the decision makes clear that an inquiry about severance is not in and of itself a resignation and suggests that, in the absence of an unambiguous expression of intent on the employee’s part to resign, whether an employee resigned or not can be called into question.  This creates a potential problem for employers when an employee who asks about severance has also engaged in some sort of protected activity, such as raising concerns of discrimination, harassment or retaliation. Indeed, had Wayfair made an offer of severance and waited for that offer to be accepted, or otherwise confirmed Forsythe’s intention to resign, it may have avoided liability. However, the fact that she engaged in protected activity shortly before she requested severance, and Wayfair then treated her inquiry as a notice of resignation, kept Forsythe’s case alive.  As such, Massachusetts employers should not be too hasty when an employee requests severance, and should instead take the time to assess the employee’s intentions before treating such an inquiry as a resignation, especially if the employee has engaged in protected activity.