A Warning About Warnings

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The rapid rise of retaliation claims has led some employers to question whether terminations really ought to be preceded by progressive discipline and pre-termination notice about performance problems, such as written warnings.

Arguably, yes. There still are many sound reasons for apprising employees about performance problems before termination, including simple fairness and the savings from turning a problem employee around instead of the costly alternative of hiring and training a replacement. Progressive discipline lays a paper trail that can minimize an employer’s exposure to discrimination claims.

But it would be wrong to assume that progressive discipline has no legal risks. Progressive discipline may, in fact, be challenged as unlawful retaliation, a charge that rose to the second most common claim filed with the U.S. Equal Employment Opportunity Commission (EEOC) in fiscal 2007, surpassing claims of gender discrimination.

The rising tide of retaliation claims has its own legal risks, including the growing risk of being sued over warnings about performance problems.

Consider the following hypothetical: Randy has been employed by your organization for approximately one year. Her performance started out fine but has declined to marginal. Her manager, Greg, indicates that he wants to fire her.

You look at Randy’s employment record and note that she has received no disciplinary warnings and that her only evaluation just a few months ago indicates that she is meeting all expectations. You tell Greg to give Randy clear notice in writing that her performance is marginal so that she has an opportunity to improve. Reluctantly, Greg issues Randy a written warning.

Two weeks later, you get a letter from an attorney representing Randy. He alleges that the warning Randy received is a product of sex discrimination. More specifically, he alleges that male employees performing the same job have similar deficiencies in their performance but they have not received disciplinary warnings.

You conduct an investigation and conclude that the disciplinary warning was justified and that the alleged male comparators do not have similar deficiencies in performance. You caution Greg about nonretaliation and make clear to him that he must give Randy every opportunity to succeed.

Three weeks later, you receive another letter from Randy’s attorney. This time, he alleges that because Randy complained about discrimination and harassment, she has been retaliated against. He alleges that Randy is being excluded from meetings and training opportunities and that these exclusions began to take place after she raised legal concerns.

Greg adamantly denies the allegations. He states that Randy’s performance continues to decline and that he wants to terminate her. Perhaps with the help of outside counsel, you then explain to Greg the retaliation risks.

Protected Activity

In this case, it is clear that Randy has engaged in protected activity by complaining about unlawful discrimination through her attorney.

It is important to note that she would have been engaging in protected activity even if she had raised the unlawful discrimination concerns on her own.

The question then becomes whether there has been any adverse action. In 2006, the U.S. Supreme Court issued a sweeping decision broadening substantially the actions that could serve as the predicate for a retaliation claim. Specifically, in Burlington N. & Santa Fe Ry. v. White (548 U.S. 53 (2006)), the Supreme Court held that it is not necessary to have a tangible adverse action for there to be unlawful retaliation. Rather, a viable claim may exist with adverse changes to "material" terms and condition of employment. These could "dissuade a reasonable worker from making or supporting a complaint."

The Supreme Court went further, holding that even adverse actions independent of the employment relationship could be retaliatory.

A Wide Sweep

Following the Supreme Court’s decision, the lower courts have defined adverse actions very broadly for retaliation purposes. By way of example only, retaliation has been held to include:

Placing an employee on paid leave (McCoy v. City of Shreveport, 492 F.3d 551, 555 (5th Cir. 2007)).

Excluding an employee from the weekly training lunch that contributes significantly to an employee’s professional advancement (James v. Metro Government of Nashville, 243 Fed. Appx. 74 (6th Cir. 2007)).

Including in the employee’s personnel file a written disciplinary statement when only a memorandum of counseling was warranted (Witt v. Moffe, C.A. No. 03-CV-971A (W.D.N.Y. Feb. 6, 2008)).

Singling out an employee for more dangerous assignments (Lewis v. City of Chicago, 496 F.3d 645 (7th Cir. 2007)).

Taking away a teacher’s resource room, refusing to authorize funds to repair her copier, cutting off her Internet and communication access to the school during her leave of absence and other comparable actions (Ross. v. Baldwin County Bd. of Educ., C.A. No. 06-0275-WS-B (S.D. Ala. March 24, 2008)).

Section 1981 Retaliation

The Supreme Court extended the reach of retaliation claims further in CBOCS West Inc. v. Humphries (128 S. Ct. 1951 (2008)), a case involving Section 1981 of the Civil Rights Act of 1866. Section 1981 prohibits racial discrimination with regard to making and enforcing contracts, including the terms, conditions and termination of an employment relationship.

In CBOCS West Inc., the Supreme Court held that Section 1981 also covers retaliation claims in the employment context.

With this legal background, let’s go back to Greg and Randy. Randy already has asserted what may be a viable retaliation claim with regard to business development opportunities and training, even if no tangible adverse action is taken against her. If Greg terminates Randy, it is inevitable that she will allege that the termination was retaliatory, too.

Even if Randy isn’t fired, if she has been denied business development opportunities and training, she still may have a viable retaliation claim, even though there has been no change in her title, compensation, benefits or hours. At a minimum, it is probably a question of fact for a jury whether the exclusions are sufficiently material to dissuade a reasonable worker from making the complaint.

Needless to say, Greg is angry … at you. He tells you that if you had not blocked him from terminating Randy when he wanted to, he wouldn’t have the problems that he does now. And to some degree, Greg is right.

Risk Selection

What does this mean for HR professionals?

When it comes to disciplinary warnings, there is a downside to giving a warning or additional warning. The warning or additional warning may decrease the discrimination risk, but it also may create a retaliation risk.

There are, nevertheless, critical business considerations independent of the legal risks that must be considered as part of the analyses. Even if providing a warning increases the retaliation risk, it is usually a necessary tool to develop talent. Most of us would not be where we are today if someone had not taken the risk to tell us where our performance was deficient.

We are dealing with risk selection—not risk avoidance. Accordingly, when it comes to termination decisions, HR professionals need to help managers understand and balance competing legal and business risks and not simply assume that some or more documentation is the answer.

Preventive Steps

The number of retaliation claims between 2006 and 2007 increased by 18 percent. That was the largest percentage increase of any category of claims filed with the EEOC.

An employer cannot avoid a retaliation claim simply by retaining the employee. If the employee is retained but marginalized, he or she may have a viable retaliation claim, even if he or she has no "economic loss." As one prominent plaintiffs’ lawyer likes to say, "every day is a new opportunity for retaliation."

While employers cannot avoid retaliation claims, there are specific steps that you can take to minimize exposure to them. By way of example:

• EEO policies should include a separate retaliation provision. This is important in creating your corporate culture and conveying to the EEOC, a judge or jury that you understand retaliation.
• Nonretaliation should be a critical part of EEO training. The training should emphasize that avoiding an employee does not avoid a retaliation claim but may create one. The training should caution managers angry about being falsely accused from sending angry e-mails that will only make the plaintiff and plaintiff’s lawyer happy.
• In deciding whether to discipline or terminate, an employer should be thoughtful but should not delay unnecessarily. When employers delay taking action against an employee, they often avoid the worker. That signals to the employee what is coming, providing him or her with the opportunity to strike first.
• If you need to delay disciplining or terminating, document the timing of the decision and the reason for the delay. If a protected complaint is made in the intervening period, you can show that the subsequent termination was not because of the complaint. In Clark County Sch. Dist. v. Breeden (532 U.S. 268 (2001)), judges found that employers are not required to suspend previously planned or contemplated employment actions upon receiving a discrimination complaint.
• In disciplinary documentation given to an employee, include a time frame for necessary improvement. That way, if the employee makes a complaint in the intervening period, the employer’s risk in moving to the next step is reduced if, in fact, the employee has not made the necessary improvement.
• If an employee raises a complaint, his or her manager should be required to consult with an HR professional before changing the employee’s terms and conditions of employment. Establishing HR oversight as a standard operating procedure will help to avoid retaliation claims and provide helpful evidence of the employer’s commitment to nonretaliation.
• If an employee has not alleged discrimination or harassment and the employer wants to discipline him or her, the employer should consider as one risk in taking action short of termination whether it is creating a window of time for the employee to build a retaliation claim.

This is, however, not the only risk that employers must consider. HR professionals should attempt to balance legal and business risks as opposed to simply avoiding legal risks. The latter is not possible or even necessarily desirable.

In terms of developing talent, the greatest risk of all may be to take no risk at all.

The author is co-chair of WolfBlock’s Employment Services Group and the managing principal of the WolfInstitute. His practice in Philadelphia concentrates on preventive planning, counseling and training.