Defusing Discriminations Claims

When former police officer Anthony Hogan accused his supervisor in the Kansas City police department of age discrimination, the department looked into the matter and decided to fight the claim. Hindsight suggests the investigation could have been more thorough, though it was good enough to satisfy the Missouri Human Rights Commission. The commission failed to find "reasonable cause," and Hogan, who had been a policeman for more than 24 years, pushed on to state court.

There, with the jury listening, he countered his supervisor’s denials with the proverbial smoking gun—tape recordings from three meetings where the supervisor could be heard telling him he was "burned out," "dragging his feet" and "no longer a fireball." Further testimony fingered another police official who had referred to him as "Officer Dirt—because he is older than dirt."

Somehow, the age bias Hogan experienced went undiscovered during internal investigation when remedial action might have salvaged his career. Now, it was the jury’s call. In a 10-2 verdict, it awarded him $700,000 in actual damages and $2 million in punitive damages. Hogan settled for $1.95 million during an appeal.

This botched investigation suggests what can happen without in-depth and careful handling of discrimination cases. Dennis Egan, partner at Popham Law Firm in Kansas City, Mo., says that job losses and layoffs foster a spike in discrimination claims. U.S. Equal Employment Opportunity Commission (EEOC) officials report that filings always go up during a recession; they expect an increase in filings because of legislative changes including the Lilly Ledbetter Fair Pay Act. And, with discrimination suits against employers expected to rise as Baby Boomers reach retirement age, it might be a good time to evaluate how your organization addresses charges of discrimination.

Here’s how to help your organization avoid the fate of the Kansas City police department and proactively prevent bias claims of all kinds.

"The demand letter puts you on notice that something went wrong. It’s common courtesy to acknowledge it," says Rae Vann, general counsel 

for the Equal Em- ployment Advisory Council in Washington, D.C. Too often, HR professionals treat these letters as junk mail. "Twenty-five to 30 percent of the HR people who get my letters just ignore me," Ballman complains. "This is very foolish. From the get-go my client feels he’s been done wrong and the nonresponse just gets him angrier. When you get a letter from me, if you do nothing, it’s not going to go away."

Sometimes, even when HR professionals respond, the tone of their letters creates problems. They may convey the outrage employers harbor at the attorneys’ audacity and perceived inaccurate assessment. "When you respond in an inflammatory manner telling the lawyer how ridiculous his letter is, it’s a big mistake," says Janet Hill of Hill & Associates in Atlanta, former president of the National Employment Lawyers Association. "It’s an invitation to him to escalate."

Sometimes, the retaliation is flagrant, like when the supervisor flies off the handle by firing or demoting the person. "This happens infrequently, but it still occurs even with seasoned employers," says Joseph Schmitt, partner and chair of the labor and employment group at Hallenland Lewis Nilan & Johnson P.A. in Minneapolis. More often, "it’s a manager who’s not sophisticated who lashes out."

People get "emotional when they’re accused of discrimination," says Jan Waterhouse, J.D., SPHR, assistant dean for operations and finance at University of Iowa College of Nursing in Iowa City, Iowa. "They may say things behind the complainant’s back, or tell people about the claim—which they’re not supposed to do."

Manage the person by the book, advises Condon McGlothlen, partner at Seyfarth Shaw in Chicago. "Complainants should not become immune from being treated like everyone else. Don’t manage them with such kid gloves that you send a message that filing charges is a ticket to job security. Document performance problems, but don’t go overboard. Keep a diary on an employee with a pending charge, but don’t put the person under a microscope that would be different from how you treat other employees."

Occasionally, the documents reveal an obvious set up, Schmitt says. "The employee communicates to the manager, tells him he has a personal concern that’s bias-related, but asks him not to do anything. Then he comes back a month later and accuses the manager of having knowledge of the problem, but not doing anything."

If the person is in a protected class, HR reviews the situation before a termination is authorized at Johnson Controls, an automotive products company in Waukesha, Wis., with 140,000 employees. "We do our best to train supervisors so they know when they’re dealing with a potential landmine," says HR Director Lisa Whitmore, SPHR. "We have control systems in place so a supervisor can’t process a negative event unilaterally."

"There may be times when you think you’ve done a thorough investigation, but you missed something," Waterhouse says. "Later, if the case goes to litigation, it can come back to haunt you."

A thorough investigation will uncover the weaknesses in your case, says Christine Walters, J.D., SPHR, a principal at HR consulting firm FiveL Co. in Westminster, Md. Walters helps employers investigate and respond to complaints. "If the case involves failure to promote or firing, I want to make sure the performance appraisals are there and that they go back a few years," she says. "It’s helpful to have the goods on them in writing."

Walters says problem cases often begin with appraisals. "When they indicate above-average performance or that the worker exceeded expectations, it can lead to an inference that the employer’s action was discriminatory."

Lawyers who investigate cases also run the risk of losing their objectivity. "The attorney has presumably given the company advice that there’s no claim or not a good claim," Hill says. "There’s a pride aspect that can inhibit willingness to compromise or rethink a recommendation."

Consider: When you terminate people, they try to figure out why they were selected. "It’s human nature to question whether it was a personal characteristic rather than a business decision," Vann says. And high-profile cases aside, the odds are stacked against the ousted employee. Most cases will fade away at the EEOC—with withdrawals, abandonments or findings of "no reasonable cause." But even for losers, the process serves a purpose. "It gives them something to do at a tough time in their lives; it gives them some feeling of having a day in court—of knowing they’ve told somebody their side of the story," Schmitt says.

In contrast, Dreiband sees advantages to mediation even if you don’t settle. "It gives the employer an opportunity to size up the person who brought the charge and learn whether there’s a lawyer involved."

Still, about 70 percent of employers take a pass on mediation, preferring to let the EEOC investigation run its course. Many conclude that they have done nothing wrong and to settle would set a poor precedent. Some say the opportunity comes too early. "The company hasn’t had the time to investigate or evaluate the case," Vann says. "You don’t want to be asked just to settle on a cost-of-defense basis. You don’t know if you did anything wrong, so why settle?"

A study in 2000 of 629 employers found that the main reason they opted out was because they didn’t think the claim was meritorious and they were unprepared to offer compensation when they expected that the EEOC would not find "reasonable cause."

Lawyers, on both sides, however, suspect these employers are not being practical. "In 25 years experience as a lawyer and HR executive, I’ve never seen that settlements encourage lawsuits," says Michael Buda, SPHR, senior vice president of HR and employment counsel at Superior Hospital Corp. in Boca Raton, Fla. "All that agreeing to a settlement shows is that you have to solve problems and get on with your business."

"It is really stupid not to mediate," Ballman insists. "What is the downside? It’s free; you get to rehash the issues; you get a chance to resolve the matter. If you don’t mediate and wind up in litigation, the judge will make you mediate."

Murphy has testified in more than 20 cases, for employers about half the time, usually when they’ve gone through a reduction in force (RIF). Employers have most trouble supporting their actions when they create procedures designed to cut staff, he says. "They have a well-developed performance management system which they disregard. Instead, they gin up something out of the blue to support their decisions. When you ignore all the things you already have in place, it can come back to bite you."

Remember, investigators have crushing caseloads and are not interested in debating the finer points of case law. "They’re not impressed so much with citations of the last 20 age-discrimination court decisions as they are with the EEOC’s own guidelines," Dreiband says. "Cite those provisions to the investigators; they care about their own standards."

• Will the employer likely win?
• What will be the cost of going through with the case if it’s not settled?
• What will be the impact of the company’s reputation as the case winds along?
• What will be the impact on other workers?

The answers may yield a business decision that opts for fighting to the finish. Or they may point to the practicality of cutting your losses. "You don’t need to take up too much attorney time before you start racking up fees," says Whitmore, a member of SHRM’s Workplace Diversity Special Expertise Panel. "Sure, sometimes the demand letter is ridiculous, but we’ll offer a smaller amount just to get rid of the claim. If we provide a settlement, we ask the claimant to sign a release in exchange. We also go on record that we don’t believe we’ve done anything wrong."

At Johnson Controls, Whitmore says when a settlement is reached, the payout is charged against the budget of the claimant’s former manager. It’s often a bitter pill to swallow because he believes he did nothing wrong. "The manager is sick about giving money to someone he thinks has no right to it," Whitmore says. She preps managers during training for the eventuality that they might have to settle a case for business reasons. They go along, but reluctantly. "They usually want to fight it out to the end."

Most important in deciding what to do, Whitmore says, is not to lose sight of the ripple effect. Your workers are watching and waiting to see how you handle each claim. "We think about the people who worked with the claimant. We want everyone to think we’re an upstanding employer. We want others to believe we did the right thing."

The author, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.