COMMON SENSE WAYS TO AVOID EMPLOYEE CLAIMS

Every employer believes he is fair to all his employees and that not one of his employees would ever become disgruntled and pursue a legal action against him.  WAKE UP.  That is the exception rather than the rule.  The reality facing employers is that there is a distinct possibility that even long term employees will become disgruntled and ultimately pursue a legal action based upon either a real or perceived wrong committed by the employer.  Recognizing this fact and preparing in advance for its possible occurrence can literally be the difference in winning the employee lawsuit when it ultimately comes or losing that lawsuit.  The following simple procedures are easy to implement, will actually promote fairness towards every employee, while providing the employer a basis of defending and defeating a merit less wrongful discharge lawsuit brought by a disgruntled employee.

AT-WILL EMPLOYEE STATUS 

• The California Labor Code provides generally that an employment having no specified term may be terminated at the will of either party on notice to the other. 

• Employment Application 

• An express disclaimer in an employment application form that employment is at-will can limit the exposure of an employer to a later claim by an employee that he or she accepted employment in reliance on an implied agreement that termination would occur only for cause. The Application should state that “the terms cannot be altered except by some specified and highly-placed company representative. 

• Handbooks and Policy Manuals: 

• A well-drafted employee handbook serves many useful purposes. It can help to (1) create and promote a desired image or corporate culture (2) improve employee morale by acquainting the employees with their benefits and other aspects of employment that make the company a desirable place to work (3) reduce employer-employee disputes by giving notice of uniform employment guidelines and policies (especially those concerning equal employment opportunity and employee discipline and discharge) (4) limit the possibility of union organizing and (5) persuade an opposing counsel, judge or jury in a wrongful discharge case that the employer has followed a coherent employee relations philosophy. 

• Limitation: All handbooks should include a disclaimer “its contents were under no circumstances to be construed as describing conditions of employment or as creating or constituting a contract.” 

• Grievance Clauses: Many employers have responded to the emergence of wrongful discharge law by adopting some type of formal or informal internal dispute resolution procedure as an attempt to assure their employees an opportunity to voice their concerns before such concerns lead to litigation.  
• WAIVER OF JURY TRIAL:  Every employee should be given an employment agreement that restates the "At Will" relationship and also includes a waiver of a trial by jury and provides for mandatory arbitration.  Juries historically favor the employee so removing the threat of an erroneous and very large judgment in favor of the employee is a major step in protecting the company from a terminated or disgruntled employee. 

• Informal: “Open Door Policy”
• Series of steps in the resolution process with ultimate appeal to a line manager, a disinterested manager or a high level authority or a committee composed of employees and managers. The committee should only be given the authority to offer a resolution to the problem.
• Filing a written complaint to designated representative.
• Precondition to litigation is non-binding mediation.
• MANDATORY BINDING ARBITRATION:  Your handbook and your employee employment contract should contain a provision providing for binding arbitration 

• Note: Requiring employees to exhaust available grievance and arbitration remedies serves the policy of providing a quick, relatively inexpensive alternative to court litigation. 

• Discipline and Discharge Clauses: Employers should adopt a discipline or discharge policy. However, if an employer adopts a discipline policy, it must  scrupulously follow the terms of that policy. Enforcement of rules and the assessment of discipline should be exercised consistently. Document everything. By creating its own discipline and discharge policy, an employer should be able to determine for itself the standard by which it will deal with its employees, escaping the imposition of some other standard by a court or jury, and will also provide a written basis to monitor the consistent administration of discipline. 

• Progressive Discipline: The effective application of progressive discipline prohibits employees from asserting later that they were not warned that their conduct could lead to discharge, helps assure consistency by formalizing guidelines for the administration of discipline, and demonstrates the employer’s wish to act reasonable and in good faith with its employees. 

• Step One: Oral Counseling (documentation to file)
• Written Warning (which should always be signed by the employee)
• Probation or Suspension
•  Termination 

• Exceptions: Progressive Discipline policies would not apply to offenses that are clearly inappropriate and require immediate termination such as on-site drug use, violent conduct, theft etc. 

• Disclaimer: The policy should also include an express reservation of management discretion in administering the policy. 

• Salary Increases / Performance Review: It is difficult to prove to a jury that a discharge was for a good reason if there is no documentation of poor performance or if the employee’s personnel file contains only documents relating to salary increases or other indications of satisfactory performance. Do not make it a habit to simply tell the employee he is doing a good job and reward him with a raise.  Make sure you discuss and document the employees' deficiencies, and if necessary give him a lessor raise than planned because of the deficiencies.  

• Performance Evaluation: An effective performance evaluation procedure is an important step toward limiting potential liability for wrongful discharge and discipline. Where improvement is indicated, a plan and timetable for improvement should be specified by the manager.  Again an honest written evaluation of the employees' performance and stated improvement goals goes a long way towards disproving an alleged unlawful discharge.  Of course, have the employee sign the written evaluation and provide him with a copy. 

• Note: standardizing review criteria and educating managers to formally and regularly review their employees performance reduces the potential for arbitrary treatment or differential standards in discharge and discipline. 

• Exit Interviews: Employers should  conduct exit interviews with all  terminating employees, in order to make a written record of the stated reasons for leaving.  This will prevent a disgruntled employee from changing his story down the road and filing a wrongful termination lawsuit.  An exit  interview also has the side benefit of allowing the employer to obtain important information on how well the employer’s employee relations policies are being implemented. 

• Pre-Termination Interview With Employee:  Speaking with and documenting what the employee is upset about and why he is quitting, prior to making any decision on termination, provides the employer the opportunity to gather data while the issue is current without the employee thinking his employment might be jeopardized.  Usually the employer is better able to identify the real problem facing the employee when the interview is conducted in this manner. 

• Requesting Employee To Resign Than Be Terminated:  Oftentimes a disgruntled employee who has committed an offense that will lead to his termination would rather be allowed to resign rather than be formally terminated.  This allows the employee to tell future employers that he resigned form his last employment and avoid the stigma that goes with a termination when looking for new employment.  Additionally, an employee who willfully resigns will be hard pressed to fashion a viable wrongful discharge lawsuit down the road. 

• Prohibit Immediate Supervisors From Terminating Employees 

• For instances involving insubordination and other offensive conduct, allow the immediate supervisor to suspend the employee pending investigation by a higher-level manager. 

• Review Discharge By Attorney: If in doubt about a wrongful termination, always seek legal advise before terminating an employee. 

• Discharges of employees who are in a protected class, or who otherwise present litigation risks, should be reviewed by an attorney as well. 

• In-House Investigation 

• The individual responsible for reviewing the discharge should speak with all persons who have knowledge of the relevant facts and circumstances. He or she should take detailed notes and consider obtaining signed statements if witness later may be unavailable or may be hostile to the company’s position. 

• Red Flags 

• Employee is long term
• Member of racial or ethic minority
• A woman in a job traditionally dominated by men
• 40 years or older
• Pregnant or pregnant related medical condition
• Handicap or Disabled
• Suffered on the job injury
• Filed worker’s compensation claim
• Testified concerning another’s employee’s claim
• Made complaint against sexual or racial harassment
• Made complaint about workplace safety or possible illegal conduct by the employer 

• Overall Concerns: 

• Ensure your termination procedure assures that the employee’s treatment of the terminated employee is fair, when objectively examined. 

• You should verify that the reason proffered for discharge is objectively justifiable as legitimate to the operation of the business.