Fitness company SoulCycle recently reached a settlement in a New York-based pregnancy discrimination lawsuit brought by a former executive who alleged the company’s pandemic-based reasoning for her termination was actually covering up employment bias. This lawsuit and the actions of the fitness company that led to the December settlement serve as a lesson to employers on parental leave policies, terminations, and reductions in force – not to mention the danger of using COVID-19 as a blanket excuse for all manner of adverse employment actions.

Quick Summary of the Case

In August 2020, former SoulCycle executive Jordan Kafenbaum filed a lawsuit against the fitness company and several company leaders alleging it used COVID-19 as pretext when it terminated her employment 32 days into her maternity leave. Kafenbaum brought claims under the FMLA, Title VII, Pregnancy Discrimination Act, and the New York City Human Rights Law. It’s important to note that the allegations below are based on Kafenbaum’s version of events and that SoulCycle disputed the accuracy of many of these accusations.

According to Kafenbaum, the company offered “shifting and nebulous excuses” for why it acted as it did in response to her taking maternity leave. She claims it ultimately tied its termination decision to COVID-19 and alleged it needed to reduce headcount due to the impact of the pandemic on its business operations.

Kafenbaum alleges the company’s inappropriate actions began shortly after she announced her pregnancy to her supervisors. For example, the former chief People Officer purportedly announced her pregnancy at a large company meeting without her permission. Kafenbaum then says she received the silent treatment once she objected to the disclosure. As Kafenbaum approached her maternity leave, she says her boss made comments about how her team “needs a new leader” and the company would need to transition Kafenbaum to a new role.

When the company terminated Kafenbaum’s employment in April 2020, she says it provided inconsistent reasoning for the action, including “department re-organization, performance concerns, position elimination, and, finally, a horrific, global pandemic.” She claims the company did not respond to her inquiries as to whether other members of her team were also being terminated and why she could not take another role at the company. Kafenbaum pointed to these claimed inconsistencies in support of her argument that the company used the pandemic as pretext for terminating her.

Her August 2020 Complaint also details incidents of alleged discrimination and sexual harassment involving high-ranking employees, including the gesturing of sexual acts and male employees using derogatory terms describing paternity leave. Kafenbaum juxtaposes these allegations with the company’s self-proclaimed commitment to tolerance and equality.

In December 2021, Kafenbaum and the company reached a settlement agreement and the lawsuit was dismissed without prejudice. Terms of the agreement were not released to the public, but no doubt the company invested time and resources in defending the case for over a year and ultimately resolving it.

What Lessons Can Employers Learn from This Case?

Again, the allegations noted above were simply one party’s version of events and SoulCycle would have provided another version had the case gone to trial. However, even reviewing the allegations contained in Kafenbaum’s Complaint can help employers avoid similar claims being filed against them. Here are four key lessons you can take from this case and settlement:

• Ensure you have solid policies in place. Ensure you have appropriate leave policies, including parental leave, clearly articulated in your company handbook.
• Focus on training, training, training. Make sure your employees are properly trained on how to handle employee leave requests and confidential health information.
• Consult counsel. Be extra cautious when making employment decisions regarding employees on leave. You will want to consult your workplace law counsel out of an abundance of caution before making such high-risk actions – even during a pandemic.
• Avoid shifting explanations. When explaining employment decisions to employees, avoid shifting explanations. This can create a perception of unlawful pretext and could force you to settle a lawsuit even if you have solid defenses at the ready.