THE MAGAZINE

See You in Court

By Diana Maier

 Bad Acts

In considering the merits of an employment lawsuit, the plaintiff’s lawyer looks first at the steps the company has taken against the employee such as probation, demotion, and termination. These are known as adverse employment actions. Termination is generally required in a successful lawsuit against an employer. There are exceptions, however. The employee’s claim may simply entail harassment based on sex or another protected status as well as retaliation or some other action that requires that employee quit to get out of an intolerable working situation. In such a case an employee is asking that the resignation be considered “constructive termination.”

If, for example, an employee is harassed by a manager or coworker, the company is often liable even if the employee voluntarily chooses to leave the workplace. This constructive termination means that the employee felt that he or she had no option but to resign to end an intolerable situation. And if the employee has good reason to leave, liability is the same for the employer regardless of who initiated the employee’s departure.

Bad acts can take many forms but can be split into three general categories: harassment, hostile work environment, and violation of public policy.

Harassment. Cases of sexual harassment often end up in the courtroom unless the employer is proactive about investigating and preventing the slightest possibility of sexual harassment. In some states, such as California, the court will hold a company strictly liable if such harassment is perpetrated by a manager. In these cases, the court assumes that the employer knows about the situation.

If the employee claims harassment by a manager, coworker or client, all that a potential plaintiff is expected to do is notify a manager, supervisor, or the corporate authority designated as responsible for investigating employee complaints. Responsibility for addressing the complaint is then in the hands of the employer.

For example, the author was recently involved with a California case in which a female employee had a relationship with a male client. When the relationship ended, the client threatened to take his business elsewhere unless the employee was removed from his accounts. When the company honored this request, it set itself up for a lawsuit, because it was complicit in the client’s acts of harassment.

As in this example, sexual harassment can simply be negative actions against an employee who ends a sexual relationship and is then retaliated against for doing so. If the company permits such retaliation to occur, it is participating in the harassment.

Though laws may vary slightly from state to state—California law tends to be more pro-employee than others—they are generally consistent in a company’s duties to its employees.

The company should also seriously investigate any complaint of sexual harassment no matter how frivolous it appears, and it should consider anyone in the company equally capable of harassment. Management should bear in mind that once the company has been made aware of the harassment, it must investigate the complaint competently or it could face liability.

For example, in the aforementioned case involving a client, the employee told the human resource department that the client was threatening her, but human resources failed to investigate because human resources personnel held the employee in low regard. The fact that she had engaged in a consensual relationship with a client damaged her credibility. But the California Supreme Court (Carter v. California Department of Veterans Affairs, California Supreme Court, 2006) recently held that a company doing business in California has the duty to prevent and investigate sexual harassment complaints, even those directed against a corporate client with whom the employee has voluntarily been involved. The company is liable for responding to allegations of harassment even if initiating the investigation or taking action to stop the harassment disrupts the corporate-client relationship.

Part of what the company did wrong in this case was that instead of investigating the allegations made by the employee, it undertook an investigation against the employee making the claim. Even if there was good cause for the investigation, it appeared that the company was retaliating against the employee for complaining of sexual harassment. A company must refrain not only from doing what is clearly illegal but also from doing what could be interpreted as illegal.

Hostile environment. Sexual harassment and hostile work environment are both a subset of sex discrimination, a cause of action that allows a plaintiff to recover certain damages depending on the applicable federal or state laws. For example, in California, successful plaintiffs can obtain attorney fees, economic damages, emotional distress damages, and punitive damages.

Any company that allows employees to do something systematically that is making other reasonable employees uncomfortable faces a potential suit for hostile work environment. But a hostile work environment is not always easy to spot. It’s not just the neighborhood garage where the office is littered floor to ceiling with “girlie” pictures. The courts may also find that the environment was hostile if male or female plaintiffs are made to feel uncomfortable at work, even if only periodically, because coworkers comment about plaintiffs’ good looks in a personal manner or coworkers discuss openly at work their own sexual conquests.

To avoid these types of claims, companies should have active training programs to ensure that employees understand the range of behaviors that can constitute sexual discrimination or harassment and the consequences for engaging in any of these behaviors at work.

Violation of public policy. Termination in violation of public policy is a favorite among plaintiff’s attorneys. If an employee is retaliated against for blowing the whistle or refusing to do illegal acts, he may have a strong cause of action for a termination in violation of public policy. What that means is that if your company is doing something illegal—violating either a statute or a regulation—and an employee openly opposes it, don’t terminate or demote that person unless there is an excellent reason that has nothing to do with the fact that he is stirring up trouble for the company.

There are employees who vocally oppose virtually every single company policy. Some of their opposition may be legitimate, and some of it may be a shortcut to taking on the company. In my practice, I see numerous employees who at first seem to have a strong case for violation of public policy. However, when I review their file, I see that their entire work history consists of a long dissent against the company carried out in an unproductive manner. In these cases, the key factor is whether there was an existing regulation or law that the company violated, whether the employee was demoted or fired after making a complaint about this violation. If she wasn’t, and she has a long history of being a troublemaker, managers should document these problems consistently until a pattern asserts itself. If a manager has done this, there is no reason to expect a successful lawsuit

Retaliation. Retaliation is a similar cause of action that arises when an employee is retaliated against for doing something that he or she is entitled to do when it relates to a protected class under the antidiscrimination laws. For example, in the case cited at the beginning of this article, the employee we called Mary could argue that she was retaliated against for exercising her right to the FMLA, and she would have a strong case.

Generally, employers should not terminate someone who is in the middle of a leave period. That person is entitled to leave under state and federal law, and the courts will see it as too much of a coincidence that something totally unforeseen would come up in the relatively short period of time that the individual is out of the office.

In the California sex harassment case described earlier, there was a fairly egregious case of retaliation. The employee told the human resources department in an e-mail that she was afraid of complaining about the harassment because she feared retaliation by her supervisor. Since she was later terminated, the plaintiff could legitimately claim that her fear had come true. That e-mail cemented the success of a retaliation cause of action.

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