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An HR Lesson from the Presidential Debate

Posted by Molly DiBiancaOn October 17, 2012In: Performance Evaluations, Reduction in Force (RIF), Terminations & Layoffs

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I never discuss politics. Never. I don't have the stomach for it, to be honest, and I avoid the subject like the plague. That said, I did manage to watch part of the Presidential Debate on Tuesday night. There are ample pundits who surely have more insightful (i.e., political) commentary than what I can offer. So I'll gladly leave the politics to others and stick with what I know--employment law. Here's one HR-related lesson that I took away from the debate.

One of the hottest topics of post- debate discussion was Mitt Romney's comment about "binders full of women." I'll admit--when I heard him say that, I cringed. It just sounded so wrong.

But I'll admit that I cringed for another reason. I assume Mr. Romney did not actually plan to say that he'd looked at "binders full of women." Surely he meant to say that he'd reviewed binders full of resumes of female candidates. But, alas, those were not the words that he said. And now he's stuck with the ones he did say.

And that's the lesson for HR professionals. Be careful with your words--they're hard to get rid of once they've been said and even more difficult to escape once they've been committed to paper.

I used to teach a seminar called, "Help Me Help You." The theme of the seminar was effective documentation for supervisors and HR professionals. My slide deck consisted of real-life examples of documentation "done wrong." One slide, for example, showed an excerpt of hand-written notes taken by a supervisor who later became the alleged wrongdoer in an age-discrimination case. He'd taken the notes during a pitch presentation by an outside vendor and had written, "would be good work for young project managers."

What he meant, he explained at his deposition, was that the work offered good opportunities for junior project managers--not necessarily young ones. I have no doubt that his explanation was an honest one. But that didn't make it any less uncomfortable when asked about it by the EEOC attorney who was deposing him.

There are more stories like this than I can possibly recount--although someday I may try if I ever getting around to writing my memoir of life as an employment lawyer. The point, though, is this: Words are cheap. Their consequences can be very, very costly. So choose wisely.

Employee's Tookus Antics Costs Him $2m

Posted by Molly DiBiancaOn September 6, 2012In: Policies, Terminations & Layoffs

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Jason Selch worked as an investment analyst for his employer for 10 years. The company went through multiple mergers and acquisitions and eventually was bought by a Bank of America subsidiary. After the BoA merger, Selch learned that his friend and co-worker had been terminated after declining to accept a pay cut.  

Presumably in protest of his friend's exit, Selch marched into a conference room where the COO and CIO were meeting.  He asked the executives if he was subject to a non-compete agreement.  When the CIO answered that he was not, Selch promptly dropped his drawers and mooned the two executives.

The two execs, to their credit, weren't flustered by the demonstration and simply returned to their discussion and went on with the meeting. Later, at the COO's instruction, HR issued Selch a final written warning, which stated that any subsequent violation would result in his termination.  

When the CEO learned of Selch's flagrant "display" of insubordination, however, he insisted that Selch be terminated.  As a result of being terminated for cause, Selch had to foreit contingency payments of approximately $2 million, which would have vested in a few months. 

Not surprisingly, Selch sued his former employer, claiming that he was entitled to the contingency payments because, in part, the written warning was a contract, which constituted a promise that he would not be fired unless he engaged in a subsequent policy violation. 

The court granted summary judgment to his employer and the decision was upheld on appeal.  In short, the court held that the warning was not a 
"promise" such that an enforceable contract was created. 

What are the employer take-aways from this case?

Well, first, kudos to the executives who, remarkably, managed not to lose their cool after such a visual assault.  Let us all be inspired by their ability to stay focused on the task at hand.

Second, today is my birthday and I find this story more than mildly entertaining. Because it is my birthday, I will take the liberty to be a bit more candid in disclosing my opinion here--what an idiot. Shame on Selch for acting like an immature middle-school kid. The good guys won this battle and I am glad for that. 

Via NY Daily News

Reasons to Terminate: More Is Not Merrier

Posted by Molly DiBiancaOn October 4, 2011In: Cases of Note, Gender (Title VII), Terminations & Layoffs

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When terminating an employee, employers need only one reason. Of course, there is rarely just a single reason for reaching the decision. But the existence of multiple reasons does not mandate that each reason be shared with the employee.  In other words, when an employer makes the decision to terminate, there should be only one reason upon which the employer relies and which is shared with the employee—the “final straw.” When an employer changes its “final straw,” it raises doubts both with the employee and with the court and changing reasons are evidence of unlawful discrimination. 

In Smizer v. Community Mennonite Early Learning Center, the employer told the employee that he was being fired due to a Facebook posting he’d made. But the employee didn’t buy it.  He claimed that he really was fired because of his “tardiness and lack of cleanliness in his classroom.”  He claimed that similarly situated female employees, who also were tardy and who kept equally messy classrooms, had not been fired.

If this claim were true, and there were late and messy female employees who had not been fired and the plaintiff was really fired for these reasons, it would support the plaintiff’s Title VII claim.  So the plaintiff sought the court to compel his former employer to produce documents he claimed would show these failings of his female counterparts.

The employer responded that evidence relating to tardiness and messiness were not relevant to the suit because, as you may recall, it fired the plaintiff due to a “troubling” comment he’d made about coworkers on his Facebook page. Thus, the employer contended, the evidence that the plaintiff sought was irrelevant to his claim.

The court disagreed.  In its opinion, it stated that the plaintiff had provided “ample documentation” tending to show that the Facebook posting may not have been the real reason for his termination.  Instead, the documentation apparently showed that the employer had claimed at various other times that there were other reasons for terminating Smizer—including his tardiness and lack of cleanliness.  In employment-discrimination claims, “a shifting justification for an employment action can itself be circumstantial evidence of an unlawful motive.”  Because evidence of “shifting justifications” may be admissible at trial, the requested documents were discoverable and ordered the employer to produce them. 

So what’s the big lesson employers can learn from this story?  In short, pick a reason and stick to it.  One reason to terminate an employee is all you need—and all you should have.  Certainly, there may be (and usually is) a long history of performance issues with the employee.  And all of these would be relevant to the employer’s decision to proceed to termination. But the “final straw” is not a “bail of hay.”  Pick a reason, stick with it, and don’t muck it up by giving multiple reasons for the decision at the termination meeting or in a termination letter.  If you’ve done what you’re supposed to do, you’ve addressed the other issues as they came up with the employee and he’s aware of those issues. 

Smizer v. Community Mennonite Early Learning Ctr., No. 10 C 4304, 2011 U.S. Dist. LEXIS 102212 (N.D. Ill. Sept. 7, 2011).

See also:

Bad Reason #29 to Fire an Employee

Don’t Hate Me Because I’m Brilliant: One Employee’s Tale

3d Cir.: No Protection for an Employee Who Lies

Employment Seminar Update: Layoffs and Reduction in Force Slides

Posted by Molly DiBiancaOn May 11, 2009In: Terminations & Layoffs

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Our annual employment law seminar, held last month, was a tremendous success.  As promised,  3d man providing informaitonwe posted the first of the presentation slides (COBRA and the Economic Stimulus Package), last     week.  Today, we are happy to deliver the slides from Scott Holt and Maribeth Minella's "Layoffs and  Reduction in Force" presentation.  

Mark your calendars--our next seminar will be held on June 5, 2009, as part of our Breakfast Briefing series.  Look for more information this week on the topic and registration.  In the meantime, don't hesitate to let us know if there are topics in particular that are on your radar these days.

For more information on terminations and layoffs,  please see our prior posts, Top Ten Layoff Tips, and Bad Reason #29 to Fire an Employee.

Top 10 Layoff Tips

Posted by Maribeth L. MinellaOn March 6, 2009In: Seminars, Past, Severance Agreements, Terminations & Layoffs, WARN Act

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Layoffs and reductions in force were the topics of a seminar we presented yesterday, during which we reviewed how to plan and implement workforce reductions, requirements for severance agreements and releases, and alternatives to layoffs.shutterstock_21093820

In following up to yesterday's discussion, here is a list of the "Top 10 Layoff Tips": 

1. Plan your business first.

Your business plan should always be at the forefront of any decision. Don’t let a reduction in force later hamper your ability to compete. Even if they don’t result in costly litigation, short-sighted layoffs can be expensive because when your business picks back up you will eventually need to replace your laid-off employees.

2. Plan your reduction in force second.

Any reduction in force, whether a traditional lay off or an alternative, should complement your business plan. The short-term goal is to cut costs, but a reduction in force should not cut corners.

3. Consider alternatives.

There are many alternatives to traditional layoffs, and their beauty is that you can tailor them to fit your company’s needs. Alternatives include job sharing, reducing employee hours, voluntary sabbatical programs, and cutting benefits. The list is long and varied, so be creative.

4. Document, document, document.

HR professionals who are worth their salt know that good documentation is the first line of defense to an employee’s discrimination claim. Likewise, impeccable documentation of your reduction in force planning and implementation is your first line of defense to discrimination claims that may arise from a reduction in force.

5. Control the process.

Translation: Don’t wait until the last minute. If you think your business is on shaky ground, start thinking about how to reduce your labor costs. Ultimately, you want a reduction that cuts costs, keeps your best employees, and can get your business through the economic downturn. If you wait and make labor cuts your last resort, you will likely sacrifice one of those goals.

6. Involve stakeholders.

Who? The people who can be trusted with the company’s actual financial condition, who have a good reputation with employees, who can think creatively, and who represent affected employees. These are the people who have demonstrated a commitment to your company’s success. Don’t just involve the same managers who make all of the decisions. Think creatively about who to involve in the process.

7. Seek the advice of legal counsel early.

This accomplishes two important things. First, layoffs can lead to angry employees, who are more likely to sue you. Involving legal counsel early can help you reduce your exposure to lawsuits by making sure your reduction in force does not run afoul of any employment or labor laws.  Second, your communications with counsel are likely protected by the attorney-client privilege, which is important in litigation. This does not mean that the process should be kept secret, because it shouldn’t. The purpose of the privilege is to give clients the opportunity to speak freely and without the concern that what they say to their attorney will be used against them later. That, in turn, means you can float your creative ideas by your attorney and not have your brainstorming held against you.

8. Thoughtful risk analysis.

Whether you involve legal counsel or not, any reduction in force has to be planned and implemented with an eye on potential legal missteps. If you control the process, you also have an opportunity to think about the potential hazards in a meaningful way. Consider the risks your reduction in force poses and if they are too great, change the plan.

9. Identify WARN notice issues.

We’ve posted about the Worker Adjustment and Retraining Notification (WARN) Act before. Basically, it’s a federal law that requires certain employers to give employees 60 days advance notice of a layoff. If you employ at least 100 full-time employees or 100 full-time and part-time employees who, in the aggregate, work at least 4,000 hours per week, any reduction in force discussion should include consideration for the WARN Act.

10. Special considerations for older workers.

There are laws that pertain only to employees who are forty or older, and those laws have particular requirements for things like releases and severance packages. This is one more reason to involve your legal counsel early so that you can readily address any issues presented by workers who are covered by the Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA).

Best Practices When Considering a Severance Agreement

Posted by Molly DiBiancaOn February 9, 2009In: Severance Agreements, Terminations & Layoffs

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Many employers use severance agreements as a way to protect their business from legal liability arising from terminating employees.  Larger companies sometimes use them in just about every termination, while most smaller companies are more selective--offering severance packages only when there is a particularly volatile situation or where there is already a suspicion that the employee will try to sue.  Here are the Top 5 tips that every employer should know about severance agreements before offering one to a soon-to-be former employee.

Who Should Be Offered a Severance Agreement?

The modern school of thought says that employers should consider offering a severance package to all persons who are laid off during a reduction in force (RIF) contract or agreementand to any employee who, for whatever reason, may be particularly inclined to sue. 

Some employers offer severance agreements to every person they terminate.  This becomes problematic, though, when they find themselves having to offer to pay money to an employee with serious policy infractions.  For example, do you really want to offer severance to an employee who is being terminated because he was found to have harassed several female employees?  Probably not.  And he's probably not likely to sue the company.  But, because they've always given severance, the employer is hesitant not to do the same for this employee. 

Specific Requirements for Employees Over 40 Who Are Offered a Severance Package

For severance agreements offered to employees aged 40 and over, the Older Workers Benefit Protection Act (OWBPA), imposes certain requirements that require strict compliance.  Specifically, the agreement must provide that the employee has 21 (or 45, in the case of layoffs) days to consider the offer.  Then, even after acceptance, the employee has seven days to revoke their decision. 

Failure to include this very specific language can result not only in the agreement being unenforceable, but also in liability against the employer if the employee files suit on the ground that the agreement is not in compliance with the law.  It can also invoke a visit from the Department of Labor.

What the Severance Agreement Can and Should Prohibit

A severance agreement should prohibit the employee from filing suit on his or her own behalf against the employer from any and all claims arising from the employment relationship.  It should also prohibit the employee from encouraging or assisting others in filing suit against the company. 

The agreement may not prohibit the employee from filing a Charge of Discrimination with the EEOC or local state agency.  But it can prohibit the employee from collecting any damages if the EEOC pursues a suit on the employee's behalf against the employer. 

There has recently been discussion on whether an employee can waive his or her rights under the FMLA. For a while, there was some indication by the courts that such a waiver would not be enforceable.  Recent guidance indicates the opposite--that FMLA claims indeed can be waived in a severance agreement.

Another area subject to debate is the inclusion of a "no-hire" provision.  Some courts have held that an employer who requires its employee to agree not to reapply for future work with the company is actually engaging in unlawful retaliation.  But, again, some recent court decisions have found that an employer who refuses to rehire a former employee who had been fired previously where the refusal is based on a "no-hire" provision, is not engaging in retaliation. 

What to Do When an Employee Wants to Negotiate a Severance Agreement Offer

The answer to this question is more about instinct than anything else.  Especially where the employer does not offer every terminated employee a severance agreement, it is easier to refuse to negotiate it and extend a "take-it-or-leave-it" type offer.

This is especially true if the employee is going to run up the clock with your lawyer.  Remember to include the costs of negotiation in your settlement offer.  If you are wiling to negotiate for an additional amount, try to quantify that amount in advance and realize that, once your expenses have reached that pre-defined maximum, then you either have to cease negotiations with the former employee or reduce the offer so you break even at the end. 

It is not uncommon for employees to attempt to negotiate.  Often, this is more of a pride issue than anything else.  If you're able to be flexible with any point, it may be enough to satisfy the employee that she walked away with her pride still intact.

Other than more money, consider whether a positive or neutral letter of reference may satisfy the negotiating employee.  Or maybe offer to pay his first 2 months of COBRA payments, especially if this may be an area of concern for the employee because of a special health-care need in his family.

Use a Lawyer

This point cannot be stressed enough.  I have lots of clients who want to reuse old severance agreements as boilerplate agreements instead of calling me for a new one each time.  Really, this is not a good idea.  I can put together a custom severance agreement that is appropriate for the circumstances specific to the employee in less than a half-hour for regular clients and for businesses I know something about or with which I have worked before. 

This is a small price to pay when compared to the expense of a lawsuit brought by an employee who already received severance payments but who was given a defective severance agreement based on a standard, one-size-fits-all template or form.

And the same goes for the employee. Don't just "let" them use a lawyer.  Encourage it.  And, to be legally compliant, state as much in big, bold, letters on the agreement itself.  It is in your best interest the employee fully understand what rights they are releasing to prevent buyer's remorse.

Bad Reason #29 to Fire an Employee

Posted by Molly DiBiancaOn June 9, 2008In: Newsworthy, Severance Agreements, Terminations & Layoffs

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There are good reasons to terminate an employee.  There are also plenty of bad reasons.  And then there are really bad reasons.  This story is an example of the latter. 

cops for cancer 2

A waitress in Owen Sound, Ontario, was "laid off" after she had her head shaved for a cancer fundraising event.

Stacey Fearnall (pictured) raised more than $2,700 for charity, but when she showed up for work and refused to sport a wig for her shift, her boss told her to take the summer off.

Her employer, Dan Hilliard, says his restaurant has certain standards prohibiting men from wearing earrings and requiring employees to keep their hair at a reasonable length.  Should she agree to wear a wig during her shifts, she's welcome to return.  If not, she should consider herself unemployed until her hair regrows to a "reasonable length."

Hillard acknowledges that his decision to not let Fearnall return to work has been a bit of a public relations disaster. But he stands by it nonetheless, insisting that he has received support from some customers who agree with him and say they would have been "appalled" to have been served at Fearnall's table. 

He also claims that Fearnall, a 27-year-old mother who also works a a plant nursery and as a caterer, was told in advance that the restaurant owners wouldn’t be pleased if she participated in the fundraiser and suggested she find alternative ways to support the cause.

Maybe it's just me but do any of these "reasons" sound legitimate?  This is yet another example of when something can be legally viable and just plain dumb at the same time.