Equal Employment Opportunity Commission v. Preferred Management Corp.
88 Fair Empl. Prac. Cas. (BNA) 1363, 216 F. Supp. 2d 763, 2002 U.S. Dist. LEXIS 3495 (2002)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An employer who pervasively integrates the owner's specific religious beliefs and practices into all aspects of the workplace, including management selection, performance evaluation, and daily operations, may create an unlawfully hostile work environment and engage in disparate treatment discrimination based on religion in violation of Title VII.
Facts:
- Jackie Steuerwald, co-owner and CEO of Preferred, a for-profit home health care company, believes God directed her to establish the company and that it is 'God’s home health care agency.' She openly shares these beliefs and states that her faith 'permeates [her] thinking, [her] decisions.'
- Preferred's mission statement includes 'to be a Christian dedicated provider of quality health care,' and its corporate organizational chart, 'the wheel,' has 'Jesus' at its center. All job applicants receive these materials, are informed Preferred is a Christian organization, and Steuerwald stated that candidates who believe religion has no place in the workplace do not belong.
- Steuerwald anoints new and existing branch offices with olive oil during working hours, believing she can rid them of demons, and has also anointed individual employees for healing.
- Preferred requires employees to sign an annual statement agreeing to 'respect and actively support Preferred’s Mission and Values,' which include religious tenets. Managers are instructed to use these values in disciplining and evaluating employees, and employees were terminated for violating them.
- Preferred offers weekly 'devotions' led by staff chaplains, and management meetings routinely begin with prayer. Managers, including Human Resources Director Michael Pyatt, area administrators, and branch managers, were hired or promoted based partly on their alignment with Steuerwald's religious views and actively promoted religious practices.
- Employees like Sondra Sievers (Catholic), Ellen Blice (Catholic), Suzanne Elder (Catholic), Sherry Stute (Catholic convert), Diana DeWester (Catholic), and Mary Mulder (Christian but not 'born again' in Steuerwald's specific sense) were subjected to various unwelcome religious activities, including unwanted prayers, religious literature, and ridicule of their non-conforming faiths.
- Theresa Raloff, a Unitarian applicant, had her interview terminated by Steuerwald, who called Unitarians 'damned humanists' and told Raloff she would 'burn in hell forever' and was 'inappropriate for the company.'
- Sondra Sievers was demoted and discharged after expressing discomfort with Preferred's religious practices and undergoing a religiously-oriented 'Leader in the Making' program where she was asked to confess her sins. Sherry Stute was not promoted to branch manager, despite being told she would, and was subjected to an 'improvement plan' that included daily Bible readings and prayer after revealing her Catholicism. Ellen Blice was discharged shortly after declining to participate in devotions and questioning disciplinary action, while a similarly situated employee was not disciplined. Suzanne Elder, Diana DeWester, and Mary Mulder resigned, citing an inability to tolerate the pervasive religious environment.
Procedural Posture:
- The Equal Employment Opportunity Commission (EEOC) filed a lawsuit in federal district court against Preferred, alleging religious harassment and disparate treatment in violation of Title VII on both a 'pattern or practice' basis and on behalf of several individual employees.
- The EEOC's complaint was based on charges of discrimination timely filed by Sondra Sievers, Diana DeWester, Ellen Blice, and Mary Mulder, and expanded to include claims for Teresa Raloff, Suzanne Elder, and Sherry Stute discovered during the investigation.
- Preferred filed a motion for summary judgment on all claims, asserting that no genuine issues of material fact existed and that it was entitled to judgment as a matter of law.
- Preferred also filed 'Establishment Objections,' which the court construed as a motion to strike certain factual assertions and evidence from the EEOC's opposition to summary judgment, arguing unlawful government intrusion into religious beliefs.
- The EEOC filed a motion for partial summary judgment to dismiss several of Preferred's affirmative defenses, including arguments regarding compliance with conditions precedent, statute of limitations, and First Amendment prohibitions.
- Preferred argued that the EEOC's claims, particularly Teresa Raloff's failure-to-hire claim and the 'pattern or practice' claim, were time-barred because they did not rest on a timely charge of discrimination.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an employer's extensive integration of the owner's personal religious beliefs and practices into a for-profit company's operations, management, and employment decisions, including ridicule of non-conforming faiths and required religious participation, create a hostile work environment and constitute religious discrimination under Title VII, thereby precluding summary judgment for the employer?
Opinions:
Majority - BARKER, District Judge
No, an employer's extensive integration of the owner's personal religious beliefs and practices into a for-profit company's operations and employment decisions does not preclude summary judgment for the employer, but rather creates genuine issues of material fact regarding hostile work environment and disparate treatment, compelling a denial of summary judgment on most claims. The court found that the EEOC presented sufficient evidence to allow a jury to reasonably infer that Preferred created and condoned a work environment where the owner's religious beliefs and practices were pervasive, intimidating, abusive, and unwelcome for employees with non-conforming views. CEO Jackie Steuerwald's open declaration that her faith 'permeates [her] thinking, [her] decisions' directly supported an inference of discriminatory intent in employment actions. The court rejected Preferred’s 'Establishment Objections,' holding that the EEOC’s investigation and lawsuit did not violate the First Amendment or the Religious Freedom Restoration Act (RFRA). Title VII's purpose to eradicate employment discrimination is a 'compelling government interest,' and the EEOC’s systematic approach constitutes the 'least restrictive means.' This case concerns a private, for-profit company, not a religious institution exempted by Title VII. The court also denied Preferred’s timeliness arguments, concluding that the EEOC's pattern or practice claims were viable, and even individual claims without a direct charge could 'piggy-back' on other timely-filed charges that were 'like or reasonably related,' especially since Preferred had sufficient notice. Regarding employer liability, the court found sufficient evidence to establish vicarious liability for harassment, as the alleged conduct was committed by supervisors and management, and Preferred failed to establish the Ellerth/Faragher affirmative defense by lacking a reasonable policy or mechanism to prevent or correct religious harassment. Furthermore, complaints were met with more religiously-oriented remedies, demonstrating futility. For individual disparate treatment claims, the court found a 'convincing mosaic of discrimination' based on Steuerwald's admission, the company's use of religious values for evaluations and discipline, and specific adverse actions. The evidence suggested Preferred’s non-religious explanations were pretextual. The court, however, granted summary judgment solely on Ellen Blice’s discriminatory discipline claim, ruling that verbal warnings, by themselves, are not materially adverse employment actions under Seventh Circuit precedent. All other claims for demotion, discharge, constructive discharge, failure to hire, and failure to promote were deemed to have sufficient evidence to proceed to trial.
Analysis:
This case significantly reinforces the breadth of Title VII's protection against religious discrimination, extending beyond overt religious persecution to include a pervasively religious work environment, even in a private, for-profit entity where the owner's faith is deeply ingrained. It illustrates how an employer’s sincere religious beliefs, when imposed or enforced through employment actions, can create a hostile environment and lead to disparate treatment claims. The court's reliance on the CEO's own statements about faith permeating her decisions serves as powerful direct evidence, reducing the burden of proof for plaintiffs and highlighting the challenges employers face when personal religious convictions blend with corporate governance. Furthermore, the ruling emphasizes the importance of effective anti-harassment policies that explicitly address religious discrimination, as the absence of such policies prevented the employer from asserting an affirmative defense.
