Avoiding the Nightmare of Class Discrimination Litigation
Not all press is good press. No corporation wants to see its brand publicly associated with employment discrimination and multimillion-dollar lawsuits, particularly now that the Internet enables collective memory to extend far beyond the headlines of the last few weeks. In addition, class litigation guarantees years of headaches for in-house counsel and ever-increasing legal costs in even the best-case scenarios.
Most companies believe they are providing a working environment that conforms with equal opportunity mandates. Unfortunately, a belief in the fairness of workplace policies, practices, and procedures is not enough. While it is fine to hope for the best, smart companies should always plan for the worst. The question, then, is what steps corporate counsel should take to ensure that the nightmare of a class action discrimination lawsuit never becomes a reality.
Too often, corporations dont raise the hard questions that, if asked and addressed, will help them avoid litigation. However hard the questions may be to ask, the benefits far outweigh the initial discomfort. When addressed, these questions lead to workplaces that are more efficient, productive, and successful. Savvy GCs may want to add to the agenda sometime soon a discussion of the following:
1. How are we identifying and developing our best employees?
A good place to start is to look at your companys best and brightest. Employees and employers interests align most closely within this group, and failures in the system for top performers often portend larger problems for average or subpar employees and more frequent liabilities for the company.
First, critically examine who the company is currently identifying or treating as the best. A companys failure to have a systematic method of determining which employees are truly the best can be a major source of liability. As obvious as this may sound, you want to make sure that those identified or treated as the best employees are also the strongest performers. When a company fails to recognize the strongest performers as the best employees, those overlooked individuals quickly can become plaintiffsparticularly when protected classes are noticeably under-represented in the group recognized as best.
Second, smart companies dont assume that managers are accurately and reliably rewarding, developing, and promoting the best performers. Instead, these companies create a range of systems where employees can self-identify as being interested in training, mentoring, development, and promotion; where the options and criteria for development opportunities are transparent and widely disseminated; and where senior management, human resources, and/or an independent talent-management committee are actively monitoring how the best employees are being developed.
These systems create records of who has sought out promotion or development and why they did or didnt receive it, which in turn provide clean and clear evidence that refutes promotion or development discrimination claims.
2. How reliable are our performance evaluation systems?
Beyond considering the strongest performers, you also want to make sure that the companys performance evaluation system is accurately and reliably assessing and classifying all employees. Even those performance review systems in which companies have invested significant time and resources may require additional fine-tuning before you can be confident that the strongest employees get the highest ratings and the weakest employees get the lowest ratings. This additional investment is worthwhile as nearly all employment decisionsincluding those regarding compensation, discipline, and promotionflow from the performance evaluation process.
In recent discrimination litigation, a key focus has been on how the observations and subjective assessments of line managers are incorporated into the review process. While reliable performance evaluation systems do incorporate the experience and observations of line managers, the incorporation is tailored to the actual requirements of the company and the job.
Smart companies ensure that employees:
- know on what specific skills and goals they will be measured at the end of the year.
- have an ability to supply their own assessment of how they demonstrated their skills and met those goals.
- understand how distinctions will be made between sub-par, average, and exemplary performance.
- have meaningful opportunities to challenge potentially inaccurate or unfair reviews.
Smart companies also verify that personnel managers:
- thoroughly and consistently understand what is being measured and how to measure it.
- know which stakeholders should be involved in the process and what weight should be given to their input.
- abide by company directives on the evaluation process in a documented and reviewable manner.
When employees are able to access and fully understand performance evaluations and when senior leadership is certain that managers are evaluating employees properly, your corporations likelihood of avoiding discrimination claims altogether is greatly increased.
3. What are we doing to root out problems affirmatively?
As easy as it is to talk about superstar employees, it is that much harder to talk about bad-apple employeesparticularly when those individuals occupy leadership positions. In the most difficult situations, individuals creating management problems might also be high achievers, have a long tenure with the company, or otherwise be well liked or respected. Dont let positive elements in an employees history or performance blind you or the corporation to liabilities.
Instead, proactively check in with employees through anonymous surveys to get their feedback on (a) company culture, (b) how comfortable and supported they feel in utilizing options like flexible work plans or parenting leave, and (c) how trustworthy, reliable, and accessible they believe appeals or HR complaint processes are. Of course, if problems are identified, it is unwise to ignore that feedback.
Other affirmative steps include making sure that record-keeping on how you investigate complaints is thorough (and demonstrates that processes are sound); that repeat bad actors dont slip through the cracks because investigations are repeatedly tabled for a lack of evidence; and that where wrongdoing is found, consequences are consistently and definitively applied.
Strong performers make superb plaintiffs and class representatives; juries believe that hard work and good results should be rewarded. Solid and reliable performance review processes can make certification of a class difficult, if not impossible. Companies that affirmatively eliminate problems limit exposure to damages (including dreaded punitive damages) and encourage plaintiffs lawyers to turn their attention to more delinquent employers. General counsel who keep these best practices in mind should be able to avoid hearing from a firm like mine and sleep a bit better at night.
Katherine M. Kimpel is the managing partner of the Washington, D.C., office of Sanford Heisler, a national law firm with offices in New York and California. Ms. Kimpel serves as lead counsel in numerous class action and individual gender discrimination matters. She routinely represents women at the highest levels in their fields, representing senior HR executives, COOs, and general counsel and other attorneys, and has been successful in negotiating exit packages and transitional plans that allow careers to proceed smoothly. She can be reached at email@example.com.