Employee Lawsuits: Introduction, Table of Contents

How employers can cope with the siege of employee lawsuits

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A jury in Seattle, Wash., concludes that an employer did not discriminate against a female sales manager but nevertheless awards her $11.7 million on her claim that the company retaliated against her for bringing gender discrimination issues to the attention of management. A Pennsylvania woman is awarded $1.4 million by a jury that determines that her employer defamed her by telling her co-employees that she stole a bag of potato chips. Employees working for a Connecticut telecommunications company are awarded $14.5 million because they were required to stay at the job site while they ate lunch.

Two female office workers in Florida receive an award of $6 million on their sexual harassment claim against a plastic surgeon. A female lab technician is awarded $4.2 million in Pennsylvania after she was successful in proving that a hostile environment existed for her in her place of employment. In California, a male employee claiming sexual harassment by his female supervisor (who allegedly forced him to have intercourse with her) is awarded over $1 million by a jury.

Texaco Corporation settles a race discrimination lawsuit brought by six black employees for $176 million. Martin Marietta Corporation agrees to pay $13 million in back pay and rehire 450 older workers at an estimated cost of $171 million in order to settle an age discrimination class action lawsuit. Southern California Edison Company enters into an $11.25 million settlement with nine black plaintiffs who brought a class action alleging that the utility company had limited pay increases, career advancement, and other employment opportunities for black employees.

In today's litigious society, employers have become a key target. The Commission on the Future of Worker-Management Relations, an advisory body appointed by President Clinton, analyzed data regarding lawsuits filed in federal court during a 20-year period from 1971 to 1991. The total number of personal injury cases filed in federal court during that 20-year period increased by 17 percent. The total number of employment law disputes filed in federal court, however, increased 430 percent in that same 20 year period, a larger increase than any other classification of cases. Employment claims are rapidly becoming the "slip and fall" action for the 21st century.

These statistics, while frightening in their own right, may understate the threat faced by employers. The Commission's study ended before passage of the Civil Rights Act of 1991, the Americans with Disabilities Act, and the Family and Medical Leave Act, all of which have generated even more litigation. The Civil Rights Act of 1991 is particularly responsible for luring many new plaintiff's attorneys into the employment litigation field. This statute allows plaintiffs to receive large compensatory and punitive damage awards for violations of employment discrimination statutes. The discharged employee has become a more appealing prospective client for many lawyers who had heretofore disdained representation of discharged employees because they could only recover back wages and "make whole" relief such as medical expenses.

The Civil Rights Act of 1991 also created a jury trial right for employees claiming discrimination, a procedural change that has increased the size of damage awards. The median jury verdict in employment cases in 1995 was $184,000, up more than 40 percent from the median verdict in 1994. Juries in employment law cases are notoriously sympathetic to plaintiffs and unsympathetic to corporate defendants. Many jurors have spent their entire working lives as nonsupervisory employees; very few have held positions where they were required to make hiring or firing decisions.

In addition to discrimination actions, employers are also being sued on various "wrongful discharge" theories. The once venerable employment-at-will rule, which held that employment may be terminated by either the employer or the employee at any time, for good reason, bad reason, or no reason at all, is riddled with exceptions such as the "public policy" exception or the "covenant of good faith and fair dealing" exception. Employees who cannot dredge up a public policy violation will, nevertheless, claim that their employers breached an employment contract by discharging them. Finally, in virtually every wrongful discharge or employment discrimination action, the employee bringing the lawsuit will also state several "tort" claims such as intentional infliction of emotional distress, assault, battery, defamation, and invasion of privacy. These tort claims also allow for the recovery of punitive damages, thus increasing the potential for large damage awards against employers.

How can a business protect itself from potential jury verdicts in favor of disgruntled employees? My primary goal in writing this book is to show employers how to avoid unnecessary labor and employment law problems and stay out of court. You may be asking yourself: What in the world does a lawyer know about keeping employers out of court? The answer is that I have spent the last 15 years doing exactly that - helping clients avoid costly employment litigation.

10 Protective Principles

This book is based on 10 protective principles that I have distilled from the advice that I have given employers over the last 15 years. The principles are not magical talismans for making employment litigation disappear. Rather, each principle is intended as a reminder to employers of certain strategies that can keep them out of court.

Employment-at-will is a myth.

Employers can no longer afford to discharge employees for "good reason, bad reason, or no reason at all." Even if it's only unemployment compensation liability, a discharge decision that is not grounded in a valid performance-based reason will cost the employer money.

Disclaim everything in your handbook

Employers will be held accountable for promises they make to employees. If a statement is not intended as a promise, the employer's intention in this regard should be made clear to employees.

Never fire a pregnant woman.

Some employees - no, make that many employees - hold protected status under state and federal discrimination laws. Therefore, the employer should not discharge these employees without a well-documented nondiscriminatory reason.

There is no such thing as a "safe" workplace romance.

Sexual harassment is the most dangerous of all employment discri mination claims. Employers cannot allow sexual harassment to exist in their workplace no matter how benign its origin.

Give abusive or combative employees the maximum penalty.

The incidence of abusive, aggressive, or violent behavior in the workplace is increasing. Employers should take a very hard line against workplace violence.

Assume that every workplace injury will be an ADA disability.

Employers must remember that any chronic physical ailment, any bizarre mental disorder, or even an asymptomatic condition may be protected by the broad definition of disability in the Americans with Disabilities Act (ADA).

Never assume an employee is exempt

Employers are cautioned against being overinclusive when categorizing employees as exempt for wage and hour purposes. The "salary basis" requirement for establishing an exemption from the overtime requirements in wage and hour statutes is undoubtedly the most violated provision in the federal wage and hour regulations.

If they don't need to know, don't tell.

Employers should abide by the rule of confidentiality when handling personnel matters. Employees have received huge damage awards on claims that an untrue communication by their employer damaged their reputation.

Employee privacy is not an inalienable right.

Employee privacy need not be a primary concern for employers as they operate their business. There are laws that regulate workplace privacy issues but, in general, employers who do not create an expectation of privacy for employees by allowing them to believe that they or their possessions will be free from surveillance or searches have no reason to fear invasion of privacy claims.

It's never too late for union avoidance.

Employers who practice positive employee relations, which is really the basis for the first nine principles, will not be targeted by unions for organizing. However, even if an employer is confronted with the prospect of a union organizing campaign, it is never too late to defeat the union.

Goals and Objectives

In writing this book, I have tried to give practical advice for avoiding problems that can lead to litigation. Each chapter starts with an introductory narrative which, although completely fictional, has its roots in actual problems that can confront employers. As you read each narrative, try and figure out what the employer is doing right or where there has been a misstep. Sometimes the result is obvious, but there also may be a surprise along the way.

I have built the legal discussion in each chapter around actual cases. Employers can take a lot of information from the case discussions in each chapter, which they can apply to their own business. I have closed each chapter with a summation section that outlines the things employers should be doing to minimize their potential for liability.

his book is intended as a practical guide for employers, human resource professionals, managers, and supervisors who want to avoid workplace problems. It is not intended to give legal advice on any specific problem where particular facts underlying the problem may recommend analysis by a competent labor and employment law attorney. This book will help managers respond effectively to day-to-day issues that arise in the workplace. The author is not soliciting an attorney-client relationship with any particular reader.


I. Employment-at-Will Is a Myth

Intentional Infliction of Emotional Distress Theory

Public Policy Exceptions to Employment-at-Will Rule

The Termination Decision

Defenses to Public Policy Wrongful Discharge Claims

II. Disclaim Everything in Your Handbook

Avoiding Enforceable Promises

Theory of Contract Formation

Offer Letters and Implied Contracts of Employment

Individual Employment Contracts

Misrepresentation or Fraud

Promissory Estoppel and the Covenant of Good Faith

Minimizing Exposure

III. Never Fire a Pregnant Woman

Ever-Expanding Discrimination Protections

Sex Discrimination

Race Discrimination

National Origin and Religious Discrimination

Harassment - Not Just a Sexual Thing

National Origin and Religious Discrimination

Reducing Potential Discrimination Claims

IV. Sexual Harassment

No 'Safe' Workplace Romances

Liability for Sexual Harassment

Pervasiveness of Sexual Harassment

Defenses Against Harassment Charges

Same Gender Harassment and Tort Causes

Discharging Harassers

Avoiding Harassment Claims

V. Abusive or Combative Employees

Violence in the Workplace

Identifying the Violent Employee

Negligent Hiring and Retention

Intentional Torts and Mental Disabilities

Background Checks

How to Deal With Violent Employees

VI. Dealing With the ADA

ADA Disabilities and Workplace Injuries

ADA - Two-Stage Hiring Process

ADA - Reasonable Accommodation and Undue Hardship

The Safety Defense

ADA - Alcoholism, Drugs, Mental Disorders Obesity, and AIDS

ADA Preparation Steps

VII. Coping With the Fair Labor Standards Act

DOL Investigations

Wage Liability

Exempt Employees

Overtime and Other Forms of Compensation

Avoiding Wage/Hour Liabililty

VIII. Defamatory Liability

Defamatory Behavior

Defamatory Performance Evaluations

Defamatory References

Fighting and Avoiding Defamation Liability

IX. Employee Privacy Rights

Limited Right of Employee Privacy

Invasions of Privacy

Privacy in the Computer Age

Avoiding Invasion of Privacy Claims

X. Union Avoidance

Decline of Unions

Reinvorated Union Organizing

Discouraging Union Organizers

Union Avoidance 'Do's' and 'Don'ts'

How to Stay Union-Free


Company Policies

Excerpted from Slam the Door on Employee Lawsuits: Keep Your Business Out of Court. Copyright 1998 by Paul M. Lusky. Published by arrangement with Career Press.

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