The Hidden Minefield of Workforce Reductons

There's sadly lots of news about workforce reductions.  There also seems to be lots discussion about  discrimination cases in the context of workforce reductions but as far as I am concerned, most of them are really missing the point.   

I have handled many discrimination cases over the years in times of recession. On most occasions, companies have downsized with the advice of many lawyers and consultants. Those companies appear to have been given the same or similar advice as  that which was given by an employment lawyer recently published in a National Law Journal article. 

It goes like this:

Successfully battling this "recessionary discrimination" requires the use of statistical analysis comparing the demographics of those laid off with those who are retained.

This is the way that advice is translated:

  1. Managers are given directives to downsize and cut costs in their departments by a certain percentage or certain number.
  2. Managers, armed with instructions on methodology, make the decisions about who should stay and who should go.
  3. Following the standard advice, overall statistics are then looked at to determine if there are a disproportionate number of women, minorities, or those over 40, who are on the targeted list.

If the statistics look good, the terminations are executed, and  the company thinks it's off the hook as far as it's exposure to discrimination lawsuits.

The problem is that while companies relying on this advice may be off the hook for large class action cases, they are not off the hook on the individual employment discrimination case.

For example, as often happens, the long term employee with a solid record of performance is selected while their much younger counterpart is not. There is no objective support for the decision and the company gets sued for age discrimination. 

In that circumstance the overall statistical data makes no difference whatsoever – not to me, not to my client, and not to the jury. What matters is: what justification did you have for terminating the 57 year old employee and keeping the 32 year old my client trained to do his job? If the explanation is not credible, more often than not, the company will lose.

It is an inescapable truth that when managers are given discretion to terminate employees, some bias may come into play – whether it’s getting rid of a woman, a minority, or an older employee for whom the manager has some prejudice.  A  workforce reduction gives that manager a chance to get rid of the disliked employee. This individual biased decision may not show up statistically, and statistical analysis is not going to get the company off the hook in those cases.

So companies beware. While it's certainly not bad advice, or the wrong advice to look at the overall statistics on a workforce reduction, it's not all that matters.  

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Last Chance Agreement Can't Waive Future Claims

The Sixth Circuit Court of Appeals, in  Hamilton v. General Electric, issued a very interesting employee rights decision this month that can be helpful to both employees (and their lawyers) and instructive to their employers.

Jarret Hamilton worked for General Electric for over 30 years.  He had a relatively clean record of employment until 2004 when things began to deteriorate.  Because one of the managers was out to get him, according to Hamilton, he was written up several times which resulted in his termination.

After the termination, the union intervened and Hamilton, GE and the union signed a Last Chance Agreement.  A Last Chance Agreement  ("LCA") is often used in union settings in situations involving alcohol or drug abuse, misconduct consisting of harassment, absenteeism, or repeated violations of workplace rules. 

Last Chance Agreements work like this:

  1. the employee engages in some misconduct;
  2. the union negotiates the LCA with the employer on behalf of the employee;
  3. an agreement  is entered into which gives the the employee his job back and
  4. contains language specifying that if the employee violates any part of the agreement, the employee will be immediately fired  (and this time it's for good) 

In Hamilton's agreement, Hamilton got his job back on the condition that he would comply with all of GE's rules. If any of the rules were violated, Hamilton would be subject to immediate termination.

Hamilton's agreement also contained a provision which said that if GE did terminate him, Hamilton agreed that no legal action regarding the discharge would be filed.  Hamilton signed the agreement and he went back to work.

Everything was fine for about a year and then other incidents occurred which led to Hamilton's suspension. Hamilton believed he was being discriminated against because of his age and filed a complaint of age discrimination with the EEOC as a result. When he returned to work after the suspension, and after the filing of the EEOC complaint, the harassment got much worse according to Hamilton's testimony, all of which culminated in his termination.

Hamilton filed a lawsuit in federal court in Kentucky. Not surprisingly, GE argued that Hamilton had "waived his right to proceed to court by signing the Last Chance Agreement."

While Last Chance Agreements are generally held to be binding on the parties, both the district court and the Sixth Circuit Court of Appeals determined that the provision in Hamilton's LCA which barred him from bringing a lawsuit to challenge the discharge was not enforceable. Finding in favor of Hamilton the court held:

We have held that '[i]t is the general rule in this circuit that an employee may not prospectively waive his or her rights under Title VII...Both of the cases GE cites hold that when an individual is faced with a known violation, he or she may be able to waive his or her ability to pursue further legal actions relating to that past violation. Neither case, however, stands for the proposition that .. an employee can prospectively waive statutory claims relating to potential future violations.

Hamilton signed the LCA nearly a year before he was terminated, and the LCA does not represent his choice to forego future remedies based on GE's future statutory violations.  Accordingly, because Kentucky law does not dictate the contrary result, we conclude that Hamilton's LCA does not bar him from pursuing this legal actions.

In reversing the district court, the Sixth Circuit also allowed Hamilton to proceed on his retaliation claim.

Last Chance Agreements can help employees keep their jobs and have a useful purpose. This is  particularly true in cases of alcoholism and substance abuse when employees are given a chance to get treatment and come back to work. LCA's were never intended to give employers a license discriminate. This case says that  language in LCA's which give employees their jobs back on the condition that they won't ever be able to sue for a wrongful discriminatory discharge will not be enforced.

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Supreme Court Surprise

 This post was originally published in Today's Workplace www.workplacefairness.org on September 10, 2008

Three years ago, I was interviewed by Court TV about the John Roberts nomination. In preparation, I painstakingly reviewed his record. In so doing, I reached the unpleasant conclusion that Roberts was philosophically opposed to civil rights and other legislation for the public good which Roberts deemed to an improper exercise of congressional power.

 The Roberts point of view, it seemed to me, was that since Congress should not have authored this legislation to begin with, it must be as narrowly construed as possible. This was the only logic I could discern which connected a long record of what appeared to be outright hostility to plaintiffs in civil rights cases.

 I was extremely worried about what might happen with Roberts at the helm of the Court. The Alito nomination, with a record equally as hostile to plaintiffs in civil rights cases as that of Roberts, made me feel even more concerned. The harsh reality of Thomas and Scalia combing with these forces was a truly frightening prospect.

But the fact remains; we never really know with any precision what one will do after ascension to the Supreme Court actually occurs. Nothing surprised me more than the Court’s decision this past year in the decision of Sprint v Mendelsohn 128 S. Ct. 1140 (2008) – and it was a very pleasant surprise indeed. 

Civil rights cases are hard to prove. There is seldom direct evidence of discrimination. People don’t go around saying, “we’re not going to hire you because you’re black,” or “we’re firing you because you’re old.” More often than not, we have to prove our cases by circumstantial evidence. Part of that evidence is proving that the reason give by the employer’s decision to fire, or not hire, is not true or not believable.

Other circumstantial evidence routinely offered is that the same thing or something similar happened to co-employees. The admissibility of this kind of evidence, labeled by the defense bar as “me too evidence” has been a battleground since we started trying to prove these cases over a quarter century ago.

Lawyers who represent employees want to call other employees as witnesses to testify about the discrimination that happened to them at the same company. Simply put, these lawyers contend that co-employee testimony is circumstantial evidence that this company discriminated in this particular case because it did the same thing to other employees. In their view, the jury ought to be able to consider this evidence and give it whatever weight they choose in making the ultimate determination as to whether the plaintiff was discriminated against or not.   Lawyers who represent companies don’t want those witnesses to take the stand. They say that what happened to others is not relevant, proves nothing, is confusing and prejudicial, and will result in a bunch of mini-trials about other people who are not parties to the case. 

Some courts have let the evidence in. Some courts have barred it. The significance of this kind of ruling can not be overstated since one’s ability to put on co-employee testimony before a jury can make the difference as to whether the case will be won or lost. For example, where a story about why one thirty year employee got terminated may seem plausible in isolation, it certainly seems less plausible when there are five or six other long term employees whose performance was suddenly not good enough for a company where each has worked without incident for twenty or thirty years. 

Ellen Mendelsohn was terminated in a reduction of the workforce by Sprint, a company where she had worked for many years. She claimed age discrimination. Mendelsohn’s lawyer attempted to introduce evidence from five other older workers who also claimed they were discriminated against because of their age when they were terminated. Three of the five were prepared to testify about denigrating remarks made about older workers. Another claimed that he was banned from working at Sprint because of his age. One was going to testify that he was required to get permission before hiring anyone over the age of forty. None were in the same department as Mendelsohn. The judge ruled the evidence inadmissible because there was no shared decision maker and no temporal proximity. The Tenth Circuit Court of Appeals reversed and held that the evidence was admissible.

The Supreme Court accepted the case. In a decision which has a profound effect on the future of employment discrimination cases, the Court held that the trial court judge was wrong. The unanimous decision, shockingly authored by Justice Thomas, stated that a blanket rule of law excluding evidence of discrimination from co-workers in a discrimination case was wrong as a matter of law. The Court relied in its opinion on the Federal Rules of Evidence with respect to relevance, admissibility, and prejudice which vests the trial court with broad discretion on these matters.  The trial court should determine whether the evidence has probative value and whether sufficient prejudice or confusion may outweigh it. It is a fundamental and liberal standard of evidence which leans toward the admission of evidence given the proper context and foundation.

 So while the decision did not endorse the 10th’Circuit’s view in concluding that the evidence was admissible, the opinion is earth shattering in the world of employment law for what it didn’t say – that is, that the evidence was not per se inadmissible.    In other words, the Court ruled, “me too evidence” should be treated just like any other evidence in any other case.

It may seem odd that it took a pronouncement of the Supreme Court to let judges and lawyers know that the same rules that apply to evidence in all civil cases also apply in discrimination cases. But in the tortured history of discrimination litigation, the same rules unfortunately have not been applied (i.e. the granting of summary judgment where material facts are in dispute, the improper weighing of evidence by the court instead of the jury)

 An opinion by the Supreme Court which held the evidence inadmissible would have been a huge blow to employees faced with the already formidable task of proving that discrimination has occurred. Fortunately, the Supreme Court in an exceedingly pleasant surprise made an important inroad just by reciting and reinforcing the rules of evidence and thereby neutralizing the playing field.

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