In a decision issued on February 8, 2011, the U.S. Court of Appeals for the 7th Circuit (which covers Illinois, Wisconsin and Indiana) upheld a jury’s verdict holding an employer liable for race discrimination for terminating an employee based on the recommendations of the employee’s manager who, unbeknownst to the employer, harbored racial bias against the employee.

The opinion in Schandelmeier-Bartels v. Chicago Park District is significant because it addresses a contested legal theory called the “cat’s paw,” which is currently awaiting a decision from the U.S. Supreme Court in Staub v. Proctor Hospital. The theory takes its name from a 17th century French fable about a monkey and a cat. As the fable goes, a monkey persuaded a cat to pull chestnuts out of a fire and the cat’s paw was burned. As the theory applies to employment law, it holds employers legally to blame for discrimination in the workplace by an employee who does not make an actual job decision, but influences the one who does. The question before the Supreme Court in Staub is how courts should apply the cat’s paw theory, if at all. The justices are reviewing an earlier decision from the 7th Circuit that said the theory applies only when the allegedly biased employee exerts “singular influence” over the decision-maker.

The 7th Circuit’s recent decision in Schandelmeier was issued before the Supreme Court ruled on Staub. As the 7th Circuit explained, “Under any formulation of the cat’s paw standard, the chain of causation can be broken if the unbiased decision-maker conducts a meaningful and independent investigation of the information being supplied by the biased employee.” In Schandelmeier, however, the jury found that the decision-maker for the Park District only solicited information from the biased supervisor, which does not constitute an independent investigation.

The take-away for employers, is that before you follow the recommendation of a manager to terminate an employee, you had better ask a neutral party (Human Resources or another member of management) to investigate the basis for the termination. Otherwise, your company’s failure to confirm that the manager’s recommendation does not reflect an illegal bias could make the company liable for discrimination.