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Second Circuit: Employer's Discretionary Bonuses cannot be based on Racial or Religious Bias

Plaintiff sued the NYC Department of Education (DOE), alleging that the DOE discriminated against her on the basis of her disability. Defendant was granted summary judgment on the grounds that Plaintiff failed to show that she suffered an adverse employment action/discriminatory motive and Plaintiff appealed.

After being in a car accident, Plaintiff went on medical leave. She was absent longer than any other employee during the 2008-2009 academic year. Plaintiff was a union employee and the terms and conditions of Plaintiff's employment were governed by the Collective Bargaining agreement. Relevant here is the School-wide Performance Bonus Program of which Plaintiff felt deprived:

whereby the school as a whole would receive a lump sum bonus award if students met certain achievement goals for the school year. The school’s total bonus pool was calculated by multiplying by $3,000 the number of full-time UFT- represented staff members employed by the school. Pursuant to the CBA, J.H.S. 302 was mandated to establish a compensation committee, comprised of the school’s principal and other staff members, responsible for determining the methodology for distributing any award the school earned from the bonus program. The CBA implied that all eligible staff should share in the bonus, but gave the committee discretion whether to make equal individual awards, vary the awards by title, or make differential awards

Pp. 3 (external quotation marks omitted).

"Davis filed a charge of disability discrimination with DOE’s Office of Equal Opportunity…alleging that $2,000 of the $3,000 bonus to which she believed she was entitled went to" the substitute teacher that replaced Plaintiff during her absence. Pp. 5. Plaintiff filed a charge of discrimination with the Equal Employment Opportunity, eventually received a right to sue letter and brought her suit pro-se. The district court dismissed her case but the Court of Appeals reversed, finding that the District Court applied an erroneous standard of review in regards to Plaintiff's bonus compensation:

The Seventh Circuit precedents on which the district court relied are not the law in this circuit. The fact that the employer has discretion whether to grant bonuses or raises does not support the conclusion that an employer may freely allocate them on the basis of racial or religious bias, or disability discrimination. We do not agree that an employer’s discretion to withhold or reduce a bonus entitles the employer to allocate the bonus on the basis of prohibited discrimination. It seems unlikely, to say the least, that employers covered by the discrimination statutes could freely decide to award substantial discretionary bonuses to all employees except those of a disfavored race, religion, national origin or disability. As most employees work “at will,” most aspects of their conditions of employment are within the employer’s discretion. Deciding which applicant to hire, which employee-at-will to promote, which one should receive additional responsibilities or which one should be fired—all these, being the traditional fare of discrimination suits—are within the employer’s discretion. Rarely does the employee who sues for illegal employment discrimination have a legal right to the benefit she claims (apart from the law of unlawful discrimination).

Pp. 8. (external quotation marks omitted).

"The fact that the employer had the right to allocate a bonus on any ground that does not violate the law does not mean that the employer had the right to allocate it on a ground that did violate the law." Pp. 9. Nonetheless, there was no evidence of discrimination here. Plaintiff was absent longer than other teachers and, therefore, the allocation was based not a disability or her performance but by the work she and her replacement did in the 2008-2009 year.

Conclusion: The District Court decision is affirmed - Plaintiff failed to present evidence of discrimination. .

The case is Davis v. N.Y.C. Dep’t of Educ., 14-1034-cv (2d Cir. Oct. 19, 2015).

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