Death By A Thousand Small Cuts: How a Company Can Survive (and Even Win) a Discrimination Lawsuit

Eventually, almost every company will have to defend a discrimination lawsuit. Success depends not on some grand gesture, but on many small things done long before the suit is filed. Here’s how to establish the company’s defense the right way.

At the end of a long day, your secretary comes in, announcing that the company was just served with a lawsuit. An ex-employee is claiming that she was sexually harassed by her boss and fired after she rebuffed his advances. As the company’s human resources administrator, you’re aware that the employee was actually terminated for repeated performance problems. The employee never complained to you about sexual harassment, as the company’s anti-harassment policy requires. You feel confident the courts will dismiss the suit quickly.

A week later, your confidence has all but disappeared. The company’s attorneys have reviewed the employee’s file. They asked a lot of questions which you and the supervisor had difficulty answering. The attorneys have also made it pointedly clear that the anti-harassment policy is not the magic shield you envisioned. The merits of the employee’s case haven’t changed. But you now realize that getting rid of it is not going to be quick, easy, or cheap.

Many employers realize too late that there is never an easy defense to even the weakest discrimination suit. No matter how hard jurors try to be impartial, it is inevitable that some of them will immediately side with the party with which they can most identify–the employee–when assessing credibility. Even the judge is likely to sympathize with "the little guy." To overcome these biases, the company needs to prove that it treated the employee fairly throughout the employment relationship. Only then can the jury focus on the real merits of the case and feel good about returning a verdict for the company.

No single act can overcome the jury’s sympathies for the employee and win the day. Instead, the "death" of a discrimination claim comes through the administration of a thousand small cuts. Each "cut" is a fact which establishes the company’s fair treatment of the employee and calls into question the employee’s true motivations. These facts come from practices established long before the employee filed suit.

Followed zealously, the following 10 practices will enable the company to administer the thousand small cuts needed to bring about the timely demise of an employee's discrimination claim:

With the exception of Montana, all states adhere to some variation of the "at-will" employment doctrine. In the absence of an employment agreement, this doctrine states that a company can legally discharge an employee at any time and for any reason–or no reason at all–so long as the motivating factor is not illegal. In other words, under most circumstances, it is legally permissible for an employer to arbitrarily terminate employees without cause and without warning.

While "at-will" employment is the rule, the prudent company should nevertheless discipline or terminate employees only for apparent good cause, i.e., some explanation that a "reasonable" person would find acceptable. Few actions induce a jury to question a company’s motivations more than when an employer disciplines or terminates an employee for no apparently good reason. Conversely, a clearly articulated, well-reasoned explanation for the company’s actions allows a juror to see things from the company’s perspective. Even if the juror does not necessarily agree with the company's actions, he or she can comfortably conclude that discriminatory animus did not play a part.

As a practical matter, you should question any supervisor who proposes to terminate an employee without a clearly documented business justification for doing so. A company makes an enormous investment in finding and training its employees. A supervisor’s unexplained desire to waste that investment should make you wonder whether the supervisor is trying to cover something up, such as discriminatory conduct. The jury surely will.

While an anti-harassment, anti-discrimination policy is not an absolute shield to a discrimination claim, it is nevertheless an essential part of the defense. In fact, the United States Supreme Court ruled last year that companies without a sex discrimination policy may not avail themselves of certain defenses if sued for sex discrimination.

Any anti-harassment, anti-discrimination policy must be well-publicized, both in writing and through repeated training of all employees. If employees do not know what is prohibited and how to report inappropriate conduct, there is little likelihood that appropriate conduct will prevail. There is also little chance that the right people will learn of problems in time to take effective remedial action. Conversely, an employee who fails to utilize a well-publicized policy about which he or she received training will find it difficult to impute liability to the company, since he or she never gave the company a chance to correct the problem.

The company must also commit itself to enforcing the policy consistently against anyone who violates it. Failing to discipline a senior-level executive or company rainmaker adequately sends a number of wrong messages. Top performers will think that the policy does not apply to them, which will only encourage improper acts. The employees will become less likely to report harassment, making it harder to identify before it gets out of hand. And the jury will find it difficult–if not impossible–to side with a company that values the bottom line over the rights of the individuals working for it.

A prompt and thorough investigation of a complaint (or even a rumor), establishes a company’s good faith efforts to eliminate discrimination in the workplace. The judge or jury will often reward these efforts. In fact, some state and federal courts have ruled that a prompt and thorough investigation may insulate a company from liability even if the conclusion of the investigation is erroneous. In other words, a faulty investigation undertaken in good faith may do more for a company’s defense than an accurate investigation performed reluctantly.

To take advantage of this defense, the company should have an investigation plan in place before any claims are made. Ideally, the investigation team will consist of at least one male and one female, so involved parties can speak to the person with whom they feel most comfortable. The investigators should also be outside the alleged harasser's chain-of-command. This will eliminate claims of bias or cover-up if the employee does not agree with the investigation’s findings or the discipline imposed.

It is imperative that the people performing an investigation receive training in how to perform an investigation correctly. Difficult decisions affecting the lives and careers of those involved will be based on the investigator’s findings. And investigation notes are often discoverable in litigation. The plaintiff’s attorney will certainly amplify any mistakes. Adequate training will help eliminate these potential problems.

Increasingly, employees are claiming that the harasser (or those friendly to the harasser) retaliated against them for bringing the original harassment complaint. These claims often arise after the employee has been disciplined for actual violations of company policy. The employee claims the supervisor would not have imposed discipline had the employee not reported the harassment. The supervisor's motivation for imposing legitimate discipline becomes the issue, making the claims difficult to defend. Excessive fear of retaliation claims can even freeze a company into inaction against an employee who, although deserving of disciplinary action, has previously complained of harassment.

Information and follow-up can effectively combat retaliation claims. When an employee complains of discrimination in good faith, inform the employee that no one may take any adverse action against him or her for making the claim. She or he should report any retaliation immediately. The alleged harasser should be warned that his or her disciplinary actions regarding the employee will be reviewed scrupulously. Then, approximately one or two months after completion of the investigation, a company representative should have a short, but formal, meeting with the employee to ask whether there has been any retaliatory action. Follow up on any "yes" responses. Document any "no" response. This follow-up meeting will make it difficult for an employee to later claim that actions taken for performance deficiencies were "really" in retaliation for bringing an earlier discrimination claim.

The best defense to a retaliation claim, however, is consistency in discipline. If the supervisor and others have imposed the same discipline in the past for similar infractions, the aggrieved employee will find it difficult to show how retaliation played a part in the disciplinary action. For this reason, review of disciplinary decisions by the Human Resources Department is an excellent procedure to have in place.

Nothing trumpets a company’s fair treatment of its employees louder than a strong, faithfully executed, progressive discipline policy. Employees are given opportunities to correct problem behavior before the employer takes drastic action. Used properly, progressive discipline policies virtually eliminate the employee’s ability to claim ignorance in response to the company’s defense that it disciplined the employee for cause–not discriminatory animus. And an employee disciplined or terminated after repeated warnings will have a hard time convincing anyone that an employer’s real motivation was discrimination.

A progressive discipline policy is a double-edged sword, however. Absent extraordinary circumstances, failing to follow a progressive discipline policy is the surest way to get a jury interested in the employee’s case. It is natural for an already suspicious jury to believe that the company must be hiding something if it failed to follow its own disciplinary policy. Accordingly, whether simple or elaborate, the company must have a total commitment to following its progressive discipline policy, or it should not have a policy at all.

Lop-sided performance reviews are the bane of every management-side employment attorney. It is virtually impossible to explain away a series of positive evaluations when arguing that the employee was disciplined or terminated for performance deficiencies, not discriminatory animus. After all, how fair is it to gloss over an employee’s performance problems at the annual review and then terminate the employee for those same problems? According to a jury, not very. And the jury is left to question the company’s "real" motivation for its actions.

The problem is compounded in a layoff, where the company cannot even point to a series of performance problems leading up to the questioned discipline. The jury is again left to wonder why a particular employee, evaluated positively all those years, was chosen for layoff instead of his or her contemporaries, who just happen to fit into the preferred gender/racial/ethnic/age category.

To combat this problem, managers must receive training on how to evaluate employees properly. Managers must include weaknesses, as well as strengths, in the yearly evaluation. Employees must learn that criticism in a yearly review presents an opportunity to improve. Then, if improvement is not seen over the course of time, the discipline imposed is seen by the employee–and the judge or jury–in its appropriate context.

An exit interview is a prime opportunity for the company to learn of problems the employee may have been reluctant to verbalize earlier. Exit interviews also give the company one last opportunity to document that the employee denied the existence of any problems the company should know about (e.g. harassment, retaliation). If the employee does raise a discrimination claim at the exit interview, the company can investigate before the employee leaves. If the claim is valid, the company can make appropriate efforts to retain the employee. Even if the employee still leaves, his or her damages may be minimized or even eliminated.

While an employee's denial of any "problems" at the exit interview will not prevent the employee from later bringing a suit for discrimination or constructive discharge (i.e., the harassment or retaliation was so unbearable that the employee was "forced" to quit), it will make the claim ring rather hollow. It will also allow the company to show that it gave the employee every possible opportunity to report improper workplace conduct–which the employee repeatedly ignored. Under these circumstances, the judge or jury is more likely to question the employee’s motivations for the suit.

It should go without saying that acting in a manner inconsistent with written policies, or contrary to similar situations, will call the company’s motivations into question immediately. It is for this reason that an employee handbook should never contain a policy that management is not fully dedicated to abiding by and enforcing. Moreover, discipline for infractions of written (or unwritten) policies should always be apparently and provably fair. They establish the precedent by which later discipline is measured. It is difficult to argue that the company properly terminated a woman for some disciplinary issue when a man received a verbal warning for the same infraction a year earlier.

Documents have a real impact on juries. They evidence the fact that the employer took an issue seriously. Documents are also more effective than live testimony in combating an employee’s memory regarding whether and when events occurred. Therefore, once an employee’s performance becomes an issue, any efforts made to correct it should be documented. Even casual discussions with the employee about the problem should be memorialized.

Memos regarding discussions with the employee do not have to be lengthy (or even grammatically correct). On-going, or particularly serious, problems merit formal memos or letters to the employee, with a copy to the employee’s file. In later stages of the disciplinary process, you should have the employee sign that he or she received the writing, even if he or she does not agree with it.

Regardless of how formal you make the documentation, a review of the employee’s file should show clearly that the employee was made aware of the problem and given a chance to correct it before stronger discipline was imposed. (This assumes, of course, the conduct was not so egregious that it warranted immediate dismissal.) With this sort of documentation in hand, the company can very effectively combat an employee’s claim that disciplinary action was the result of discriminatory animus.

When dealing with employees, your common sense is your greatest asset. If you believe that an employee is a disciplinary problem, or taking advantage of a situation, he or she probably is and you should respond appropriately. If, on the other hand, you believe a supervisor is overreacting to a relatively minor transgression by the employee (or worse, to no transgression at all), you should trust your instincts and investigate. You may uncover a situation and rectify it before it gets out of hand.

As importantly, common sense is the yardstick most jurors utilize to measure the employee's -- and the company's -- actions. If their common sense tells them that the company acted appropriately, they are more likely to set their biases aside. At that point, they will be more open to listening to the real reasons why an employee was disciplined.

Defending against a discrimination suit rarely depends on some master stroke. Success comes from carefully chipping away at the plaintiff's case until anyone can see it for what it really is. By following the tips stated above before the threat of litigation, you will be prepared to emphatically document the company's fairness – and administer the thousand small cuts necessary to win.

For further information, please contact us.

The ideas presented in these materials are general in nature and not intended to be construed as legal advice and cannot be relied on by any person or entity as legal advice pertaining to any specific situation.