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April 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.
THE "REVENGE LAWSUIT" -
FIVE TIPS FOR MINIMIZING THE RISK OF
LAWSUITS FROM TERMINATED EMPLOYEES
Human nature being what it is, terminated employees frequently lash back at their employers in any way they can, often by filing lawsuits. You may not be able to avoid these lawsuits, but you can increase the likelihood that you'll win them. Primarily, it takes some advance planning, coupled with management training.
Here are five things you can do to make it less attractive for terminated employees to file lawsuits, and to up the odds for a quick victory.
- Develop A Meaningful Written Employee Evaluation Procedure,
And Train Your Managers To Use It
Joe and Mary hold identical positions as accounting clerks. Joe is much more productive than Mary, and Mary makes numerous mistakes in her work. Joe and Mary each report to Bob. Bob has told Mary on numerous occasions that she needs to improve her work performance. However, Bob abhors confrontation, and he believes that reporting Mary's failures will reflect poorly on his own performance. Consequently, Bob never sends Mary a warning memo, he makes no written record of her poor performance, and he fills out his semi-annual evaluation forms for Joe and Mary by checking the "meeting expectations" blocks next to each evaluation category. Eventually, Mary's mistakes come to the attention of Bob's superiors, and Bob musters up the courage to fire her. Mary immediately files a claim with the EEOC, claiming that Bob discriminated against her, based on her gender.
Mary's lawyer subpoenas Mary's and Joe's personnel records, and schedules Bob's deposition. When asked why he fired Mary, Bob testifies that he terminated Mary not because she was a woman, but because of her poor work performance.
Mary's lawyer then asks Bob if he ever lied to his employer. Bob answered that, of course, he did not. Mary's lawyer then pulls out the job evaluation forms that Bob prepared for Mary and Joe - he's blown them up and mounted them on poster boards. Mary's lawyer gets Bob to admit that Bob submitted these evaluation forms to his employer, and because Bob never lied to his employer, the evaluation forms must be correct. "You wouldn't submit phony evaluation forms, would you Bob?" he asks. He then asks Bob to point out where on the evaluation forms there exists any indication that Mary was a less competent employee than Joe, her male counterpart. Bob begins to sweat. Mary's lawyer then asks Bob to extract from Mary's personnel file any memo, note or other evidence of any kind that Mary had ever been warned, disciplined or negatively evaluated at any time. Bob struggles for an explanation. He then asks Bob whether he has any documentary evidence showing that there was any reason aside from her gender which could explain Mary's termination.
All the while, Mary's lawyer contemplates how much fun it can be to shoot fish in a barrel.
Avoiding Lawsuits has, on many occasions, repeated the mantra that proof, not allegations, is what matters in a lawsuit - in the world of litigation, if you cannot prove it, it doesn't exist. (See, for example, the August 1, 2000, the October 15, 2000 and the September 1, 2001 issues.) This is no more true than in the arena of employee terminations. All too often, terminated employees will take an oath and testify that they were model performers who were never disciplined, warned or negatively evaluated. Their managers will know that the employee is lying, but if the manager cannot prove it, the case will become, at best, a "my word against your word" coin flip.
Worse, knowing that companies routinely keep personnel files, judges and juries will often presume that if, in fact, there had been problems with an employee, the employer would have had documents to prove it. The lack of documents will be used as evidence that such problems really did not exist, and that the employer is simply trying to smear the employee after the fact, to hide unlawful, discriminatory conduct.
The solution is a real employee evaluation procedure, and a management team that is trained on the importance of using it in the right way.
- Check The File Before Terminating A Member Of A Protected Class
You need to be on guard before terminating a person who is member of a class to which the law applies certain protections, such as, for example, a racial minority, a disabled person, a pregnant woman, and an individual over 40. Those who are responsible for termination decisions must be schooled to anticipate the fact of life that, sometimes, a terminated employee in a protected class will contend that he or she was fired because of race, national origin, gender, disability, age... anything but the employee's own fault.
Before terminating an employee for poor performance or misconduct, therefore, a prudent manager will first ask whether the employer will be able to prove the real reason for the termination. Does the file reflect poor job evaluations? Does the file reflect any disciplinary warnings or notices? Does the file reflect that the employee was told that he or she needed to improve performance, and failed to do so? Ultimately, the answer to these questions will, again, depend on how well the employer documented employee evaluations, warnings and other issues. If the employee is a member of a protected class and the proof is not there, it is sometimes better to back off until the appropriate documentation can be put into place - for instance, issue the employee a formal warning which details prior problems and requires substantial improvement. If the employee improves, great; if not, document it, and then act accordingly.
- Watch Out For Potential Retaliation Claims
A common scenario involves an employee who is repeatedly absent, and is warned that he needs to improve his attendance. The problem persists, but no disciplinary action is taken and no file documents are created. The employee misses a Monday and a Tuesday without notice. The employee's manager has had it, and prepares a termination notice. Before the notice is sent, however, the employee calls and says he needs a one month leave of absence to attend to an ailing spouse. Assuming that the FLMA applies (for instance, the employee has the requisite 50 or more employees and the employer has worked the requisite number of hours), the employee's request constitutes an exercise of the employee's federal right to FLMA leave. The manager sends the termination notice.
The employee then sues, bringing what the courts call a "retaliation claim" - he says he was fired in retaliation for exercising his federally-protected right to FMLA leave, which is unlawful. The employee can often offer enough proof to shift the burden to the employer by showing little more than the undisputed chronology of events - there are no documents showing I was a bad employee, I exercised my rights, then I was fired. Without the requisite documents, how will the employer prove that the employee was fired for lawful reasons?
Retaliation claims come in lots of flavors - an employer is not allowed to terminate or otherwise prejudice an employee's rights in retaliation for filing a sexual harassment claim, a discrimination claim, an ADA claim, and so on. The issue in such cases is almost always one of proof: how can the employer prove why the action was taken? At the risk of repetition, your procedures, and the training you have given your managers respecting the creation and maintenance of employee records, will rule the day.
- Be Careful Not To Turn A Termination Case Into A Defamation Case
It is of paramount importance that an employer publicize the reasons for terminating an employee on a need to know basis, only. If, for example, you feel that an employee is incompetent or dishonest and you terminate the employee for that reason, and if you publicize your assessment of that employee beyond the circle of those who really have a reason to know about it, you run the risk of the employee suing you for defamation. The law of defamation provides that an employee whose reputation is damaged can sue an employer for both compensatory and punitive damages. The employer is then left with the burden of proving that what the employer said was true, and because so many termination decisions are made on a subjective basis, without hard evidence, this can often be an insurmountable task.
As an adjunct to this, be extremely careful about how you respond to requests for references from a terminated employee's prospective employers. If you provide a negative reference, you again run the risk of the employee suing you for defamation. We routinely advise our clients to respond to requests for employee references by doing nothing other than stating the dates of employment and the positions held. There is no upside to your providing a prospective employer with your view of your former employee's negative traits.
- Be Careful Of Potentially Violent Or Unstable Employee
Suppose you have an employee who has manifested potentially violent tendencies, and you think it best to terminate that employee for the safety of all concerned. These situations hold all kinds of "damned if you do and damned if you don't" possibilities. On the one hand, the ADA may require you to accommodate such an employee. On the other hand, employers frequently face liability for workplace violence if they do not take prudent steps to remove potentially-dangerous employees from the workforce.
You (and your managers) need to recognize the risks; often, the inescapable conclusion is that these situations have to be confronted on a case-by-case basis, with the assistance of competent counsel.
Those responsible for implementing termination decisions must know how to assess the risks of their decisions. There are many issues aside from those referenced above that may need to be confronted. Did the employee have an employment contract that precludes termination except upon proof of "cause" for termination? Is the termination part of a large scale layoff that might come within the parameters of the WARN Act? Is the terminated employee close to vesting in a pension plan and, therefore, protected by ERISA? A consult with counsel is always a good idea in all except the most routine termination decisions.
Like it or not, in many cases, termination decisions cannot be made strictly on the merits. Lawyers who practice in this field all have horror stories of employers who were absolutely "right," and who paid hundreds of thousands of dollars in legal costs for that privilege.
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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