February 1, 2002

Avoiding Lawsuits is a service of the employment law training and consulting firm of Counsel Consulting Group LLC and the law firm of Powell, Trachtman, Logan, Carrle & Lombardo, P.C.

IT FINALLY HAPPENED … A COURT RULES THAT AN EMPLOYER WHO FAILED TO TRAIN ITS MANAGERS MADE AN "EXTRAORDINARY MISTAKE" AND IS LIABLE FOR $50,000 IN ADDITIONAL DAMAGES

For over a year, we have been telling readers of Avoiding Lawsuits that, inevitably, courts would punish companies who fail to train their managers in basic employment law principles. We hoped our readers would see this as something other than a crass commercial for the training services we provide, and as an honest effort at communicating one of the most important preventive law messages we could convey.

The inevitable has now come to pass, big time.

A federal circuit court - the court that sits just below the United States Supreme Court - has ruled that an employer who fails to train its managers in crucial areas of employment law commits an "extraordinary mistake," and the court imposed an additional $50,000 in damages on the employer, just to make the point.

The case involved Anthony Mathis, an African-American car salesman with extensive experience. Mathis filled out a job application at Phillips Chevrolet. The application asked for Mathis' date of discharge from the military which, the court concluded, allowed Phillips Chevrolet to determine that Mathis was over 40 (the point at which age discrimination laws really kick in). The court also noted that Phillips Chevrolet personnel had been able to observe Mathis' race.

Phillips Chevrolet ignored Mathis' application, and hired seven white salespersons, each of whom was younger than Mathis. Mathis filed suit, alleging age and race discrimination. During the course of the lawsuit, the evidence showed that Phillips Chevrolet's general manager routinely took note of the age of applicants on the application form - a significant gaffe. Another employee testified that he wanted applicants at Phillips Chevrolet to be "bright, young, and aggressive."

The jury found that Phillips Chevrolet denied Mathis a job because of his age and race, and awarded him compensatory damages. In addition, however, the jury found that the discrimination was willful, and on that basis the court added $50,000 to the tab. Phillips Chevrolet appealed, giving the Circuit Court the opportunity to write an opinion.

The Circuit Court seized that opportunity, endorsed what the jury did, and set forth a message that all employers need to hear and understand:

Leaving managers with hiring authority in ignorance of the basic features of the discrimination laws is an extraordinary mistake for a company to make, and a jury can find that such an extraordinary mistake amounts to reckless indifference . . . The Circuit Court also noted that Phillips Chevrolet's application form contained the standard "we don't discriminate" language, and seized on that as evidence that Phillips Chevrolet knew what it was supposed to do, and simply disregarded it. The Circuit Court ruled that "printing this statement on the application but then making no effort to train hiring managers about the ADEA shows that Phillips knew what the law required but was indifferent to whether their managers followed that law."

The message could be no more clear: employers must provide employment law training to managers who are responsible for hiring, firing or supervising employees. If you don't do it, and a manager acts unlawfully, you will pay.

Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.

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