A federal appeals court has revived a fired State Farm employee’s ADA retaliation lawsuit, putting insurer HR practices and supervisor conduct under the microscope.
Monica Gray, a 15-year State Farm claims specialist, was terminated after she helped a colleague, Sonya Mauter, secure an accommodation under the Americans with Disabilities Act (ADA). The Sixth Circuit’s recent decision in Gray v. State Farm Mutual Automobile Insurance Company and Joe Kyle, No. 24-3086, now sends her claims back to trial, raising the stakes for insurance industry employers navigating ADA compliance and workplace retaliation.
Gray’s journey to the courtroom began in 2017, when Mauter - who worked on a different team managed by Joe Kyle - faced the loss of her ADA accommodation that exempted her from overtime. In August of that year, Kyle told Mauter that State Farm would no longer honor her accommodation, placed her on leave until she agreed to work overtime, and threatened her with eventual termination. When Mauter asked about using Family and Medical Leave Act (FMLA) time, Kyle incorrectly told her she had none left.
Mauter turned to Gray for help. Gray researched ADA law and State Farm’s internal policies, contacted human resources, and filed an internal complaint against Kyle. She also advised Mauter to seek legal counsel and file a charge with the Equal Employment Opportunity Commission (EEOC). Throughout this period, Mauter repeatedly informed Kyle and other managers that Gray was assisting her.
In November 2017, while substituting for Gray’s regular supervisor Chris Martin, Kyle scrutinized Gray’s timesheets, comparing her reported hours to her computer activity. He found three instances where Gray reported working while logged off her computer. Kyle reported these discrepancies to HR, alleging Gray had manually adjusted her time to hide long lunches and early departures, and incorrectly claimed Gray had previously been coached for similar behavior. He also suggested HR would find more discrepancies if they investigated further.
HR’s investigation uncovered additional errors, including seven instances where Gray reported returning from lunch before re-entering the building. Gray was interviewed, denied wrongdoing, and insisted Kyle had targeted her for helping Mauter. She questioned whether State Farm was reviewing other employees’ timesheets. Gray’s retaliation allegation was relayed to management, but no further action was taken. Within a week, Gray’s termination was recommended. She filed a retaliation charge with the EEOC, and State Farm fired her for falsifying timesheets.
Gray sued State Farm and Kyle for retaliation under the ADA and Ohio law, alleging Kyle selectively reported her for behavior common among other employees, triggering an investigation that led to her firing. The district court granted summary judgment to State Farm, finding the company held an honest belief that Gray had engaged in misconduct.
But the Sixth Circuit reversed, holding that Gray had presented enough evidence for a jury to decide whether her firing was the result of retaliatory bias under the “cat’s paw” theory of vicarious liability. The court emphasized that Gray had evidence showing she was singled out for scrutiny and discipline while other employees who engaged in similar conduct were not reported or terminated. The court also noted Gray’s high performance and lack of prior discipline, making the timing and nature of the investigation suspect. State Farm’s policy, the court observed, did not distinguish between the severity of timekeeping violations, and the company failed to investigate Gray’s retaliation claim.
No insurance policy clauses were discussed in the opinion. The case focused squarely on internal employment practices, ADA compliance, and State Farm’s procedures as an employer.
With the appellate court’s decision, Gray’s claims are headed to trial. For insurance companies, the message is clear: employment decisions involving ADA accommodations and potential retaliation require rigorous, unbiased investigation and consistent enforcement of workplace policies. The case is not final and has been remanded for further proceedings.
