P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)



ERD Case No. 199600028, EEOC Case No. 26G960485

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter on February 28, 1997. A timely petition for review was filed. The commission received the file from the division on July 21, 1997.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:

Delete paragraphs 12 and 13 of the FINDINGS OF FACT and substitute therefor the following:

12. Michael Holland, doing business as State Street Stylists, hired Ms. Swanson during the week of November 13, 1995, to start on November 24, 1995, but he terminated her employment on November 22, 1995.

13. Holland terminated Swanson because he wanted Merlyn Pfaff to agree to enter into a partnership with him to operate the business, and Pfaff was making the termination of Swanson a condition of her agreement to enter into the partnership with Holland.

14. Pfaff was making the termination of Swanson a condition of her agreement to enter into the partnership with Holland, because of Swanson's record of having an impairment which made achievement unusually difficult or limited her capacity to work, and because Pfaff perceived Swanson as having such an impairment.

15. At the time he terminated Swanson, Holland was aware of the reasons that Pfaff was making the termination of Swanson a condition of her agreement to enter into the partnership with him.

Delete paragraphs 1 through 4 of the CONCLUSIONS OF LAW and substitute therefor the following:

1. Complainant Pattricia Swanson is a handicapped individual within the meaning of Wis. Stat. 111.32 (8).

2. Respondent State Street Stylists is an employer within the meaning of Wis. Stat. 111.32 (6).

3. Respondent State Street Stylists discriminated against Complainant Pattricia Swanson because of handicap, within the meaning of Wis. Stat. 111.322 (1), when it terminated her employment in November, 1995.

Delete paragraph 5 of the ORDER and substitute therefor the following:

1. Within 30 days of the expiration of time within which an appeal may be taken herein, the respondent shall submit a compliance report detailing the specific action taken to comply with the commission's decision. The compliance report shall be directed to the attention of Kendra DePrey, Labor and Industry Review Commission, P.O. Box 8126, Madison, Wisconsin 53708.


The decision of the administrative law judge (copy attached), as modified, is affirmed.

Dated and mailed: November 26, 1997
swanspa.rmd : 110 :

/s/ Pamela I. Anderson, Chairman

/s/ David B. Falstad, Commissioner


The commission agrees with the Administrative Law Judge that the respondent discriminated against the complainant because of handicap when it terminated her employment. However, the commission arrives at this decision based on a somewhat different rationale than that followed by the Administrative Law Judge.

The definition of "handicapped individual" in the Fair Employment Act states:

(8) "Handicapped individual" means an individual who:

(a) Has a physical or mental impairment which makes achievement unusually difficult or limits the capacity to work;
(b) Has a record of such an impairment; or
(c) Is perceived as having such an impairment.

Wis. Stat. 111.32 (8). The complainant testified that she had previously worked for a hairdressing establishment called "Great Clips," that she had an accident there and was then off work for about a year, and that she continued to be under a doctor's care. She also testified that she told Holland, the owner of State Street Stylists, about this. If the complainant had simply attempted to testify directly that she suffered from a particular medical condition, then the Administrative Law Judge's observation about the necessity of medical expertise would have been more significant. However, an expert witness was not necessary to establish that complainant had an accident at a previous job, nor to establish that she was then off work for a year, nor to establish that she was seeing a doctor and was wearing a TENS unit. These are things that she was competent to testify to, and they establish that she had a record of having a condition that would qualify as a handicap (presumably, if a person cannot work for a year, the "limits capacity to work" condition is satisfied).

The complainant thus had a record of having an impairment that limited her capacity to work. Holland was aware of this record. The question is, whether he terminated her employment, because of that factor.

The element of this case that may at first glance be thought to present the most difficulty, is the fact that someone other than the employer could be said to be the one who was responsible for the decision -- at least, responsible in the sense of initiating it. It was Pfaff, in legal contemplation a stranger to the employment relationship between complainant and respondent, who wanted to see the complainant's employment terminated because of complaint's record of an impairment and who pressured respondent to do so. On that basis, respondent's owner Michael Holland argued that he himself did not act on the basis of complainant's record of having an impairment. The commission does not accept that argument.

The issue presented by this case is simply one of whether an employer violates the law when it knowingly makes an employment decision, which it would not have made itself, because some third party who is in a position to coerce the employer insists on that decision out of a discriminatory motive. The answer, generally, is yes: the employer who yields to such coercion with knowledge of the discriminatory motive behind it, has discriminated. The classic example of this is the "customer preference" area: the situation in which an employer disclaims any bias, but asserts that the employer's customers will withdraw their patronage unless the employer discriminates. The law's answer to this assertion is unsympathetic. The landmark case here is Diaz v. Pan American World Airways, Inc., 442 F. 2d 385, 389 (5th Cir. 1971), cert. denied, 404 U.S. 950, 92 S. Ct. 275, 30 L. Ed. 2d 267 (1971). In this case, Pan Am sought to avoid liability for sex discrimination in the selection of flight attendants by explaining that, even though it did not care what sex these employes were, its customers preferred female flight attendants and it would be at a competitive disadvantage if it did not provide what the customers wanted. The court rejected this argument, observing that to permit an employer to circumvent the dictates of the antidiscrimination statute by declaring an individual unfit because of the prejudices of others would be "totally anomalous" with the purposes of the law.

This construction of the law is not limited to cases in which the third party pressure on the employer arises from customers. It is also not limited to sex discrimination cases. Thus, for example, it has been recognized that an employer can not avoid liability for discrimination against a handicapped employe by explaining that it was not biased but that co-workers were: the "unreasonable and unfounded fears of co-employees is not an exception to an employer's obligation not to discriminate against a handicapped person." Jansen v. Food Circus Supermarkets, 110 N.J. 363, 373, 541 A. 2d 682, 687 (1988); see also Leonard, AIDS and Employment Law Revisited, 14 Hofstra 53 Empl. Prac. Dec. (CCH) 40,021 L. Rev. 11, 40-41 (1985). It is similarly forbidden to refuse on racial grounds to hire someone because customers or clientele do not like his race. Rucker v. Higher Educ. Aids Bd., 669 F. 2d 1179, 1181 (7th Cir. 1982) (citing Fernandez v. Wynn Oil Co., 653 F. 2d 1273, 1276-77 (9th Cir. 1981)); see also 29 C.F.R. 1604.1(ii) (stating "the refusal to hire an individual because of the preferences of co-workers, the employer, clients or customers" not permissible under Title VII).

Reduced to its essence, the salient principle of Diaz is that an employer may not discriminate simply because some third party urges or pressures it to do so. Platner v. Cash & Thomas Contractors, Inc, 908 F. 2d 902, 905 n. 5 (11th Cir. 1990), 53 Fair Empl. Prac. Cas. (BNA) 940. The source of the third party pressure is not relevant. Whether it is the unwillingness of biased customers to patronize a business, or the unwillingness of biased employes to work there, or the unwillingness of biased suppliers to sell to the business, or the unwillingness of biased investors or lenders to provide financial backing for the business, the extent of the pressures brought to bear on the business may be equally serious, but the law remains the same: the employer may not serve as a conduit for the discriminatory intent of the third party.

A commission decision reflecting the spirit of this rule, is Stanton v. Abbyland Meat Processing, Inc., May 30, 1985, aff'd, Abbyland Processing v. LIRC, Taylor Co. Cir. Ct., No. 85-CV-53, February 14, 1986. In that case, the employer discharged an employe because another employe, whose services the employer did not wish to lose, was insisting on it. The other employe's desire to see Stanton terminated arose from his resentment at her unwillingness to enter into a romantic relationship with the other employe -- a motivation which would be illegal if acted on by an employer. The commission held that by acquiescing to the pressure from this other employe to fire Stanton, the employer violated the Fair Employment Act. In effect, by doing what the third party (the other employe) was pressuring it to do because of an improper motive, the employer itself acted because of an improper motive.

Whether there was that kind of employer acquiescence in the face of pressure from a biased third party, is precisely the issue here.

The issue being thus defined, its resolution is primarily a question of what the facts were. Holland tried to cast the situation as one in which Pfaff, when she found out that Holland had hired the complainant, unequivocally broke off negotiations with Holland and told him that she would not go into partnership with him, and he then determined after analyzing his finances that he could not economically keep his business in operation, so he decided to close it, and terminated complainant for that reason.

However, the commission is persuaded by the evidence in the record that when Pfaff found out that Holland had hired the Complainant, she made the question of Complainant's employment an issue in their negotiation about forming a partnership, in that she told Holland that she would not form a partnership with him unless he fired complainant. The commission is further persuaded that Holland at all times believed that he did have prospects of forming a partnership with Pfaff, but that in order to do so he would have to terminate the Complainant. It is clear that he knew that Pfaff wanted him to fire Complainant because of Pfaff's concern about complainant's record of having had an impairment which made her unable to work. The commission finds, as did the Administrative Law Judge, that Holland decided to fire complainant in order to satisfy Pfaff's conditions for forming the partnership.

Thus, this is a case in which an employer acquiesced to the desire of a third party to the employment relationship, that the employer engage in an act of discrimination. The fact that the desire to discriminate may have originated with a third party is no defense, because whatever the origin of that discriminatory motive, the employer knew of it, and carried it out. The employer therefore engaged in discrimination.

NOTE: The Administrative Law Judge did not make any order for payment of attorney's fees because, despite the fact that he requested that complainant's attorney file a petition for fees and supporting documents, the complainant's attorney never did so. Complainant did not file a petition for review complaining of the failure to award attorney's fees, and she has not argued in her brief that attorney's fees should be awarded; rather, she has urged the commission to uphold the Administrative Law Judge's decision. For these reasons, the commission affirms the remedial order as it was rendered by the Administrative Law Judge and does not make any provision for attorney's fees.

Michael Fitzpatrick, Attorney for Complainant
James P. Grenisen, Attorney for Respondent

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