A Lot More Job Bias Lawsuits Are on the Way

But there are steps employers can take to minimize their chances of ending up in court.

By Martha Lynn Craver, Associate Editor, The Kiplinger Letter

March 19, 2009

Employers should brace themselves for a big increase in employment discrimination suits, spurred by recent Supreme Court decisions, new federal laws and massive layoffs in many industries. Complaints to the Equal Employment Opportunity Commission went up 15% in 2008. They began to tick up in 2007, gained momentum in 2008 and show no signs of slowing down.

Charges of retaliation rose 23% last year, replacing sexual discrimination as the second most filed complaint. Racial discrimination remains number one. “Without a doubt, retaliation claims are the most explosive in growth,” says Greg Keating of Littler Mendelson. Reasons for the surge include several Supreme Court rulings that expanded protections for employees and made it easier for them to claim they suffered “adverse employment action.” Another reason is eye-popping verdicts from juries. “It’s not uncommon to see verdicts in the tens of millions of dollars,” says Keating.

Compensation discrimination claims are sure to go up because of the Lilly Ledbetter Fair Pay Act, which broadens the definition to include not just decisions about pay, but also those that might affect compensation, such as training and promotions. The law, which was signed in January, also relaxes the statute of limitations for bringing pay discrimination claims by restarting the clock every time a paycheck is issued.

A new law amending the Americans with Disabilities Act to expand workplace protections means disability claims may also start rising.

There are ways, though, to lessen your chances of ending up on the wrong side of an expensive lawsuit. For starters, keep good records. A thorough accounting of an employee’s job performance is the best defense if a firing or other job action has to be defended in court, says Larry Lorber, an attorney with Proskauer Rose.

Train supervisors on proper procedures, including equal treatment and the rules about what constitutes retaliation against workers who file complaints. This is especially important if the organization is decentralized. “If you’ve empowered supervisors to make decisions, they need to know what’s required,” says Alison Davis of Littler Mendelson. Also, update training regularly, since this area of law is changing rapidly, adds Davis.

Be careful with layoffs, making sure there’s no disproportionate impact on particular groups, such as people over 40, either gender or any racial group. If you do find disparities, be prepared to make a good business case to justify the action. Sometimes disparities are unavoidable, so be able to show you relied on a reasonable factor other than age, race or gender in making your decision, says Rae Vann of the Equal Employment Advisory Council.

Good communication and generous severance help. Employers should explain how decisions are made and why, “so workers don’t feel like they are getting the shaft,” says Vann. Liberal severance packages can help ease workers’ ire. They should include a signed pledge from the worker promising not to sue.

For weekly updates on topics to improve your business decisionmaking, click here.