J. Discrimination Laws

Significant damages are recoverable when an individual receives unfair treatment because of a personal characteristic such as age, sex, race, religion or handicap. This may include job reinstatement in the event of a firing, wage adjustments, back pay and double back pay, promotions, recovery of legal fees, expert fees and filing costs, compensatory and punitive damages. Recourse can also include the institution of an affirmative action program on behalf of fellow employees. Thus, always consider whether the firing violates discrimination laws.

When a recently fired employee or salesperson enters a labor lawyer's office, one of the first points the attorney considers is whether he or she has a valid claim of unfair termination based upon discrimination, one of the exceptions to the employment-at-will rule.

As previously discussed, it is illegal to terminate anyone on the basis of age. Whenever an older employee (over 40) is fired and claims discrimination, the issue is basically whether the company's decision was made because of age or was the result of a reasonable, non-discriminatory business decision. Typically, the older worker must provide evidence that the employer's motive was improper. This is sometimes done by demonstrating that he/she was between 40 and 70 years of age, was doing satisfactory work, and was forced to leave a position that was then filled by a younger employee under 40. Age-related statements made to the claimant (e.g., "You are too old; why don't you retire?) and statistics (e.g., the company fired five older workers in the past year and replaced them with employees under 40) may also be used as proof. The following thumbnail sketch generally outlines what employers can do under discrimination laws pertaining to age:

• Fire older workers for inadequate job performance and good cause, provided younger employees are similarly treated.
• Entice older workers into early retirement by offering additional benefits (e.g., bigger pensions, extended health insurance, substantial bonuses, etc.) which are voluntarily accepted.
• Lay off older workers, provided younger employees are similarly treated.
• Choose younger rather than older applicants when successful job performance absolutely requires that a younger person be hired for the job.

However, the following actions are prohibited by law:

• Denying an older applicant a job solely on the basis of age.
• Imposing compulsory retirement before age 70.
• Threatening termination, loss of benefits, etc.
• Firing older persons because of age.
• Penalizing older employees with reduced privileges, employment opportunities or compensation, because of age.

Counsel Comment #133: Early retirement programs are legal and do not violate federal age discrimination laws so long as participation is voluntary. If your company offers a financial package containing early retirement inducements, be sure it really contains worthwhile incentives such as additional pension benefits (extra years of age and service for pension calculations), lump sum severance payments (e.g., an extra month's pay), cash inducements and retirement health programs. Take the proper steps to reduce the risks of age discrimination litigation arising from "forced retirement." Never exert pressure on older workers to opt for early retirement by threatening firing, demotions, poor recommend- ations or references, or a cut in pay. When contemplating a large layoff or seeking to reduce your payroll through early retirement incentives, proceed with caution.

TIP: Back up all firing decisions with proper documen- tation of poor work performance or "for cause" factors. Instruct staff to avoid making liability-sensitive statements, remarks, or threats with respect to age. It is also a good idea to study carefully and continually the company's statistical hiring and firing patterns. This may enable you to avoid giving a terminated worker's case the leverage it needs proof that the company has made a practice of firing older workers and replacing them with younger ones.

With respect to sex discrimination, be aware that the law requires equal pay for equal work and similar employment policies, standards and practices for males and females. Always treat pregnant women who are unable to work the same way as other workers who have other forms of disability. Avoid firing anyone who complains about sexual harassment or reports a sexual harassment incident.

In cases where the employee is subjected to slur, insult, or innuendo, the courts are allowing claimants to prevail if they can prove that sexual harassment incidents took place which were neither isolated nor trivial. Some courts have even ruled that companies are liable for incidents which they should have known about (but didn't) if no effective action is taken to end the harassment, even when the companies' official policies prohibit sexual harassment and the victim suffered no severe psychological harm or inability to function in the job properly.

Counsel Comment #134: Management must remind key executives of potential legal hazards. Companies should dis- seminate a periodic reminder to employees in policy manuals, journals and letters that the company does not tolerate sex discrimination or harassment of any kind, that anyone who experiences or observes such treatment should report it to management (or their immediate supervisor) immediately, and that all communications will be held in the strictest confidence with no direct or indirect reprisals against the informant and/or complainant. Supervisors should be educated as to what constitutes sexual harassment and other forms of sex discrimination, what the adverse effects to the company could be, and ways to handle problems if they arise.

All supervisors should be instructed to:

• Address themselves promptly to all complaints;
• Remain objective and responsive to problems;
• Consult with the complainant immediately to resolve problems before they get out of hand.

Retirement plans and pension programs that favor one sex over the other are illegal. Speak with experienced labor counsel imme- diately if you have any doubts about the application of fringe benefit plans such as vacations, insurance coverage, pensions, profit-sharing plans, bonuses, holidays, or disability leave policies you may be considering.

Counsel Comment #135: In the absence of state or federal law, your company may be free to determine what benefits will be given and the nature of those benefits. If benefits are offered, publish them in a company handbook or policy manual so that employees will have advance notification of what is available. Your manuals and handbooks should always state that the benefits offered may be rescinded, discontinued or modified at any time without advance notice.

Potential problems regarding race, handicap, and religious discrimination arise every time your company fires someone in a protected class. For example, employers have an obligation to make reasonable accommodations of the religious needs of employees. An employer must give time off for the sabbath or holy day observance, except in an emergency. The employer may give leave without pay, may require equivalent time to be made up, or may allow the employee to charge the time against any other leave with pay except sick pay. Exempted from this protection, however, are employees in certain health and safety occupations, or any employee whose pre- sence is essential on any given day. It also does not apply to private employers who can prove that an employee's absence would cause severe business hardship.

In summary, management's ability to recognize what constitutes discrimination can go a long way toward protecting the company from such charges. In the event a private lawsuit is instituted, or formal charges are filed with the EEOC, the State Division of Human Rights, or other agency, take prompt steps to enforce the company's rights. A carefully drafted response should be forwarded within several weeks after formal charges are received. Decide whether it makes economic sense to offer some form of restitution or money settlement early on, out of court. However, perhaps the best way to avoid legal exposure and involvement in this area is to consider carefully (before the firing) whether there is a strong possibility that a discrimination charge will be brought. If so, you may wish to reconsider your decision before taking action.