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Denny’s to pay $1.3M to former employees

Denny’s has agreed to pay $1.3 million to dozens of former employees as part of a consent decree that requires the restaurant chain to overhaul its corporate policies regarding people with disabilities.

The settlement, signed by U.S. District Court Judge William D. Quarles Jr. on Friday, came more than four years after the U.S. Equal Employment Opportunity Commission sued on behalf of Maryland restaurant manager Paula Hart, who was fired after she returned after her leg was amputated.

Hart will receive $150,000 in back pay and compensatory damages in the deal, and 33 other former cooks, servers, hosts and managers from across the United States will receive between $23,000 and $50,000 apiece by next week. Seven — six managers and one server — will receive offers of reinstatement.

On top of the changes to policies about medical leave and reasonable accommodations outlined in the decree, Denny’s must beef up its tracking of issues related to the Americans with Disabilities Act, conduct internal audits and submit periodic reports to the EEOC.

EEOC attorneys did not return calls for comment Friday, and Hart could not be reached. But C. Christopher Brown, a Baltimore civil rights attorney not involved in the case, said the “EEOC must be happy with” what he called a “pretty strong” consent decree.

“I would think this gets the defendant’s attention and Denny’s will be shaping up,” Brown said.

Denny’s, which began as a single Danny’s Donuts shop in Lakewood, Calif., in 1953, now operates more than 1,600 family-style restaurants across North America, the Caribbean and as far away as Guam and New Zealand, according to its website. All are covered by the decree, which will be in effect for two years.

Peter J. Petesch, a Washington, D.C., lawyer who defended Denny’s Inc., referred questions to Michael Fox, a company spokesman, who emailed a statement.

“Denny’s did not and does not discriminate on the basis of disability or any other basis,” the company statement read. “We believe we acted properly and in accordance with the law in this matter and that the facts of this case support our position.

“We worked with the EEOC to achieve this settlement because we recognized the value of putting this time-consuming dispute behind us in order to focus on our business and avoid the costs and demands of additional litigation,” the statement continued. “We are pleased that the consent decree captures many of the best practices in reasonable accommodations that Denny’s has already been implementing over the course of several years.”

Denny’s has faced allegations of civil rights violations before, most notably involving racial discrimination against black customers. In 1994, the company agreed to pay more than $54 million to settle a series of class action lawsuits, including one in Baltimore, brought by black customers who alleged they were refused service or made to wait longer or pay more than their white counterparts. The company since has won several awards from national publications for its “diversity progress,” according to its website.

The EEOC sued the South Carolina-based chain in September 2006, alleging it had “engaged in a continuing course of unlawful employment practices” since at least 2000, a year after Hart began work on Belair Road in Baltimore. While there is little information in court records about the other claimants, Hart’s story is told in a July 2010 judicial opinion.

Hart took medical leave in fall 2002, complaining of numbness in her right leg. The following March, after she had undergone above-the-knee amputation surgery, Denny’s informed her she had to return to work by the end of April or face termination for exceeding the 26-week maximum, short-term disability leave.

Hart returned in time but was fired anyway because, according to a May 2003 letter from a Denny’s attorney, her “condition presently requires her to utilize either a walker or a wheelchair to ambulate, she is not in a position to perform the essential functions of the job of a restaurant manager.” Denny’s could not offer her other employment at that point, the letter continued, but Denny’s would “monitor [her] rehabilitation with the hope and expectation” that she could return to her old job.

The litigation carried on with motions and settlement conferences, claimants joining and dropping out, for years. Then, last summer, Judge Quarles decided only a jury could determine what the physical duties of a restaurant manager were and whether a manager should be able to perform all the other jobs in the restaurant. The judge also ruled that Hart’s representations in other legal proceedings about her ability to work did not doom her EEOC claim.

Docket entries in the case from that point through the spring mostly concerned settlement.

According to the decree, Denny’s will now make exceptions to any maximum-leave provisions. It must report any complaints of reasonable-accommodation denial and any terminations on those grounds to the EEOC.

The company must also create a database that identifies the full range of reasonable accommodations, and its human resources department shall adopt a tracking system for medical leave requests. More training is also in order.

Brown, of Brown, Goldstein & Levy LLP, cautioned against assuming corporate wrongdoing or compliance: he once had a public accommodation case against Denny’s that collapsed when the restaurant offered video evidence that contradicted his clients’ story about poor service.

“The issue is how do you get people to abide by the rules, and I often say just send a tester out to find out rather than do all this training,” said Brown, referring to a technique in housing discrimination cases. “The proof is sort of in the pudding.”

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION V. DENNY’S INC.

Court:

U.S. District Court, Baltimore

Case No.:

1:06-cv-02527-WDQ

Judge:

William D. Quarles Jr.

Outcome:

Consent decree

Dates:

Event: April-May 2003

Suit filed: Sept. 26, 2006

Consent Decree: June 20, 2011

Plaintiff’s Attorneys:

Debra M. Lawrence and Ronald L. Phillips of the U.S. EEOC in Baltimore.

Defendant’s Attorneys:

Peter J. Petesch and Steven E. Kaplan of Littler Mendelson P.C. in Washington, D.C.

Counts:

Disability discrimination.