Gruntled Employees

500,000 reasons to worry about retaliation claims

Good news, you're thinking. Your company's just been sued for sex discrimination, but your lawyer tells you that her discrimination claim stinks. You're almost certainly going to beat it. W00t! Squee!

Not so fast with your w00ts and your squees. As employment lawyers, we see this scenario play out far too often. Company gets hit with a weak discrimination claim. Turns out something bad happened to the plaintiff after he or she complained about the bogus discrimination. Wa-bamm! Now the company's stuck defending a much stronger retaliatory-discrimination claim.

This happened the other day here in Boston. The state's Probation Department faced a sex-discrimination claim (among other things) from an assistant chief probation officer. The case went all the way to a jury trial, which is unusual (less then one percent of these cases try). The Suffolk County jury found in the Department's favor on the sex-discrimination claims, but ruled for the plaintiff in her retaliation claim. It awarded her $6,000 in compensatory damages, and … wait for it … half a million dollars in punitive damages. Plus, now she's entitled to her attorneys' fees.

Now to be fair, the Probation Department has been having a bad year as the subject of daily newspaper stories about corruption and patronage. (For The Boston Globe's extensive coverage, click here.) But the lesson is still an apt one. In this case, after the employee complained of sex discrimination, she was stripped of supervisory duties and reassigned to cover the front desk. In its defense, the Department said that her performance had declined. Maybe it had. But that's a weak defense in a retaliation claim. (For more coverage of the case, see Marcella Bombadieri's piece in the Globe.)

Employers: When you're facing a potential discrimination lawsuit, you have to be extra careful to avoid doing something that could end up giving the employee a much stronger retaliation claim. It's a delicate situation to be in, but the wrong actions by the employer can be just the thing that the plaintiff needs to end up with a windfall.

For tips on how to treat a complaining employee, tweet or direct-message me at @jayshep, or send me an

Why employment law is like "Survivor"

Tonight is the premiere of the 21st season of "Survivor," the CBS reality show that has been hugely successful. The show's been on for ten years (they do two seasons a year, unlike most shows), and even now draws 12 million viewers and ranks among the top 25 shows in ratings. To be sure, I'm the only person I actually know who still watches it (my wife gave up years ago). It's my TV guilty pleasure, and the only reality show I watch (I'm done with "Idol").

And for years, I've been telling people that it's very similar to practicing employment law.

Let me explain:

"Survivor" is incredibly formulaic. Every episode of every season (except the season finales) follow the same exact pattern: Two tribes of castaways in an exotic location bond and caper and plot and fight in their respective camps. Then the two tribes have a contest to try to win some minor comfort (the Reward Challenge). More bonding and capering and plotting and fighting, then another challenge (the Immunity Challenge) to figure out who is at risk for going home. The climax of each episode is the Tribal Council, which is even more ritualistic and formulaic. The losing tribe sits around a fire. The host, Emmy-winning Jeff Probst, goads the players into revealing their fears and suspicions and plans. Then the players cast ballots to vote someone off the island. Probst uses many of the same stock phrases every episode, like "The Tribe has spoken. It's time for you to go."

But despite the repetition over a complete decade and 273 episodes, there is still great drama. (OK, maybe not "great," but drama nevertheless.) It's never boring.

As in employment law.

I've been practicing employment law for 16 years this month. (Paging Molly Ringwald.) I work on the same kinds of cases day in and day out. Noncompetes, discrimination, wage claims, sexual harassment. The usual. Everything I do boils down to people not getting along at work. The lawsuits and agency claims are all basically the same. It's been many years since I've come across a case that was truly novel in any way. I use the same set phrases — "The Tribe has spoken. It's time for you to go. (OK, not really.) — in many of my conversations.

And yet there is still great drama. And it's never boring. To me, practicing employment law and helping companies have gruntled employees and easier workplaces is as interesting to me as it was 16 years ago.

And the reason for that is the same reason that "Survivor" is still interesting:

Because of the people. Every employment-law case or issue or problem, every "Survivor" episode or challenge or Tribal Council is different because of the human variable. It's the people who make it different every time. The different personalities of the players and employees. The different exotic locations, and their effects on the contestants. The different corporate cultures. The people always make it different, and thus interesting.

That's why I still love employment law. And that's why I still watch "Survivor." Wednesday nights at 8 ET on CBS.

What do you think? Is your practice like a particular TV show? Is your tax firm like "True Blood," or your family-law practice like "Glee"? Share your thoughts in the comments below.

Massachusetts hides antiemployer HR rule in "probusiness" law

Massachusetts law has long required employers to give workers access to their personnel files upon request. Which is fine, I guess. But a new change to the law now requires companies to notify employees about any potentially negative information added to their files. The amendment, which Gov. Deval Patrick signed into law on August 5, was tucked away in an “economic development” bill laden with higher-profile items like the recent sales-tax holiday. (To see how "probusiness" the law is, check out the Governor's press release from the signing. No mention of this provision, natch.) I have no particular opinion on the rest of the law. But this new personnel-records rule is going to lead to more employee lawsuits.

Here are five things you need to know:

1. Employers must tell workers about negative entries. An employer now has to notify an employee when it puts into a personnel record any information that has been or may be used to negatively affect the worker’s job. This must be done within ten days. The law leaves unchanged an employee’s right to review or get a copy of their records within five days of requesting it. The only sop to employers is a limit on these requests to two a year. But that limit does not apply to the notice and review of negative entries.

2. There could be serious penalties for failing to comply. The Attorney General’s Office is charged with enforcing the statute. The amendment does not change the existing penalty, which is a fine of between $500 and $2,500. It’s not yet clear to what extent the AG’s Office will seek to enforce the law. Besides these penalties, the new law could cause problems for employers during other employment litigation. If discovery reveals that the employer failed to comply, this could hurt the employer’s credibility.

3. Employers now face a dilemma about documentation. On the one hand, we’re always warning clients to document employee issues as much as possible, just in case the issues go to litigation. On the other hand, the new law makes putting relatively innocuous information into a personnel file a much more-provocative event. Now a quiet, low-level note in a file carries the risk of unnecessarily agitating the employee. Agitated employees become disgruntled employees, and disgruntled employees sue. Under the new law, employers are damned if they do and damned if they don’t.

4. Many employers are required to keep personnel records. If you employ 20 or more workers, then you’re required to keep in personnel records any written information about:

   • identity
   • job title and description
   • pay information
   • start date
   • job application
   • evaluations
   • warnings
   • probationary periods
   • waivers
   • termination notice
   • any documents on discipline

5. The law doesn’t benefit anyone (except lawyers). The amendment snuck in below the radar, without any discussion in the employment-law community. It’s antiemployer, in that it places companies at increased risk for employee lawsuits. While advocates could possibly argue that workers benefit from increased “transparency,” we disagree. There are times when a prudent employer should make a minor note in a file without escalating it to a human-resources event. Employees shouldn’t need to be stressed out by every less-than-positive note made in a file. But the new law makes that unavoidable.

So what do you do now? This is a tricky one. How to handle it depends on your current practice of handling personnel records as well as on your corporate culture. Talk with your employment counsel about devising a strategy for handling employee documentation in light of this new law.

Unfortunately, a paper trail could now take you down the wrong path.

What do you think? Is this going to be a problem for your workplace? Sound off in the comments below.

The First Rule of Managerial Eptitude

A while back, we talked about our Universal Truth (you can tell it's important since it's capitalized):

Inept managers lead to disgruntled employees, which in turn lead to diminishing profits.

Ept managers lead to gruntled employees, which in turn lead to minishing profits.

To that end, we thought we'd offer up the Rules of Managerial Eptitude (again with the capitalizing).

The first one is probably the sentence I've said most often to managers during the past 15 years:

1. Write it down.

Whenever something happens in the workplace that could have future consequences, write it down. Anywhere. I don't really care where. Grab a piece of paper, put the date and time on it, and write down whatever it is. Then put it somewhere safe.

I used to say "Document everything." It sounded more lawyerly, what with its seven syllables and all. But I slowly realized that people worry more about "documenting" something than about just writing it down. People tend to draft documents, which seems like more work. Better to just jot a note. Then stick it in a private file (and not a personnel file, unless and until it becomes a "personnel document" being used to make a personnel decision.)

So why is writing something down so important?

Because it's magic.

Well, almost. Stuff that gets written down takes on a talismanic quality. (That's right, kids. Stuff and talismanic in the same sentence. Don't try that at home.) People — judges, jurors, hearing officers, mediators, arbitrators, and even you and I — tend to believe that something is true by virtue of its being written down.

Imagine we have a case against each other in court. You get on the stand and testify about my dastardly deed. On cross-examination, my crack lawyer asks you when the deed occurred. "Uh," you mumble, "sometime in the spring?" My crack lawyer deadpans, "Sometime in the spring." You look away and say, "I think." My crack lawyer says, "No further questions."

Then I get on the stand. My crack lawyer now asks me when the dastardly deed occurred. I look over at the jury box and say in a strong, clear voice,"On April 16, at 3:45 in the afternoon." Crack lawyer: "How can you be so sure?" I look at the jurors again. "Well, partly because it's my mother's birthday. But mostly because I ... wrote ... it ... down." Game, set, and match, baby. You can't handle the truth! Shepherd out.

Uh, sorry. Actually, my crack lawyer would then make a big show of producing my jotted-down (and date- and timestamped) note, and then the jurors would be all "Oh yes he did." And I'd win.

Something written is more real — more believable — than something unwritten. Sure, I could have written the note the night before the trial began. There isn't going to be any C.S.I.-style carbon-dating of my note going on. But the jury knows that people don't generally do that. If I said I wrote the note at 3:45 p.m. on April 16, it's probably because I did. Which means my side of the story is probably more accurate. Which means I'll probably win.

So managers: write it down. Winning's better than losing.

Strippers take it off ... off payroll, that is

Everyone knows that strippers are properly considered independent contractors. Right?

Yeah, right.

A Massaschusetts court this week ruled that a strip club had violated state wage laws when it improperly classified its exotic dancers as independent contractors. Instead, they should have been treated as W-2 employees. (Although to be fair, the IRS hates it when you get glitter on your tax returns.)

The Boston Globe reported that Massachusetts superior court Judge Frances McIntyre granted summary judgment on liability in favor of the clothing-challenged professionals (look: how many different ways can you say "stripper"?) working at King Arthur's Lounge in Chelsea, near Boston. The case, which the judge certified as a class action (oh, there's gotta be a pun there somewhere), now proceeds to trial to determine the damages, which could run into the thousands of dollars per ecdysiast (helpful Wikipedia definition included in a somewhat NSFW entry).

The Globe explained how it all worked:

King Arthur’s Lounge, a club that has been the scene of more than one notorious crime, did not pay the strippers any salaries, required each to pony up $35 to perform each night, and kept $10 of every $30 that each made for “private dancing’’ in secluded booths, according to a state judge who granted a stripper’s motion for summary judgment on the issue of liability.

Apparently, the performers were allowed to keep the singles that patrons tucked in their garters, or whatever, while they performed on the open stage. But they had to turn over a third of their "private dancing" (read: lap dance) tips to management.

The club argued that the dancers were independent contractors because of the independent discretion they exercised. Writes the Globe:

In arguing that the strippers were independent contractors, King Arthur’s said that Chaves got to pick her own music, costumes, partners, and routines. The club also said it never gave her written rules to follow or documentation that she was an employee.

Uh ... no written rules means you're not an employee? As if.

This case was a loser from the start. Most of the time, when an employer tries to pass an employee off as an independent contractor, it is violating the law. This is especially so in Massachusetts, where a statute says that an employee whose trade is the same as the business's cannot be an independent contractor. To get around this, the club argued that it was in the alcohol business, and that strippers were just something extra. You know, like darts.

The judge basically called that ridiculous:

A court would need to be blind to human instinct to decide that live nude entertainment was equivalent to the wallpaper of routinely televised matches, games, tournaments, and sports talk in such a place. The dancing is an integral part of King Arthur’s business.

As we've said here before (see "How to lose a wage-and-hour case"), you can't win a wage case if you mess up an employee's pay. There's no defense if you got it wrong. Our advice to employers: make sure you get the pay right. Or be prepared to settle if you don't.

And bring plenty of singles.

How to lose a wage-and-hour case

In our last post, we talked about eight ways for an employer to lose a noncompete case. Today, we cover something much simpler: how to lose a wage-and-hour lawsuit. It's really quite easy to do:

Just screw up an employee's pay.

That's all! No fussing, no mussing. You see, unlike in most any other kind of employee lawsuit, your employment counsel has no lawyer tricks to pull to defeat a wage claim. Either you paid the correct wages or you didn't.

In a disability-discrimination case, I can make technical, legalistic arguments about whether the employee is really disabled, whether he was otherwise qualified to do the job, whether a particular accomodation was reasonable, and so on. In a sexual-harassment case, I can argue that the sexual conduct wasn't egregious enough to alter the employee's working conditions, or that the conduct wasn't unwelcome (typical lawyer double negative), or that it wasn't even sexual conduct at all. Even in an overtime case, I have a shot. The federal Fair Labor Standards Act has so many exemptions and exceptions to exemptions and so forth that you can sometimes dodge that bullet.

But in a straight wage case, if the right wages weren't paid, it's "Goodnight, Irene." You're on the hook for the lost wages, and probably the employee's attorney's fees. In Massachusetts, you're looking at automatic triple damages. (See "Massachusetts: Closed for business.")

States take the payment of wages so seriously that they've created criminal penalties in addition to civil remedies (again, raise your hand, Massachusetts). The message is clear: don't mess with wages. Pay what you owe, pay it on time — especially around termination — and keep careful track of it. Otherwise, you're likely to pay a lot more.

One in 300

Our employer clients often ask us, "What are the odds that an employee will sue my company?"

Clients frequently ask for odds, especially when it comes to litigation. "What do you think, Jay? Fifty-fifty? Sixty-forty?" But in litigation, odds are just about impossible to calculate. I can tell you if you have a reasonably good case, a reasonably bad case, or a case that is equally likely to go either way. Beyond that, it's nearly impossible to come up with an actual number for the probability of winning.

But as for the odds of getting sued, it is possible to give some useful numbers, based on some rough statistical analysis. Over the holidays, I did some number crunching of my own. Here's what I came up with:

In Massachusetts (where my office is, and where many of our clients are), there are about three million employees working in workplaces with five or more employees. (I got my numbers from 2006 US Census data, the most recent numbers available. You can check it out here.) Employers with fewer than five workers aren't very likely to be sued; in fact, in Massachusetts, the magic number for most employment cases is six employees.

There are about 3,000 discrimination charges filed in Massachusetts in a year, according to the Massachusetts Commission Against Discrimination's 2007 Annual Report. The Massachusetts Attorney General's Office processes about 5,000 wage complaints each year. I got this number from a 2006 Boston Herald article reporting 2005 numbers, and then extrapolated. There were 364 employment cases filed in the Massachusetts federal district court in 2008. (You can check out your state here.) The Massachusetts state-court system doesn't publish this sort of information, but I estimate that about 2,000 of the 35,000 civil cases filed in superior court are employment related.

So all told, we're looking at about 10,000 employee cases for 3,000,000 Massachusetts workers. That's a ratio of 1 in 300. Does that seem like a lot? Wait till you crunch some more numbers.

If you're a Massachusetts employer with just ten employees, then you have a 3% chance of having one of those employees sue you in 2009 (all things being equal). But watch how the numbers jump up as your workforce increases. With a hundred employees, you stand a 28% chance of being sued this year. An employer with 250 employees faces a 57% chance, while a 500-worker employer is staring at an 81% chance. By the time you get to a thousand employees, you have only a 3.5% chance of not getting sued this year. More than a thousand workers, and you face an almost certainty of employment litigation.

You also need to consider the mean number of lawsuits. If you have 300 employees, the mean of your probable lawsuits is (duh) one. At a thousand employees, your mean is 3.3. In other words, a thousand-worker employer has 96.5% chance of getting sued, and is likely to face an average of just over three different employee lawsuits in a year.

Keep in mind: these numbers don't account for a number of factors that could lower or raise your company's odds. For example, your industry is a big factor: restaurants, hotels, and hospitals are more likely to be sued; while law firms are less likely. Whether your company is unionized is another big factor: if it is, you're much more likely to be sued. Also, your state may have different odds. Massachusetts is a classic blue state with employee-friendly laws and institutions; a red state is likely to have lower odds for lawsuits.

Still, it's useful to have a rough idea of the risks you face. Once you know the risks, you can better prepare for them.

Change employers can believe in

Most management attorneys will tell you that 2009 will see a big increase in employment litigation and labor-union gains. On the employment front (that is, not related to unions), the combination of the recession and Democratic Party gains in Congress (and, of course, the White House) should drive employee lawsuits up.

Why? The recession means more layoffs and fewer new hires. This means more disgruntled employees (or would-be employees). The bedrock principle of this blog is that disgruntled employees are more likely to sue than are gruntled employees. While most employees understand that layoffs are usually economics driven, some take it more personally and lawyer up.

As for the Democratic successes in the election, both the Obama campaign/transition and the Democratic Congressional leadership have voiced there support for new, broader statutes that will help employees at the expense of employers. In the coming weeks, we'll take a closer look at these initiatives. But for now, take a gander at the Obama transition webpage on the economy, which talks about expanding the Family and Medical Leave Act (FMLA), raising the minimum wage, spearheading paid family leave, and targeting so-called "caregiver discrimination." Also, the new administration is expected to take a tougher enforcement stance than the outgoing one. (And remember, the outgoing conservative administration just brought you the ADA Amendments Act.)

As for the labor side (involving unions), the transition site trumpets the cynically named Employee Free Choice Act, which would do away with the protection from initimidation afforded by secret ballots for employees in union elections. The site also talks about plans to eliminate "supervisor" status for hundreds of thousands of employees to artificially increase the size of the unionized workforce. The new administration will also seek to eliminate getting rid of an employer's right to replace striking workers.

Some observers have argued that these pro-Labor moves could, when combined with an already-down economy, produce similar results to when the Supreme Court upheld the National Labor Relations Act in 1937.

With this anti-employer agenda about to fall into place, combined with a lousy economy, employers should prepare now for a serious increase in employment litigation in 2009.

*   *   *   *   *

Here are a couple of excellent, pre-election posts about the likely workplace changes we will see this year as a result of the election: Michael Fox's always-excellent Jottings by an Employer's Lawyer and John Phillips's thorough The Word on Employment Law.

New Year, New Disability Lawsuits

Happy New Year!

Or is it?

Because today, January 1, millions of American employees will become disabled — including some of yours. No, we’re not predicting a rash of workplace injuries or a horrible epidemic. Instead, these workers got their newfound disabilities at the stroke of a pen. On September 25, 2008, President Bush signed the ADA Amendments Act of 2008 (ADAAA), significantly changing the Americans with Disabilities Act. The changes make it easier for individuals to show that they are disabled. The amendments also expand their protection under the law. Congress made the changes in response to court decisions that had narrowed the scope of protection over the 18 years since the ADA was passed.

Congress found that these court cases focused more on analyzing whether an individual’s impairment was considered a disability and less on whether employers had met their obligations under the ADA. The new amendments reverse that focus.

Before the amendments, disability lawsuits would sometimes turn on whether the employee was actually disabled — that is, did he or she have a “major life activity” that was “substantially impaired”? But the original ADA never explained what a “major life activity” was. The amendments change that, giving examples such as learning, reading, concentrating, thinking, and working.

The new law also relaxes the “substantially impaired” requirement. Congress determined that the original law created too high a bar to gaining ADA protections. Under the new law, the question of whether an individual is disabled requires little analysis.

Other court decisions had rejected disability status if the employee was able to use corrective measures — such as prosthetics, medications, and hearing aids — to overcome the impairment. But the amendments do away with this analysis; an employee is disabled even if she can hear with a hearing aid. Similarly, if an impairment is episodic or in remission, it still counts as a disability.

Because the ADAAA eases the definition of disability, employers should expect to see an increase in disability-discrimination claims. And those claims will now be harder to defend against, as employees who previously were not considered disabled now will be.

What you can do:

• Read the text of the ADA Amendments Act of 2008 here (PDF)
• Train supervisors to properly handle requests for accommodations
• Have procedures for handling employees’ health issues 
• Talk to your employment counsel as soon as an issue arises with a potentially disabled employee

Retaliation: now without pesky filing deadlines!

Imagine getting sued by an employee who was fired nearly four years ago. Following a recent Supreme Court decision, lawsuits from forgotten former employees will now become much more common. And more expensive.

In CBOCS West, Inc. v. Humphries, the Supreme Court ruled 7–2 in favor of an assistant manager at a Cracker Barrel restaurant. The employee sued claiming that he was fired because he was black and because he had complained about the dismissal of another black employee. What’s unusual about this case is that he sued under a Reconstruction-era statute, 42 U.S.C. § 1981. Unlike the more-common Title VII, Section 1981 does not address retaliation in its text. But the Supreme Court decided that the employee could sue for retaliation under that law nonetheless.

The implications for employers are substantial. With the Supreme Court “discovering” a retaliation claim in Section 1981, employees have a better option than the traditional Title VII claim. To bring a claim under Title VII, employees must first file with the EEOC — and they must do so within 180 days of the alleged retaliation (or 300 days if filing with a state agency). They must also file in court within 90 days of the EEOC’s issuing a right-to-sue letter. None of these restrictions applies to Section 1981, and an employee has four years to bring a claim. Also, Title VII caps the amount of damages an employee can win. Section 1981 has no cap.

In the Court’s opinion, Justice Breyer wrote that even though the statute lacked retaliation language, Congress must have intended that the right to “make and enforce contracts” free from discrimination included protection against retaliatory discrimination. The Court cited legislative reports that suggested Congressional intent to have § 1981 apply to retaliation claims. Justice Thomas wrote a scathing dissent (which Justice Scalia joined), arguing that if Congress intended to include retaliation in the statute, it would have written the law that way.

With no agency-filing requirements, no damages caps, and a much-longer limitations period, Section 1981 provides disgruntled employees claiming retaliation with a more-powerful weapon. Even employees who have already missed their Title VII deadlines can now file in federal court under Section 1981. Employers who thought they were safe after 180 days now have another three-and-a-half years to worry about new lawsuits.

What employers can do

• Don’t penalize employees for complaining about discrimination
• Train all supervisors to properly handle discrimination claims
• Read the Supreme Court’s opinion here (PDF, 228K)