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Case of the Month: May 2010

Phone Directories Company to pay $75,000 to settle charge of age discrimination by former sales representative

CASE # 52087, Closed 4-23-10

Charging Party

Ronald G. Smith
Virginia, MN

Respondent

Phone Directories Company (PDC Pages)
P.O. Box 227 Orem, UT 84059-2277

The following information is a summary of the department's findings and contains excerpts from other public documents relevant to this case.

Factual Basis of the Allegations — What the Charging Party Alleged

In his job as a sales rep for a company that publishes phone directories, Ronald Smith, 61, spent half the year selling ads in Grand Rapids, the other half selling in the Brainerd area. It had been the company's policy to pay for lodging when a sales rep was assigned to work more than 60 miles from home, and Smith's lodging expenses were paid while he sold ads in Brainerd. Then one day in December 2008, Smith was assigned by a new manager to work in the Duluth area, along with four other sales reps. He told his manager that he would need lodging while working in Duluth, since it was more than 60 miles from his home. The lodging policy had been changed, he was told, and he would receive only a $20 fee for each ad he sold. Smith determined that, at this rate, his pay would not even cover his commuting expenses, and on January 10, 2008 he felt compelled to resign.

The new manager had hired two other sales reps, both in their twenties, to join a sales force that had included Smith, another rep who was 68, and another who was in his thirties, all of whom had been assigned to Duluth. But while all of them had similar commutes, Smith learned almost immediately after he resigned that the company had agreed to provide lodging for the three sales reps who were in their twenties or thirties, refusing only Smith and his 68-year-old coworker.

In August 2008 Smith filed a charge of age discrimination with the Minnesota Department of Human Rights, alleging that the company had wanted to get rid of its two over-60 workers and had forced them to resign by not providing lodging, as it had done for the younger workers. He stated that he had received no warnings over job performance issues, had increased his sales over projection, but had been "constructively discharged" — in effect, compelled to quit — because of his age.

Summary of the Commissioner's Memorandum — What the Department's Investigation Found

In answering the charge, the company denied that age was a factor in its lodging practices. It contended that it applied a consistent policy of only paying for lodging when an employee had to drive two hours or more to a work area. However, evidence revealed that younger workers were provided lodging when they were less than two hours away from home, while older workers were denied company-compensated lodging under similar circumstances. The department's investigation also revealed that the company gave pay increases to younger employees to prevent possible resignations, when these employees complained about pay or lodging policies that affected their pay. The charging party, Smith, had made similar complaints but the company had not offered him the same incentives.

The department's investigation found some evidence that dissatisfaction with Smith's sales performance may have influenced the company's actions, and that the favored, younger employees were thought to have better sales or better sales potential. But there was nonetheless strong evidence that the company had considered Smith's age when making decisions.

Although the company contended that Smith had quit voluntarily, the department found that he had been subjected to a "constructive discharge." A constructive discharge may occur when an employee is subjected to intolerable working conditions such that the employee's resignation is reasonably foreseeable, or intolerable working conditions are imposed by the employer with the intent of forcing the employee to quit. The department's investigation concluded that the company's management had wanted to end the employment of certain older workers including the charging party, and had changed the terms and conditions of his employment in an effort to force him to resign. The department found probable cause to believe Phone Directories Company (PDC Pages) had violated the Minnesota Human Rights Act by discriminating against Ronald Smith because of his age.

Terms of Settlement

In a negotiated settlement, Phone Directories Company, LP, now known as Ziplocal, LP, agreed:

  • To pay Ronald Smith a total of $75,000;
  • To evaluate its existing policies or develop new policies addressing its obligations under the Minnesota Human Rights Act; and
  • To provide one hour of training on the obligations of employers under the Act for all Minnesota managers, supervisors, and human resources personnel.

The Department of Human Rights publishes information about selected cases and settlement agreements, including its "Case of the Month," as part of its mandate under the Human Rights Act to "educate to eliminate" discrimination. Settlement agreements do not constitute an admission of any liability, an admission of a violation of the Minnesota Human Rights Act or any other law, or an admission of wrongdoing by the respondents.