How to Avoid Costly Litigation When Laying Off Senior Employees
The Goldstein Law Firm
March 2010 Newsletter
“How to Avoid Costly Litigation When Laying Off Senior Employees; The California Supreme Court Clarifies the ‘Severe and Pervasive’ Standard in Sexual Harassment Cases; and Are You Still Resisting Having Your Employees and Independent Contractors Sign Enforceable Arbitration Agreements”
By: Charles H. Goldstein, Esq.
1. How to Avoid Costly Litigation When You Layoff Senior Employees
President Barrack Obama and his congressional surrogates say that the economy is improving and that the Great Recession has ended. However, half of the leading economists believe that the U.S. is in for a Double Dip Recession. Currently, California unemployment is at 12% and we are still seeing significant job losses across every sector and industry.
Many California Employers now face making even tougher layoff decisions this year that will affect their senior employees. In my experience, this is the group of employees who are most likely to sue you. This is because regardless of the sound economic justification for your actions, to these senior employees - your layoff decision is unfair and unjustified. Senior employees may attack your decision as being based on their age if they are 40 and over. They may attempt to delay the layoff by claiming a medical disability; filing a workers’ compensation claim and/or filing a harassment and/or discrimination claim with federal and/or state agencies. A soundly based layoff decision cannot, and should not, be prevented by these actions.
In addition, layoff decisions are made more complicated by the need of Employers to reduce their labor costs and improve efficiency, while at the same time complying with federal and state anti-discrimination laws.
Ten important questions you must ask before you decide to layoff a Senior Employee:
1. Why are you selecting a senior employee, rather than a more junior employee?
2. Is your selection of the person to be laid off supported by written performance evaluations or merely the opinion of managers and supervisors?
3. Can the senior employee be reassigned to another position without requiring excess training or special knowledge that is presently held by a more junior employee?
4. Are a disproportionate number of senior employees who are 40 and over being affected by the layoff?
5. Are you using salary or compensation as a basis for making layoff decisions of senior employees?
6. Are the decisions to layoff senior employees being made by executives and managers who are under 40 years of age?
7. Have you documented your reasons for selecting each of the persons to be laid off?
8. Have you had your layoff decisions critically reviewed by your employment lawyer to avoid post layoff litigation?
9. Are you offering senior laid off employees a severance agreement conditioned on a release of all claims?
10. Is the senior employee a signatory to an enforceable arbitration agreement.
2. California Supreme Court Clarifies the Severe and Pervasive Standard in Sexual Harassment Cases
In Hughes v. Pair 46 Cal. 4th 1035(2009), the California Supreme Court clarified and heightened the “severe and pervasive” standard that employees are required to prove in order to maintain an unlawful sexual harassment action under California’s Fair Employment and Housing Act (“FEHA”).
Although the Hughes case was not an employment case, the Court adopted that standard for sexual harassment and held that even though the Defendant made statements to the plaintiff by calling her “sweetie” and “honey” and told her that he would “eventually f… her one way or another”, the allegations did not rise to the level of pervasive sexual harassment because they were not so egregious as to alter the condition of the underlying professional relationship. The Court found that the alleged conduct was not severe because although vulgar and highly offensive, the conduct did not amount to a physical assault or the threat of a physical assault to the plaintiff.
To date, at least one lower Court of Appeal has utilized this higher standard to deny a claim of sexual harassment in an employment case. In Haberman v. Cengage Learning, Inc. 180 Cal. App. 4th 365 (2009), the employee alleged 19 incidents of alleged harassment by two supervisors including conversations about one of the supervisor’s sex life and references to third parties having the “hots” for the employee; the supervisor joking to a group of about 30-40 men and women that his father, Richard was referred to as “Big Dick”, as opposed to the supervisor whose official first name is also Richard; and the supervisor calling the employee on her cell phone when both were parking in the same lot and telling her that he was coming up right behind her and it felt pretty good.” The conclusion here is that Courts are getting more real about what constitutes severe and pervasive sexual harassment and setting the standard much higher than it has been.
3. Are you still resisting having your Employees and Independent Contractors sign Enforceable Arbitration Agreements?
The February 15, 2010 Los Angeles Times headline read: “Disgruntled Jurors are Straining Court System” and “These Days, Seating a Jury Can Be a Trial”. What followed in the Times article was an exposition of the explosive anger and hostility that jurors feel toward the jury selection process and the civil litigants who have forced them to participate in this process. The Letters to the Editor which followed the article several days later were even more scathing of the jury process.
Jurors feel they are unfairly pressed into service for slave wages of $5.00 a day, and channel their anger toward the litigant who they perceive caused them to be inconvenienced and to lose money by being a juror.
Is this the type of angry individual who you want to decide whether your employment decisions were lawful and potentially award significant damages? Wouldn’t you rather have an employment law Arbitrator who is generally a retired judge or an experienced attorney hear and decide the merits or lack of merits of the case against you. In order to avoid a jury, Employers have to provide employees with a legitimate, fair forum for the resolution of their common law and statutory claims. Binding Employment Arbitration provides such as forum if the Arbitration Agreement is carefully drafted to provide the employee with all of the same procedural and substantive rights the employee would have if he or she had filed an employment lawsuit in Superior Court.
To avoid the substantial economic uncertainty that a jury can inflict on an Employer, every California Employer should insist that, at a bare minimum, the following individuals sign an enforceable Agreement to Arbitrate: (1) newly hired employees as a condition of employment and/or continued employment; (2) current employees who are promoted; (3) current employees who are receiving an increase in compensation; and (4) all independent contractors and corporate vendors.
The Goldstein Law Firm
8912 Burton Way
Beverly Hills, California 90211
Telephone: (310) 553-4746
Facsimile: (310) 282-8070