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.  

image:http://www.delarondeforge.com

Pope Speaks Out on Genetic Discrimination

An article by the Associated Press  about Pope Benedict XVI's remarks on Saturday regarding the danger of genetic discrimination has generated a good deal of comment. What is genetic discrimination?

In sum, there are now more than 1,000 genetic tests for various disorders. These tests assess risk for illness ranging from prenatal tests for Down syndrome and birth defects to tests given to individuals with a family history of colon cancer, ovarian cancer and Huntington's disease to name a few. The medical community  strongly advocates the use of testing to help prevent disease and illness. Genetic discrimination refers to adverse decisions which are made as a result of those test results.

According to the Associated Press, Pope Benedict XVI said Saturday that any type of discrimination based on genetic factors,  such as a risk for cancer or other ailments, is an attack against all of humanity:

One's biological, psychological and cultural development and health can never become an element for discrimination.

The article went on to point out that the Pope's comments  were made in reference to to a screening mechanism for embryos created for testing prior to in-vitro fertilization. It comes as no surprise that the Vatican is strongly opposed to the practice.

The issues surrounding genetic discrimination however are far broader particularly as they relate to employment. I did a television interview about this topic last spring. Here's the problem.

Some employers and their health insurance companies require individuals to submit to genetic or chromosomal testing in order to determine  whether the person is predisposed to certain diseases or disabilities. The result is that some employers, as well as some insurance companies, make adverse employment  as well as health benefit decisions based on those test results.

In other words, your employer finds out that you have a history of breast cancer or colon cancer  in your family and decides not to hire you or  to fire you for that reason -- that's genetic discrimination.

Fortunately, genetic discrimination was virtually unanimously outlawed by Congress last year.  The Genetic Information Nondiscrimination Act  ("GINA") prohibits employers from firing, refusing to hire or otherwise discriminating against employees based on genetic information. Just a few days ago, Workplace Prof Blog  highlighted a newly published article by William Herbert and Amelia Tuminaro, in the Hofstra Labor and Employment Law Journal, which elaborates on this bill:

A central tenet of the legislation is to encourage individuals to take advantage of the benefits of genetic technology without having to fear that participation in genetic testing and studies will endanger job opportunities or health benefits ...

In addition to prohibiting employment discrimination based on genetic information, GINA also restricts employers generally  from' reques[ting], requir[ing], or purchas[ing] genetic information with respect to an employee or a family member of the employee.'

There are many great parts about GINA but  it's not perfect as Herbert and Amelia point out in their article. What's more,  it doesn't go into effect until October 2009 (eighteen months after its passage).

But at least the law prohibiting genetic discrimination was enacted, employers and insurance companies won't be able to discriminate against you based on your genetics, and it doesn't hurt that  the Pope's on our your side.

image: http://www.topnews.in/files/pope_benedict_0.jpg                                          

Taxes on Civil Rights Damages Need Adjustment

A recent ruling can have a positive financial impact for winning employees in discrimination cases and both plaintiffs and their counsel should know about it. The Third Circuit decision in Eshelman v. Agere Systems addresses a long term tax problem the employment bar has been struggling with for years. 

Here’s the explanation. Awards in discrimination cases usually entail an amount called “backpay” which compensates the victim for wages lost as a result of the discriminatory conduct. So, for example, if a person was wrongfully discharged because of his race and it took him three years to find a new job, the jury is entitled to award three years of “backpay.”

The problem is that when awarded in a lump sum, the taxes owed are more than they would have been had the employee paid the taxes in three consecutive years of work or in the normal course of employment. This result doesn’t jive with the law which entitles the employee to be restored to the economic position he would have been in but for the employer’s conduct.

The lawyer representing Joan Eshelman, who won this important disability discrimination case discussed  here on February 18th, asked the judge in a post-trial motion for an amount to compensate Eshelman for the negative tax consequences of the lump sum back pay award.

The judge granted the request and the Third Circuit Court of Appeals agreed:

We hold that a district court may, pursuant to its broad equitable powers granted by the ADA, award a prevailing employee an additional sum of money to compensate for the increased tax burden a back pay award may create. Our conclusion is driven by the “make whole” remedial purpose of the anti-discrimination statutes. Without this type of equitable relief in appropriate cases, it would not be possible ‘to restore the employee to the economic status quo that would exist but for the employer’s conduct.'

In order to obtain the additional award, employees must be prepared to prove the loss. In Eshelman, the plaintiff provided an affidavit from an economic expert who calculated the amount of tax effect, the applicable tax rates, and Eshelman’s tax returns for the years in question, a method of proof which was approved by the court.

Several years ago, as reported in Lawyers Weekly USA, we got the trial court  in one of our cases to instruct the jury on this issue. In other words, the jury charge included language informing them that the award to the plaintiff would be taxed at a higher rate as a result of the lump sum award than if the plaintiff employee had collected the same amount in income over several years. We provided economic testimony on the issue so that the jury had the appropriate calculations.

Groups advocating for both employers and employees have been trying to address this tax problem for years. We now have precedent to address this issue on a case by case basis. When the Civil Rights Tax Relief Act is reintroduced, Congress should pass it and rectify this situation once and for all.

Image:hffo.cuna.org

Sexual Harassment Not Observed by Victim Can be Used Against Employer

Can a plaintiff support her sexual harassment claim with evidence of sexual harassment she did not observe? According to the Fourth Circuit Court of Appeals in Ziskie v. Mineta the answer is yes.

Cynthia Ziskie sued the Federal Aviation Administration for creating a sexually hostile work environment.

In support of her claim, Ziskie submitted affidavits from co-workers containing examples of crude and inappropriate behavior (i.e. making fun of pregnant worker’s breasts, commenting that women should be home taking care of children instead of working, calling a woman "an alien with big boobs" , calling a woman a “stupidvisor”, telling a female supervisor to “fuck off ”, etc.)

The District Court threw out Ziskie’s case holding that Ziskie’s sexual harassment was not severe enough to support the claim. The District Court refused to consider the affidavits of the other female employees and would only consider what Ziskie personally experienced. In reversing the decision of the District Court, the Fourth Circuit Court of Appeals said:

 When examining all the circumstances of a plaintiff’s workplace environment, evidence about how other employees were treated in that same workplace can be probative of whether the environment was indeed a sexually hostile one, even if the plaintiff did not witness the conduct herself. Hostile conduct directed toward a plaintiff that might of itself be interpreted as isolated or unrelated to gender might look different in light of evidence that a number of women experienced similar treatment.

The opinion noted that the district court’s “blanket refusal” to consider the testimony of the other women was inconsistent with the Federal Rules of of Civil Procedure  and Evidence which require that all relevant evidence be considered:

Even if  Ziskie did not witness the conduct  described herein, it is nonetheless relevant because it could contribute to the evidence offered to show that the workplace environment at the Washington Center was indeed a hostile one.

This is a hugely important decision for victims of sexual harassment. In order to prevail in these cases, the plaintiff must prove that the harassment was severe or pervasive. Far too often claims of sexual harassment fail, as did this one initially, because the judge finds that the victim’s testimony alone does not meet that burden. In other words, yes some harassment may have happened, but it wasn’t “severe or pervasive” so you lose and the case is thrown out.

This decision, which allows the testimony of the co-workers to establish the severity or pervasiveness of the sexual hostility in the workplace, will go a long way in helping women assert their rights.     

image: http://www.worktrauma.org/CKF60026.JPG

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.

image: http://www.biojobblog.com/surprise(1).jpg