Phillips Nizer LLP Articles
Article - How to Avoid Employee Discrimination Claims (Part II) (Fashion Mannuscript)
In a previous column I discussed and recommended that apparel companies utilize a written contract with employees (it can be an "at will" contract – i.e., terminable at will by either party) containing a provision for arbitration of any and all claims or disputes. In this way, companies can avoid the risk of runaway jury verdicts in favor of employees asserting questionable or meritless claims. This article discusses the internal procedures that a company should utilize to minimize the risk of unjust employee discrimination claims ever getting to either a lawsuit or arbitration, and improving the company's position if a claim is pursued to Court or arbitration.
It is not enough to say "we don't discriminate", even though the statement may be totally accurate. Claims of race, sex, and age discrimination may still be asserted. In fact, other types of employee discrimination claims, such as "harassment", "hostile environment", "disability" and others are becoming all the more common. All such claims can be minimized (though not necessarily eliminated) by following appropriate company policies and procedures.
Severance Agreements and Releases
Most discrimination claims are asserted by employees after their employment has ended. Such claims can be substantially reduced by requesting that the departing employee sign a severance agreement and general release. A severance payment to a departing employee, particularly one who it is envisaged may possibly assert a discrimination claim, is money well spent and will often eliminate a possible discrimination claim.
For those companies with existing written severance policies, there should be a provision conditioning severance on the execution of an appropriate general release.
Since there are precise requirements under the federal discrimination statutes that a severance agreement and release must meet, it is important that the form be drafted by a lawyer experienced in this area.
Adopt and Publish an Anti-Discrimination Policy and Procedure
Every company should have a written discrimination policy and an internal complaint procedure to deal with discrimination claims. An executive (or better yet, several executives) whom employees respect for their integrity and fairness, should be appointed to deal in the first instance with discrimination claims. The appointed person should meet with the Complainant privately and get his or her statement of complaint in writing and signed. This will "set" the factual context of the Complainant's complaint and prevent later changes. Just the fact that the Complainant is able to vent his complaint privately to a respected person of authority perceived to be fair and reasonable sometimes is sufficient to deflate the problem. The supervisor should then of course meet with the alleged culprit and get his or her statement in writing and signed.
Appropriate remedial action, if necessary, should then of course be taken. An internal "appellate" procedure (such as review by a senior member of management) if the Complainant is dissatisfied with the suggested remedial action is also possible, depending on the size and culture of the company. Many complaints that might otherwise find their way into legal proceedings will be solved by an appropriate internal procedure.
Full Documentation is Crucial
It is extremely important that there be full documentation on a contemporary basis of performance issues. If a customer complains about an employee, if that employee has a practice of arriving late or leaving early, or if any other derelictions occur, they should be promptly recorded. The documentary record, recorded contemporaneously with the events, will provide the effective answer to an employee discharged for cause who then claims his discharge resulted from discrimination.
But it is important that the write-ups be done on a current basis – an "after the fact" write-up, detailing all the delinquencies over a period of time, which is reconstructed after termination or after assertion of a discrimination claim, has much less effect. Consistent with the importance of documentation, it is very important that periodic regular evaluations are frank and objective and not "sugar coated". The evaluation given to the employee should not be done "with kid gloves" to avoid hurting the employee's feelings. If an employee who deserved criticism received nothing but favorable or lukewarm evaluations, the employee may justifiably use them to rebut a defense that termination was justified - "How can they say I performed badly – look at my yearly performance evaluations." The employee's performance must be reported frankly, although criticism should always be in a constructive way, reflecting goals for improved performance.
While no assurance can ever be given to any company that it will be free of any discrimination claims, the procedures outlined above will reduce substantially the risk of unjustified employee discrimination claims.