Second Circuit Reinstates Discrimination Lawsuit of Employee Fired for Unauthorized Removal of Cash From Register

Quick Hits

• The Second Circuit Court of Appeals reversed a district court’s entry of summary judgment that had been granted in favor of a defendant employer and reinstated the plaintiff’s employment discrimination lawsuit, finding that genuine disputes of material fact existed as to each of the plaintiff’s claims and that the plaintiff was entitled to present the claims to a jury.
• The plaintiff, a former laundromat employee whose employer had discharged her for removing cash from the register and refusing to return it, filed a lawsuit in federal court alleging discriminatory and retaliatory termination, hostile work environment, refusal to accommodate a disability, and unpaid wages.
• The case highlights for employers the value of carefully addressing employee complaints of discrimination and harassment, enforcing workplace policies consistently, and providing training for supervisors.

Background

Natasha Knox, a Black woman of Jamaican descent, was employed as a customer service attendant at three Clean Rite Center laundromats in the Bronx from December 2018 until her employment was terminated in April 2019. During her employment, Knox allegedly experienced derogatory comments from her supervisor. The supervisor allegedly criticized Knox for being “too hood” and “ghetto” to work at Clean Rite. Knox reported these comments to her district lead, who allegedly took no action.

In late January or early February 2019, Knox sustained a broken thumb in a car accident, and in early March, she was instructed by her doctor not to lift more than twenty-five pounds. Knox’s subsequent requests for accommodation in conformance with her doctor’s instruction were allegedly dismissed. One supervisor reportedly told Knox that she “shouldn’t have this job” if she required an accommodation, and her new district lead also made derogatory comments, including that Knox “looked like Aunt Jemima” and “talk[ed] Jamaican” when she became “upset.” Knox further alleged that she was not compensated for extra shifts that she worked at other Clean Rite locations and that she had filed a formal complaint with the new district lead, who did not follow up on her claims.

On April 14, 2019, after taking a taxi to work, Knox took $15 from the cash register to reimburse herself for the taxi fare and placed her taxi receipt in the register, believing she had permission to do so. She was later confronted by her new supervisor, who asked her to return the money—a request Knox refused. Following this incident, the district lead terminated Knox’s employment, citing her removal of cash from the register and her refusal to return it as the reason for the termination.

The Second Circuit Revives Knox’s Claims

Knox filed a lawsuit in the U.S. District Court for the Southern District of New York against Clean Rite and her supervisors. She alleged racial discrimination, failure to accommodate her disability, retaliation, and unpaid wages.

The district court granted summary judgment in favor of the defendants. The district court concluded that Knox had not provided sufficient evidence beyond her own testimony to demonstrate that Clean Rite’s reason for terminating her employment—specifically, her alleged theft of money—was discriminatory. Additionally, the district court determined that Knox’s testimony and sworn affidavit alone were inadequate to establish factual disputes regarding her claims, including those related to unpaid wages.

On April 9, 2025, the U.S. Court of Appeals for the Second Circuit issued a decision reviving the case, holding that Knox had presented sufficient evidence to survive summary judgment on all her claims. In doing so, the court emphasized that Knox had presented evidence of discriminatory comments near in time to her employment termination that could reasonably support an inference of unlawful discrimination. The court also pointed out that Knox’s supervisors had not taken any action in response to her internal complaints of workplace discrimination, which were protected conduct under Title VII of the Civil Rights Act of 1964.

Importantly, the Second Circuit reasoned that Knox had testified in her deposition that other employees had been permitted to take cash from the register to pay for their taxi fares, so long as they left receipts. This, according to the Second Circuit, was sufficient to create an issue of fact concerning whether the reasons provided by Clean Rite were a pretext for unlawful discrimination.

As for the disability discrimination claims, the Second Circuit focused on Knox’s disclosure of her injury and lifting restrictions and the fact that her accommodation request had been denied, even though arguably she could perform other essential functions of the job.

Finally, the Second Circuit held that Knox’s affidavit stating she had been subjected to daily harassment from her supervisor and had worked hours for which she was not paid was sufficient to create an issue of fact relating to her hostile-work-environment and unpaid-wages claims.

Guidance for Employers

The Knox decision provides a helpful reminder to employers of the importance of ensuring that all complaints of discrimination, harassment, and retaliation are taken seriously and investigated promptly. Knox’s complaints to supervisors about racial harassment and failure to accommodate her disability were allegedly ignored, contributing to the Second Circuit’s decision to reinstate her claims.

The Second Circuit’s decision does not alter the “sham affidavit” rule, which prevents a party from creating a genuine issue of material fact by submitting an affidavit that contradicts prior deposition testimony. In Knox’s case, the court found that her affidavit was consistent with her deposition testimony and other evidence presented. This underscores the importance of maintaining consistent and truthful documentation throughout all legal proceedings.

Employers should consider providing regular training to supervisors and managers on antidiscrimination laws, reasonable accommodations, and the proper handling of employee complaints. In Knox’s case, alleged derogatory comments and inconsistent treatment by supervisors played a significant role in the appellate court’s decision. Training can help prevent such behavior and ensure consistency in a respectful workplace.

Finally, employers may want to regularly review and update their antidiscrimination, harassment, and accommodation policies to ensure they comply with current laws and best practices. Clear policies and procedures can help guide employees and managers in handling complaints and accommodation requests appropriately. Relatedly, clear, written policies and procedures concerning items such as expense reimbursement may help reduce or eliminate allegations of selective enforcement, such as those at issue in the Knox case.

Ogletree Deakins’ New York and Stamford offices will continue to monitor developments and provide updates on the Employment Law, Leaves of Absence, and State Developments blogs as additional information becomes available.

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