With the myriad of federal and state laws protecting employees, employment-related lawsuits have steadily increased in our litigious society. Since anyone can file a lawsuit and allege anything, lawsuits by current and former employees cannot be completely avoided. However, they can be reduced in number and potential exposure can be minimized.
“Certain claims are completely fabricated,” says J. Ronald Ignatuk, a partner in the law firm of Shulman Hodges & Bastian LLP. “But other cases present egregious conduct, not only by employees and supervisors but by the very HR department charged with investigating and remedying the improper conduct.”
These lawsuits are significantly impacted by the policies and procedures instituted by the employer and whether or not those policies are strictly followed.
Smart Business spoke with Ignatuk about ways that employers can minimize discrimination and wrongful termination lawsuits by former employees.
Please explain what is meant by ‘wrongful termination.’
While an employer can terminate an ‘at-will’ employee for no reason or for any number of reasons, the employer may not terminate an employee for an improper reason, such as age, gender, race, disability, religion or national origin. If this occurs, the employee has a claim against the employer for wrongful termination.
However, the employer does not have to fire the employee to be subject to a claim for wrongful termination. If the employee is subjected to a hostile environment in the workplace that would be intolerable to a reasonable person, such as continuous and severe sexual harassment, and this causes the employee to quit his or her job, the employee can bring a lawsuit for ‘constructive termination.’ In other words, the law treats this situation as if the employer actually fired the employee. If the employee proves that the work environment was intolerable, the employer is liable to the employee to the same extent as if the employer fired the employee for an improper purpose.
What exposure does an employer face when sued for discrimination or wrongful termination?
First, unless the employer has insurance coverage for these types of claims, the employer may incur significant attorney’s fees and costs in defending the lawsuit. If the case goes to trial and the employee prevails, the employer could be held responsible for all damages caused by the discrimination or wrongful termination. These damages could include emotional distress, lost wages both past and future and medical care, including psychiatric treatment. If the conduct is sufficiently egregious, the jury could award punitive damages against the employer, which are above the amount to compensate the employee, and serve as a form of civil fine to punish the employer and make an example in order to deter others from similar conduct. Finally, the employer could be required to pay the employee’s legal fees.
How can the employer minimize discrimination and wrongful termination cases?
First, the employer should establish a zero-tolerance policy regarding all forms of discrimination. The policy should explicitly state that violation of these polices will result in immediate discipline, up to and including termination.
Second, the employer should have a procedure for reporting discrimination that does not involve the alleged perpetrator and that is handled as confidentially as possible under the circumstances. Employees should be informed that there will be no retaliation for reporting discrimination.
Third, the human resources department should have a procedure in place to promptly investigate all forms of discrimination, including interviewing the victim, perpetrator and all witnesses.
Fourth, the HR department’s response is critical. When there is a complaint, the employer has an obligation to promptly investigate and take remedial action. The appropriate remedial action depends on the nature of the complaint and what the investigation reveals.
These policies and procedures should be contained in the employee handbook distributed to all employees. The employee should sign a receipt after the handbook is provided to him or her.
Finally, every employer should retain a knowledgeable employment law attorney who can create materials or review materials created by the HR department.
What should the employer do if it intends to take a negative job action against an employee for a legitimate reason?
In order to minimize the chance that a lawsuit will be filed or if it is filed, to maximize the chance of obtaining a favorable outcome the employer must document the legitimate reasons for the negative job action.
If the employee is performing poorly, chronically late for work, insubordinate, etc., written warnings should be provided to the employee by the HR director or stated in the employee’s file. The warnings should be specific, provided to the employee with another witness present and signed by the employee. Then if termination is necessary, the employer has a well-documented legitimate defense to a claim of wrongful termination. These warnings may make the employee reluctant to claim discrimination and will serve the employer well in court should a lawsuit be filed.
If the employer is truly concerned about a lawsuit, he or she can offer the employee a severance package in exchange for a release of all claims. It is advisable to have an attorney prepare this document.
J. RONALD IGNATUK is a partner at Shulman Hodges & Bastian LLP. Reach him at firstname.lastname@example.org or (949) 340-3400.