Experienced employer-side employment lawyers know the tricks for avoiding, or at least limiting liability for clients who have violated the law. They rarely speak publicly of them, for obvious reasons. Here are a few, in no particular order. (DISCLAIMER: I condone none of this, but feel it is in the public’s interest to know what is going on behind the scenes).
1. Deny Everything
Employers have significantly more resources with which to litigate employment related legal claims than employees, and the costs of fighting are usually tax deductible business expenses. Even where an employer has violated the law, intentionally or otherwise, many are counseled to deny everything and fight. This goes so doubly where the employee’s damages are small. Lawyers representing employees often evaluate the viability of case on the basis of damages, as much (or more) than liability. Because most employees cannot afford the costs of litigation, which can measure in the many tens of thousands of dollars through trial, plaintiffs’ contingency fee lawyers will run the numbers to see whether their 33%-50% contingency split of recovery obtained through settlement or at trial will comes close to the value of their work. Fee shifting statutes which award prevailing plaintiffs their attorneys fees and costs in unpaid wages, discrimination, whistleblower and other employment related claims are designed to level the playing field. In actuality, they do not, except in the exceedingly rare case in which an employer has deep pockets with which to pay a judgment and liability is overwhelming. Cases which, as a practical matter, settle close to 100% of the time after the mailing of a demand letter. Although state and federal agencies, such as the Minnesota Department of Human Rights, the Equal Employment Opportunity Commission and Department of Labor, are statutorily authorized to take cases forward for employees free of charge, the agencies have limited resources. As a result, they rarely litigate on behalf of individual plaintiffs, focusing instead on class actions and other claims involving large groups of employees.
The corollary to denying everything and fighting is denying everything and offering a small “nuisance value” settlement to make the case go away. This has the obvious benefit of reducing legal costs to defend a claim, and obtaining in exchange for the settlement a full release of all employment related legal claims, known and unknown, in addition to other benefits such as non-disparagement agreements to prohibit the employee from bad-mouthing the company on social media and sometimes a no-hire agreement prohibiting the employee from re-applying to work for the company.
2. Strategic Timing of Termination
State and federal law protect employees from termination in retaliation for making a good faith report to the employer or a government agency of the employer’s violation of law. The Minnesota Legislature in 2013 amended the 1987 Minnesota Whistleblower Act to increase its scope significantly. Among other changes, it now covers reports of breaches of contracts (not just laws), and applies even if the employee’s belief that the company violated the law proves to be incorrect. Smoking gun evidence rarely exists in whistleblower claims, just like discrimination claims. No employer will tell the employee, “we are going to have to let you go because your reporting of our tax fraud to the IRS demonstrates you’re not a company man.” Instead, they will make up some neutral performance related reason. The key to violating the law and getting away with it lies in the timing of the firing. Courts evaluating whistleblower claims frequently focus on “temporal proximity.” Against logic, courts reason that the further away in time the firing takes place from the reporting of the incident the less likely it is that the firing was retaliatory in nature. But that is the state of the law. So the key is to wait. And wait. And wait. Before pulling the trigger and terminating the whistle blower.
4. Call it a Layoff
Discrimination claims, in the abstract, are significantly harder to prove where the affected employee has lost his/her job through a reduction in force as opposed to outright termination. To make the termination appear to be a bona fide layoff requires advance planning and documentation. Numbers matter for credibility. A layoff of one in a five person workplace is less suspicious than a layoff of one in a 400 person workplace.
5. Paper the File
Minnesota law requires that employers who maintain employee personnel files include in them, among other things, the following: application for employment, commendations and discipline, benefit information, leave records, salary and compensation history, job titles, dates of promotions, attendance records and performance evaluations. Minn. Stat. § 181.960. Use it. An employee claiming discrimination on the basis of age, race, religion, disability, gender, etc. will have difficulty proving his or her case in the presence of a documented history of poor performance or misconduct. The key is to not make it too obvious. Frequently evaluating the subject, but none of his/her peers, looks suspicious. This is especially so where the employer fly-specks an employee’s work. Writing up trivial infractions gives the appearance of pretext, particularly if similar conduct is permitted of other employees. It is important to also follow any progressive discipline regime outlined in the employee handbook, even if it is not contractually enforceable through bold disclaimers specifically advising the employee that the handbook does not confer any contractual rights. Typically, although not always, this requires giving a verbal warning, written warning and sometimes performance improvement plan before firing. Again, consistency is the key.
6. Induce the Employee to Quit
Unemployment insurance premiums paid by employers increase with every successful claim for benefits. Employees laid off or fired for reasons other than “employment misconduct” are entitled to unemployment insurance. Those who quit, however, are normally disqualified from receiving benefits. Accordingly, some employers, instead of firing an employee outright, induce him or her to quit. Common tactics include piling on work, bullying or shunning. Strange as it may sound, targeting an employee for mistreatment is perfectly legal, unless the employee can link the mistreatment to a legally protected characteristic, such as race, religion, national origin, gender, etc. It goes without saying that making an employee miserable can have deleterious side effects on workplace morale and productivity. Plus, going too far bears risks in that an employee who justifiably resigns may be eligible for benefits if he/she can demonstrate that no reasonable employee would remain on the job. The standard is employer-created circumstances “that would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment.” That is a difficult legal standard, however, and such arguments rarely prevail at the unemployment appeal level. Moreover, an employee making this claim must first allow the employer to correct the situation: “If an applicant was subjected to adverse working conditions by the employer, the applicant must complain to the employer and give the employer a reasonable opportunity to correct the adverse working conditions before that may be a good reason caused by the employer for quitting.” Minn. Stat. § 268.095, subd. 3(c). Inducing an employee to quit to avoid liability also may be employed against whistleblowers and other wrongful termination candidates, although adopting this strategy in those circumstances bears increased risk and, correspondingly, requires a greater degree of subtlety. If an employee voluntarily quits, there can be “no adverse employment action” triggering employer liability. Stated differently, any wage loss damages to the employee are self-inflicted, so there can be no recovery. The employee, in such circumstances, is left to argue “constructive termination,” a difficult legal standard requiring a showing that (1) the employee’s working environment is objectively intolerable, and (2) either the employer intends to force the employee to quit or it is reasonably foreseeable that the employer’s actions would cause the employee to quit. Thomas v. Hennepin Healthcare Sys., Inc. (D. Minn. 2015). In the Thomas case, the standard was not met where an employee quit seven months after being transferred to a new department at which, by employee’s account, no discrimination occurred. The court concluded, “The chronology is too attenuated to sustain a claim of constructive termination.” Underscoring, again, the importance to courts of timing.