EMPLOYMENT LAW: HOW DOES THE SMALL BUSINESS PERSON PROTECT HERSELF FROM DISCRIMINATION LAWSUITS

A few days ago, I advised employees terminated or threatened with termination for discriminatory reasons (race, gender, sexual orientation, national origin, age, disability, religion, pregnancy) on how to protect themselves.  (Employment Law: Do You Have Any Protection Against Wrongful Termination By Your Employer?)  But there is also the other side.  What does a small or medium sized business do to defend itself against an employee who is being fired for destructive or incompetent behavior but is claiming wrongful termination on the basis of illegal discrimination?

 

What Is The Problem You Face?


The large corporation is protected in two ways that you – the smaller, growing business – is not: first, the large corporation has contract attorneys or business litigation attorneys on retainer or in-house who can be contacted at any time a problem arises, and second, those corporations can budget for the inevitable litigation at the beginning of the fiscal year.  As a practical matter, few if any of you will put an employment attorney or business litigation lawyer on retainer, and none of you can budget for litigation disaster.

 

Why haven’t you had to deal with this problem?  Because the people you fire are, like most people, afraid of litigation, short on money, and unaware of their rights.  But relying on this is pure gambling because there are people who do have the emotional and financial wherewithal to fight, and there are contract and business litigation attorneys who will take their cases on partial or full contingency.  And unlike the big corporations, a successful wrongful termination case against you will probably close your doors.

 

How Do You Protect Yourself?  By Setting Up The Right System.
Like mine and most other growing businesses, you and your staff constitute a sort of family.  The idea of treating family or friends like they may some day grow fangs and threaten you and your business is beyond most of us.  But an employee that turns on you poses a substantial threat to your business.  I have had that experience.  So the way around this dilemma is to set up a system which you apply to everyone from the outset.

 

What Does The System Need To Include?
Each business owner has her own style, and the system she sets up will reflect that style.  But I believe that system should include the following components:

1.    Make a record of the initial interview.  I have had a big problem with employment prospects making representations about themselves at the initial interview  and then turning out to be quite the opposite.  Record the content of the interview, ideally by tape recorder (which the interviewee knows is present) or at least by written record immediately after the interview.  A subsequent claim of discrimination will deflate in the face of evidence that the employee misrepresented herself from the outset.

2.    Write a short disciplinary manual.  At first glance, it may seem that this would constrict you, but in fact it will give you freedom if the employee problem arises.  Include in it a list of which infractions warrant a second chance and a list of which ones are subject to immediate termination at the owner’s discretion.  Have the new employee countersign the manual so there is no question about disclosure.  And then – and this is important – abide by your own manual.  This will provide you with protection as to all but the worst incidents.

3.    Create personnel files and use them.  There are lots of reasons why we owners might not keep documentation that could later become critical.  You might feel strange about taping people.  You might feel a little guilty about having to correct an employee with whom you feel close.  But a system that applies to everyone will immunize you from those feelings.  “It’s not personal: we do this with everyone.”  And if there is a dispute down the road, written and taped material carries ten times the weight of oral testimony from memory.

4.    Make A Record Or Have A Witness For All Disciplinary Meetings.  You would be amazed how creative memory can become over time, so never leave the important moments to oral testimony based on memory. Or at least make sure there is someone else there to remember the moment the way you do.  I believe disciplinary meetings, and especially termination meetings, should be taped.  At a minimum, have a witness there.  Or both.
5.    Consult An Employment Lawyer.  The time to consult a contract lawyer or business litigation attorney is when you are putting together your system in the first place.  But if for budgetary or other reasons you don’t want to do that, make sure you consult an employment lawyer when the problem starts to arise with the employee, especially if that employee falls within one of the discriminatory classifications.  Your consulting a litigation attorney before things get too bad could save you tens of thousands of dollars.

 

We are currently prosecuting a discrimination case against a decent sized company that did not do any of the above and is paying over $50,000 for the defense.  If the company loses, the loss will be three or four times that amount.  But even if the company wins, it will have lost.  Counsel for the company could or should have prevented this.

 

 

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