Inconsistent Enforcement Of HR Policies Will Consistently Cause Employee Lawsuits

Avoiding Lawsuits

“ No Good Deed Goes Unpunished”

Ralph Waldo Emerson once wrote that, “A foolish consistency is the hobgoblin of little minds.” He meant to convey that each situation is different, and consistency for its own sake is a false idol. True enough. But if Emerson ever had the responsibility for administering HR policies, he might have injected a qualifier or two into his famous maxim.

The Problem

In our November 2003 What Do You Think? segment, we asked for our readers’ input on a case that had just been argued before the United States Supreme Court, Raytheon versus Hernandez. We received a firestorm of comments on the case, some of which we published in our January 2004 issue. The case is a good example of the problems inherent in HR inconsistency. Here’s a quick refresher.

Hernandez had tested positive for cocaine, and was terminated in accordance with Raytheon’s established policies. More than two years later, however, Hernandez successfully completed rehabilitation, and applied for reinstatement. Raytheon refused, and Hernandez sued.

The stigma that attaches to a prior drug user can be a disability under the ADA, and employers cannot refuse to hire an employee on the basis of such prior drug use. Hernandez contended that this had to be the reason why Raytheon refused to rehire him -- he had been a good employee, he was over his addiction, and there was no other reasonable explanation for Raytheon’s position. Raytheon’s rationale, however, was simply this: our policy, albeit unwritten, is not to rehire employees who break the rules, period, and we have no obligation to treat Hernandez any differently than any other rule breaker, disability or no disability.

A lower court took Hernandez’ side, and the Supreme Court then agreed to hear the case. With uncharacteristic speed, the Supreme Court has now issued a ruling. While not yet finally deciding the case, the Supreme Court has sent a not-so-subtle message to the business community.

The Supreme Court ruled that a “blanket” no-rehire policy applicable to any employee who violates a workplace rule is a “quintessentially legitimate, nondiscriminatory reason for refusing to rehire an employee.” That’s a pretty significant ruling by itself, but it’s not our present focus.

What’s important right now is this: the Supreme Court said that on the record before it, there was not enough proof to determine if, in fact, Raytheon refused to re-hire Hernandez because of its “no re-hire” rule, as Raytheon claimed, or because of some illegitimate reason, as Hernandez claimed. Consequently, a trial would have to be conducted on that issue: if Raytheon could prove that it refused to rehire Hernandez because of its no-rehire policy, it wins; if Hernandez could prove that Raytheon discriminated against former drug users, he wins.

Let’s fast forward to the upcoming trial. How will Hernandez prove his case? The Raytheon officials will, no doubt, stridently claim that they made their decision based only on the no-rehire policy. How will Hernandez prove otherwise?

The answer lies in another old maxim: actions speak louder than words. Hernandez will look to see how consistent (foolishly consistent, as Emerson might see it) Raytheon has been in applying the “no rehire” rule. If, indeed, Hernandez can show that rather than the “no re-hire” rule being a “blanket” policy, it is really a policy that Raytheon applies inconsistently, Hernandez will have a very powerful argument: “Raytheon only applies the “no re-hire” rule when it wants to,” Hernandez will contend, “and in this case it wanted to because I was a former drug user.”

In other words, inconsistent HR enforcement will be, as so frequently happens to employers, Raytheon’s soft underbelly during the trial. One more famous maxim: Claire Booth Luce cynically observed that, “No good deed goes unpunished.” If Raytheon made a past exception to the “no hire” rule for some favored employee or because of some perceived “extenuating circumstance,” it will have drastically diluted the strength of its defense against Hernandez’ claim.

We see this all the time: managers and executives make exceptions to the rules, trying to do a good deed, usually motivated by sympathy for the employee or concern for the company. In plain violation of workplace rules, they either fail to fire, or quickly rehire, selected employees because “she’s been a good employee for many years” or “I’m on a deadline and need him” or “she’s got a family and I just couldn’t do it.” Later, when the same rules are applied to another employee and no exception is made, a loophole big enough to accommodate all nine Supreme Court justices quickly opens. In those cases, the employee will argue that the rules are not really rules at all, but are only pretexts that the company uses to get rid of disfavored employees. If the employees who were the recipients of the past “good deeds” are white, or under 40, or not subject to some disability, and the employees to whom the rules were applied without exception are minorities, or older, or, perhaps, former drug users … you get the point.

And what about inconsistencies with regard to the same employee? For example, the employee is repeatedly late and the manager overlooks it. No documentation, no discussion, he simply overlooks it. Months pass and the manager has now reached the point where he is beyond fed up and he disciplines the employee in accordance with the Company’s well written, well publicized attendance policy. The employee alleges that the manager only started caring about his arrival time after he advised the manager in passing that he was suffering from cancer. The inevitable claim quickly follows.

The Solution: Five Ways To Minimize The Risks

The solution is not necessarily to be uniformly unsympathetic, or a slave to rules even when their application does not make sense. You can be foolishly consistent, even in this context. Here’s how to minimize the risks.

1. Develop Written Policies That Specifically Apply to the Situations You Will Most Frequently Confront

Often, managers, executives and HR personnel have to make exceptions to the rules because the rules themselves are too general, or don’t make sense, or don’t contemplate the kinds of situations that arise in the specific workplace. Form book policies and procedure can be very dangerous.

Anticipate the sorts of circumstances in which exceptions to a general policy would be considered, and incorporate those circumstances into the policy. To the extent feasible, make the situations that were formerly exceptions into predictable rules. Then, when the exceptional situation arises, you won’t be charged with departing from the rules in order to favor one employee and disfavor another.

A suggestion coupled with a caution: to facilitate this process, consider establishing different policies for different groups/categories of employees; but consult counsel to make sure that the differentiation raises no legal risks. For instance, it will be much easier to design and consistently enforce policies that are specifically tailored to exempt versus non-exempt employees, or lower level employees versus managers, or clerical personnel versus production personnel. But the process of categorizing employees can sometimes lead to legal issues, so make sure counsel screens what you have done before you implement it. (Shameless plug #1: we provide this service to a wide variety of companies.)

2. Avoid Obligatory Language, and Allow for Controlled Discretion

Avoid obligatory terminology in your policies and procedures, such as “always,” “only,“ “must” or “permanent.” Instead, rely on terms such as “generally, ” typically,“ usually,” etc. Acknowledge the fact that some situations will not be covered by the policy language, and provide the company with the right to change or update policies, and with the further right to apply them within the best interests of the company.

Building in the right to exercise such discretion, however, could lead to a claim of inconsistent and discriminatory enforcement. To minimize that risk, make sure the right to exercise discretion – the right to be inconsistent – is carefully controlled in a defined way. Supervisors must be required to follow a procedure before an exception or departure is implemented – for instance, consult with and obtain written approval from Human Resources, or the Legal Department, or a designated member of senior management.

In fact, we (and the United States Supreme Court, for that matter) strongly recommend that supervisors be regularly trained in the mandatory and discretionary interpretation and application of all HR policies -- as the primary point of contact between employees and the company, supervisor conduct is the primary point of defense in the prevention of employee claims. (Shameless plug #2: consider CCG’s new e-learning programs, and our in-person training sessions for managers, executives and HR administrators.)

Of equal importance: keep a written record of the exceptions that are made and the circumstances that led to them. When the charge is made that you only made exceptions for Caucasians or males or persons under 40, you need to be able to show that your discretion was driven by circumstance, not discriminatory intent.

3. Measure Your Policies Against the “Best Employee” Test

Look at each of your policies in the following light: if your best employee violated the policy, would you be willing to impose the mandated consequences, or would you more likely find a way to make an exception? If the answer is more the latter than the former, you will run the risk of developing a track record of inconsistency respecting that policy, and that inconsistency will lay the groundwork for future trouble.

Re-evaluate the policy in question, and revise it until you can honestly conclude that you would be willing to enforce it as written, no matter who the violator might be.

4. Standardize Performance Documentation Procedures

Whether it’s the annual review or a one-time policy infraction, failing to document the course of action taken can be deadly. It is a stamped invitation to the land of “He said”/ She said” – a place employers need to avoid. See the January 2004 issue of Avoiding Lawsuits for an in-depth discussion of this issue.

5. Make Changes Where Change Makes Sense

Incorporate a periodic review procedure to ferret out past practices that are out-of-date, no longer make sense, or were simply mistakes, and to add policies that might help address problems you had not previously anticipated. (Shameless plug #3: CCG provides this service for its clients.)

Eliminating the inconsistent policy enforcement that leads to employee claims is, at its core, a two part process: structure the policies so that the need to make exceptions is minimized; and develop a training methodology and business structure to control and document the exceptions that should be made. As always, let us know if we can help.

What Do You Think?

This month’s What Do You Think? brings good news for older workers.

Last month, in a 6 to 3 decision, the Supreme Court ruled that the Age Discrimination in Employment Act (ADEA) does permit reverse discrimination in favor of older employees: in other words, it is legal for employers to discriminate in favor of employees who are over 40. Although reverse discrimination suits have been upheld in the areas of race and gender discrimination, the Court ruled that the rationale was not applicable to the ADEA. (Cautionary note: Some states may prohibit reverse age discrimination under their own human relations acts.)

Click here to give us your point of view – should employers be permitted to discriminate against younger employees, even if they are more qualified, based solely on their age?

Next month we will share your input (but we will never disclose your name, e-mail address or other identifying data without your permission).

Analysis and Review:
What Do You Think? – February 2004

Our February 2004 What Do You Think? raised this issue: Do you feel that your Company’s training programs effectively prepare managers to properly handle employment law issues? If so, why? If not, why not?

Some of your comments:

“ My Company provides very little training and much of it is incredibly boring and outdated.”

“ We are required to attend mandatory training every year on sexual harassment. It seems like we should be learning about more topics.”

“ The training we receive is OK but I would love to receive a lot more. I am a fairly new supervisor and I can use all the help I can get.”

“ Our company is going through a downsizing and the Training Department was the first to go.”

“ Training on employment law issues and areas of compliance are very important in my company as we are a government contractor with strict regulations to follow.”

“ Only certain levels of management are eligible to go to training. The sad thing is most of them don’t go.”

Analysis:

There is a consistent thread that runs through your comments: although companies appear to be trying to train employees, they are not succeeding. This is problematic, for a variety or reasons. For instance:

The Supreme Court has effectively required that companies train their managers to avoid employment law mistakes. Companies that fail to do so will risk huge damage awards, including punitive damages.
Seven figure employment law verdicts are becoming commonplace, and the direct and indirect costs of defending against employment claims are monumental. There is no denying the link between effective HR practices and return on investment.
As if the prospect for corporate liabilities were not sufficiently worrisome, there is a real risk of personal liability for officers and directors who fail to stem the tide of employment liabilities.

CCG trains employees at all levels, from entry level to the corporate boardroom, on the best ways to prevent the distractions, the legal fees and the potential damages caused by employment practices lawsuits. We do it in person, and we do it through state of the art e-learning programs that allow individuals to obtain training on their own time, at their own pace. It’s not boring; it does not waste time; and it produces long term changes in the behaviors that lead to lawsuits.

Helping companies realize the financial benefit that effective, affordable and engaging training can reap is at the heart of CCG’s mission. Let us know if we can help.

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.

©Copyright 2004 CCG Properties LLC. All rights reserved, except that recipients hereof are permitted, for noncommercial purposes, to provide copies or excerpts, with full attribution to us, to other interested persons for their personal use. Avoiding Lawsuits is distributed for general informational purposes only. It is not a substitute for personalized legal advice from a competent attorney.