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AVOIDING LAWSUITS HOW BUSINESSES CAN PREVENT February 1, 2002 Avoiding Lawsuits is a service of the employment law training and consulting firm of Counsel Consulting Group LLC and the law firm of Powell, Trachtman, Logan, Carrle, & Lombardo, P.C. IT FINALLY HAPPENED . A COURT RULES THAT AN EMPLOYER WHO FAILED TO TRAIN ITS MANAGERS MADE AN "EXTRAORDINARY MISTAKE" AND IS LIABLE FOR $50,000 IN ADDITIONAL DAMAGES For over a year, we have been telling readers of Avoiding Lawsuits that, inevitably, courts would punish companies who fail to train their managers in basic employment law principles. We hoped our readers would see this as something other than a crass commercial for the training services we provide, and as an honest effort at communicating one of the most important preventive law messages we could convey. The inevitable has now come to pass, big time. A federal circuit court - the court that sits just below the United States Supreme Court - has ruled that an employer who fails to train its managers in crucial areas of employment law commits an "extraordinary mistake," and the court imposed an additional $50,000 in damages on the employer, just to make the point. The case involved Anthony Mathis, an African-American car salesman with extensive experience. Mathis filled out a job application at Phillips Chevrolet. The application asked for Mathis' date of discharge from the military which, the court concluded, allowed Phillips Chevrolet to determine that Mathis was over 40 (the point at which age discrimination laws really kick in). The court also noted that Phillips Chevrolet personnel had been able to observe Mathis' race. Phillips Chevrolet ignored Mathis' application, and hired seven white salespersons, each of whom was younger than Mathis. Mathis filed suit, alleging age and race discrimination. During the course of the lawsuit, the evidence showed that Phillips Chevrolet's general manager routinely took note of the age of applicants on the application form - a significant gaffe. Another employee testified that he wanted applicants at Phillips Chevrolet to be "bright, young, and aggressive." The jury found that Phillips Chevrolet denied Mathis a job because of his age and race, and awarded him compensatory damages. In addition, however, the jury found that the discrimination was willful, and on that basis the court added $50,000 to the tab. Phillips Chevrolet appealed, giving the Circuit Court the opportunity to write an opinion. The Circuit Court seized that opportunity, endorsed what the jury did, and set forth a message that all employers need to hear and understand: Leaving managers with hiring authority in ignorance of the basic features of the discrimination laws is an extraordinary mistake for a company to make, and a jury can find that such an extraordinary mistake amounts to reckless indifference . . . The Circuit Court also noted that Phillips Chevrolet's application form contained the standard "we don't discriminate" language, and seized on that as evidence that Phillips Chevrolet knew what it was supposed to do, and simply disregarded it. The Circuit Court ruled that "printing this statement on the application but then making no effort to train hiring managers about the ADEA shows that Phillips knew what the law required but was indifferent to whether their managers followed that law." The message could be no more clear: employers must provide employment law training to managers who are responsible for hiring, firing or supervising employees. If you don't do it, and a manager acts unlawfully, you will pay.
AN EASY, EFFECTIVE PREVENTIVE LAW TECHNIQUE: A crucial strategy in preventing employee harassment claims, particularly sexual harassment claims, is this: Set up a complaint procedure that complies with the law. If you do, and if an employee fails to use it, the employee's claim will generally be dismissed, whether or not the employee was actually harassed. Georgia Woods worked for Delta Beverage as a telephone sales clerk. Woods alleged that a fellow employee, Gary Eddy, sexually harassed her on a daily basis. Woods complained, and Delta Beverage's district managers investigated the complaint. They informed Eddy that his conduct was inappropriate and would result in termination if it continued. They then told Woods that she should notify them immediately if Eddy engaged in further improper conduct. One of the district managers followed up with Woods thereafter to make sure that she was satisfied with the investigation and disposition. After two more weeks, Woods stopped reporting to work and, eventually, she filed suit against Delta Beverage, claiming that during the two-week period after the initial investigation, Eddy continued to sexually harass her. She claimed that she was forced to work in a hostile environment, and she had no choice but to leave, for her own well-being. For purposes of argument, the court was willing to assume that Eddy continued to harass Woods in the two weeks previous to her departure. But the court then ruled as follows, in language that every employer must take to heart: Even so, Delta Beverage cannot be held liable for conduct of which it had no knowledge. Woods had the obligation to report the alleged harassment to Delta Beverage as she had been instructed. Her failure to do so is fatal to her case. Delta Beverage would not have prevailed unless it clearly instructed Woods respecting its complaint procedure. In many cases, however, the harassed employee will deny that he or she was ever made aware of the existence of a complaint procedure. For that reason, the best solution is always to create a written complaint procedure that satisfies the law - the United States Supreme Court, and other courts, have set forth the specific features that must be included in such a procedure, and specific guidelines on how the procedure has to be implemented. Once you do that, your employee will be hard pressed to plead the "I didn't know" defense. Feel free to let us know if you need any advice or assistance in complying with this crucial preventive law strategy. ___________________________________________________________________________________ Counsel Consulting Group LLC helps companies throughout the Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com. ©Copyright 2003-2005 CCG Properties LLC. All rights reserved, except that recipients hereof are permitted, for noncommercial purposes, to provide copies or excerpts, with full attribution to us, to other interested persons for their personal use. Avoiding Lawsuits is distributed for general informational purposes only. It is not a substitute for personalized legal advice from a competent attorney. |
