By Kate Acheson
In Sterling Savings Bank v. Stanley, a Washington District Court rejected Sterling Bank’s argument that receipt of federal Troubled Asset Relief Program (TARP) funds, restricts them from making any payment to its Chief Executive Officer (CEO), Mrs. Heidi Stanley, after her termination. The Court found that TARP was not intended to prevent monetary recovery in discrimination suits like Mrs. Stanley’s.
Mrs. Stanley, a Sterling Bank employee since 1985, became Sterling’s CEO in 2008. Months later, Stanley agreed to revoke the portion of her employment contract containing a severance-pay provision so the Bank could receive “bailout” funds under TARP.
In May 2009, Mrs. Stanley was diagnosed with breast cancer, but continued working while receiving treatment. She was terminated in October 2009, and later filed suit, claiming that her discharge while receiving breast cancer treatment, violated Washington State’s employment discrimination statute. Sterling claimed that the case should be dismissed because, even if Mrs. Stanley were awarded monetary damages, they would be prohibited from making that payment under TARP.
TARP prohibits golden parachute payments, including severance pay, to senior executive officers upon or after their departure. However,
“[a]n employee who is fired as a result of her employer’s discriminatory conduct is not ‘departing’ from the employer as that term is envisioned by the TARP laws. This is because, but for the wrongful termination, the employee would not have departed.”
Accordingly, the Court found that TARP was not intended to prevent senior executive officers, such as Mrs. Stanley, from recovering monetary damages for discrimination. Therefore, if Mrs. Stanley succeeds on her state-court discrimination claim, she may recover lost wages, future wages, and emotional distress damages.
