HR vs. HR

HR professionals are accustomed to responding to employee complaints, not making them, and to being on the inside, not the outside, of corporate decision-making. When HR employees end up as plaintiffs in an employment law dispute, the employer may be in for trouble.

The Great Recession has not spared the HR profession, and a subset of laid-off HR employees, like any group, will sue their former employers. Some, when they see their jobs in jeopardy, may attempt to "blow the whistle" on perceived corporate misdeeds or gather smoking-gun evidence, such as e-mails and other inside information, to support a theory of discrimination on behalf of themselves or others.

In one case handled by my firm, an HR manager conducted the company’s investigation of her own sexual harassment complaint and took home the graffiti evidence she had found in the workplace. In another case, when the HR director of a small company alleged that the chief executive officer harassed her, she claimed she had no one to turn to because the sexual harassment policy stated that harassment could only be reported to the HR director or the CEO. In still another case, a terminated HR employee in active litigation against her company secretly was coaching the plaintiff-oriented law firm representing her on how to solicit employees from her former employer for a wage and hour collective action.

These cases present special challenges for employers. In companies with only an HR generalist, the HR replacement may end up handling the fallout from the situation with his or her predecessor. In larger enterprises, senior HR managers should be wary of issues within their own departments.

Suing a former employer can be trying for the HR plaintiff, who for years may have taken pride in defending from litigation the company he or she now is suing. Ironically, HR plaintiffs often point to their role as guardian of employer compliance as a motivating factor behind their terminations.

Sound awkward? It is. From an ethical standpoint, despite the squirminess of helping an employer shield itself from claims brought by your closest colleagues and perhaps one day even you, HR professionals should consider how an employer would shield itself from an HR plaintiff’s claim. From a professional standpoint, HR professionals would be wise to be fully aware of the limits of the law’s protections if they wind up on the receiving end of adverse employment actions.

Insider Knowledge

HR employees tend to know, or think they know, the inside angles when it comes to employment matters. For example, they may know what other employees have received as severance benefits in various circumstances, although they may not always know why. HR professionals also frequently have access to documents others never see, including files that include confidential employee information.

Former HR professionals may know the corporate decision-makers personally and have insider knowledge of the company’s tolerance for litigation—whether high or low.

Certainly, a former HR employee’s stubborn misread of the company’s mettle in this regard can make it more difficult to reach agreement on severance and can even force the parties into litigation. That said, the majority of displaced HR professionals understand that plaintiffs statistically have a difficult time in court and that taking a reasonable severance and moving on amicably is usually better for all.

Confidentiality at Stake

More than bad publicity and the time and cost of litigation are at stake when an HR professional sues an employer. HR professionals often have special access to employee documents, raising confidentiality concerns.

Consider a partially reversed $10 million jury verdict under review by the New Jersey Supreme Court.

The litigation arose after Curtiss-Wright, an aerospace and defense contractor, terminated Joyce Quinlan, who started working for the company in 1980 as a benefits analyst and worked her way up to executive director of human resources by 1999. Quinlan had worked at other companies and holds an MBA. When she began her employment, she signed a statement saying she would not disclose confidential employment or other information.

In July 2000, the company hired Kenneth Lewis to work in human resources, with the title of director of succession planning and management development. In January 2003, the company reorganized its HR department and Lewis was promoted to vice president of human resources and management development. One of the results of this reorganization was that Lewis became Quinlan’s superior.

Quinlan, who had more years of experience than Lewis, felt she had been unfairly passed over for the position because of her gender. She met with a lawyer and began reviewing files in the HR department and copying material that she felt bolstered her gender discrimination case. Some of the documents she copied contained confidential and personal employee information, such as home addresses, telephone numbers and Social Security numbers, as well as salary information. Quinlan delivered this material, more than 1,800 pages in all, to her attorney.

In November 2003, while still employed with Curtiss-Wright, Quinlan filed a four-count complaint against the company for sex discrimination based on her failure to receive the promotion given to Lewis. In pre-trial discovery, her lawyer produced the 1,800 pages Quinlan had copied from the company’s files. The company then terminated Quinlan’s employment because she had taken confidential documents. Quinlan quickly amended her complaint to allege retaliation and wrongful discharge.

The case eventually went to trial, and a jury ruled in Quinlan’s favor, awarding her a judgment of more than $10.6 million. On review, a New Jersey appellate court found the jury instructions on retaliation erroneous and sent the case back for retrial (Quinlan v. Curtiss-Wright Corp., 409 N.J. Super. 193 (2009)). However, before a new trial could be held, New Jersey’s highest court agreed to review the decision of the intermediate court of appeals. Oral arguments took place in May, and a decision was pending at press time.

Quinlan is a perfect example of how an HR director can turn against an employer, using, or attempting to use, internal documents to bolster the case. This case ultimately will be instructive for employers struggling with the problem of when employees may take documents home because they plan to sue the company, and when a company has a right to protect its own confidential information.

Limits of Law’s Protections

Because of HR professionals’ inside knowledge about corporate operations, company officials may feel particularly vulnerable when HR professionals raise concerns about compliance issues—and when HR professionals sue. But HR professionals are vulnerable, too, as they must strike a delicate balance between ensuring that the company meets compliance obligations in practice and keeping their own jobs safe even after sounding the alarm.

Consider the case of Karen Welzel, an HR director who obviously felt strongly about the importance of her profession. Welzel was HR director for Richard Bernstein, a real estate company in Washington, D.C.

In June 2002, the chief financial officer, James Martens, allegedly walked into Welzel’s office, provided her with a copy of the Washington Business Journal and asked why Richard Bernstein had not been included in an article regarding human resources.

A few days later, Welzel responded to his question in a memorandum. She stated that, among other things, all of the companies in the article—as implicitly contrasted to Richard Bernstein—"VALUE EVERY EMPLOYEE, … seek out and welcome DIVERSITY, … involve their employees in decision-making, … inform their employees about all aspects of the company, … offer REAL BENEFITS, … see a value in training, … [and generally] understand and appreciate the value of their greatest commodity—their people." The emphasis is in the original.

Welzel further commented, "For those companies that have more than one location, they have an HR person situated at every location so that the employees have a consistent, reliable source for benefit and policy administration."

And finally, she noted: "These are companies that make ethical hiring, promotion and firing decisions. These are companies that know the federal, state and local employment laws, Department of Labor regulations, wage and hour laws, and fully comply with all of them. These are companies that listen to and depend upon their human resources professional to guide and advise them along these difficult routes. These are companies that see their HR professional as a member of the executive team, who is kept informed and helps make decisions regarding the success of employees and ultimately of the company."

Again, Welzel’s comments were implicitly critical of Richard Bernstein. She was later terminated, and she filed a lawsuit claiming, among other things, that sending her memorandum constituted "protected activity" under Title VII of the Civil Rights Act.

A federal district judge disagreed and dismissed her case on summary judgment, finding that she was terminated for poor performance, did not have a reasonable good-faith belief that she was opposing unfair employment practices, and had not shown a causal link between her complaints and termination (Welzel v. Bernstein, 436 F. Supp. 2d 110 (D.D.C. 2006)).

Despite the U.S. Supreme Court’s growing receptivity to retaliation claims, including its recognition in Crawford v. Metropolitan Gov’t. of Nashville & Davidson County, Tenn. (129 S. Ct. 846 (2009)), that an HR professional may sue for retaliation over her cooperation in an internal investigation as a witness, HR departments conduct many compliance obligations without much of a safety net. These compliance functions often are deemed part of an HR professional’s job and not protected activity.

In one Minnesota case, for example, an HR manager alleged that she was engaged in "protected activity" when she investigated a complaint of sexual harassment involving, in part, her husband, who worked at the same company. She claimed her subsequent termination constituted reprisal under the Minnesota Human Rights Act. Company officials argued that she did a poor job of investigating the complaint and, because performing investigations was one of her duties, she was let go for performance reasons.

The district court ruled in favor of the employer, and the Minnesota Court of Appeals agreed in an unpublished decision. The court noted that "employees do not engage in protected activity when making reports in the normal course of their job duties."

Tips for HR Complaints

While litigation brought by HR employees can be trickier than lawsuits brought by other employees, executives can take steps to minimize risks:

• Make sure that your sexual harassment policy provides guidance for an HR employee to report harassment.
• Confront known or suspected employment law issues instead of letting them fester. If, for example, a concern about misclassification of employees is well-known within the organization, a disgruntled HR employee may eventually use the information against the company.
• Consider offering a severance package, even for low-level HR employees, and even when the company does not typically offer severance.

Finally, make sure that a departing HR employee returns all work-related documents and signs an acknowledgment that he or she has not retained any company documents at home or elsewhere. If litigation results and the plaintiff-employee is shown to have taken confidential information, your counsel may consider a counterclaim for breach of contract, breach of duty of loyalty or conversion, and take other steps to protect your organization.

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The author is an attorney in the Minneapolis office of Jackson Lewis LLP.

Web Extras

• SHRM web page: SHRM Online Legal Issues home page
• SHRM article: Consider Yourself a Retaliation Target (HR Magazine)
• SHRM article: Know Your Adversary (HR Magazine)
• SHRM article: Supreme Court Further Expands Protection from Retaliation (SHRM Online Legal Issues)
• SHRM article: How to Clean Up Your Act: Pick a Plaintiff’s Attorney’s Brain (HR News)