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Woody Allen once said, “90 percent of life is just showing up.” On Feb. 23, 2005, the New Jersey Supreme Court decided a case that applies a similar principle to job performance in discrimination cases, changing in the process 17 years of precedent under New Jersey’s Law Against Discrimination. The case, Zive v. Stanley Roberts, Inc., reduces the prima facie burden that plaintiffs in LAD cases must carry; assures that most LAD plaintiffs will survive motions for summary judgment or motions for a directed verdict at trial; eliminates poor performance as a prima facie defense to a claim for alleged discriminatory discharge; and dispenses with a trial court’s need to instruct a jury that poor job performance is a valid defense to a LAD claim. The decision provides significant incentives for New Jersey employees to bring a LAD claim in response to an employment termination, even one that clearly resulted from poor job performance. The Zive case is notable for the undisputed evidence of the employee’s poor job performance and the fact that he was informed before he became disabled that his job was in jeopardy. Stanley Roberts, a flatware importer, hired the plaintiff Zive in May 1991 to head a new division called Homeworld. He received a yearly salary of $125,000, full medical benefits, and a $500 per month car allowance. Between 1991 and 1995, Homeworld’s sales increased from zero up to about $2 million. Sales began to decline after 1995. Except for a brief period in 1997-98, Zive was the only employee of the division. In 1997, Zive gave management a sales target for 1998 of $2.53 million. Management told him at the time that the division would have to be closed if sales did not reach at least $2.5 million. To help him meet his sales goals, Zive hired an assistant in July 1997 named Tom Garda. During Garda’s interview for the job, Zive told him that Homeworld “was a struggling division” and that management had been threatening to close it down. “This division needs to do two and a half million dollars to survive,” he told Garda, or else it would be terminated. Zive missed his goal by about $1 million. The division lost money in every year of Zive’s tenure. He admitted that all of the employer’s complaints about his performance over the years were true and never disputed that he had failed to perform well in his job. In October 1998, he was told that the company was thinking about closing his division because he had missed his sales target and that, if he wanted to stay on at the company, he could take a job as a commissioned salesman. In December 1998, before the change could be made, he suffered a debilitating stroke. In March 1999, after rehabilitation, Zive told Stanley Roberts that he was prepared to return to his old job. The president of the company refused, telling him that he could still have a job as a salesman or, in the alternative, he could take a severance package of $20,000 plus one year of medical insurance. At trial, the court refused to impose upon Zive the prima facie burden under then-existing Supreme Court precedent. Since the decision in Clowes v. Terminix, Inc., 109 N.J. 575 (1988), a plaintiff in a discriminatory discharge case was required to prove that his job performance met his employer’s legitimate expectations before the case could be submitted to the jury. Instead, the trial court held that Zive’s only burden was to show that he was minimally qualified to occupy the position. The trial court held that he met this burden as a matter of law. The trial court also refused defense counsel’s request to charge the jury that poor job performance is a valid defense to a LAD claim. The jury awarded Zive $225,000 in compensatory damages and $75,000 in pain and suffering, to which the court added attorneys’ fees and interest. The Appellate Division affirmed that Zive’s only burden was to show that he was “qualified” for his job, not that his performance was satisfactory. The supreme court granted certification and, in a unanimous decision for the court, Justice Virginia Long affirmed. In doing so, the court changed the prima facie burden that has applied to discriminatory discharge cases since the 1988 decision in Clowes. The supreme court held that “[b]ecause of its remedial purposes, the LAD should be construed liberally to achieve its aims.” Thus, “[t]he evidentiary burden at the prima facie stage is ‘rather modest: it is to demonstrate that plaintiff’s factual scenario is compatible with discriminatory intent — i.e, that discrimination could be a reason for the employer’s action.’” The courtfurther stated that “consistent reaffirmance of the plaintiff’s slight evidentiary burden acknowledges that requiring greater proof would generally prevent a plaintiff from accessing the tools, i.e., evidence of the employer’s motivation, necessary to even begin to assemble a case.” The court confirmed that prior precedent required a plaintiff to show that (1) he was in a protected group; (2) he was performing his job at a level that met his employer’s reasonable expectations; (3) he nevertheless was fired; and (4) the employer sought someone to perform the same work after he left. But the court refused to apply the second prong, stating: “[The] reluctance to accept the ‘employer’s legitimate expectations’ at face value springs out of the subjective nature of ‘expectations’ and the difficulty an ordinary plaintiff would encounter in anticipating and bearing his or her burden of producing evidence of what was in the employer’s mind.” The court then changed the standard, holding: “All that is necessary is that the plaintiff produce evidence showing that she was actually performing the job prior to the termination.” According to the court, “[b]ecause performance markers like poor evaluations are more properly debated in the second and third stages of the burden-shifting test, they do not come into play as part of the second prong of the prima facie case.” The court therefore upheld the jury verdict, essentially because Zive had been showing up for work, regardless of his performance. What does the Zive decision mean for employers in New Jersey? The supreme court, surely, did not intend some of the likely consequences. Most plaintiffs who are members of a protected class under LAD will now have their cases reach a jury. What is more, under prior case law, every New Jersey worker — young or old; white or minority; male or female; drunk or sober; obese or slim; handicapped or not — is a potential member of a class of employees protected by the LAD. Future courts seeking guidance to apply the new prima facie standard may look to the facts of Zive and conclude that no case should be dismissed on summary judgment or directed verdict, even when there is undisputed proof of the employee’s abysmal performance. Indeed, the court has expressly made the quality of the plaintiff’s performance irrelevant at the prima facie stage. The decision may force settlement even of frivolous claims that should be resolved in an employer’s favor because of the protracted litigation Zive now imposes upon the parties to such a suit. Employers who give poorly performing employees a second or third chance do so at their peril. Had Stanley Roberts fired Stewart Zive in 1997, at the first sign of serious performance problems, instead of giving him one last chance to meet his sales and other performance goals, he could not have brought a claim based upon handicap discrimination. It was not enough, even, that the company offered to keep Zive on as a commissioned salesman. The decision suggests, instead, that nothing short of returning Zive to his $125,000 per year salaried executive position as head of a division that lost money every year of his tenure would suffice. Employers must now assume that discrimination cases will no longer be resolved before trial and a jury verdict. Here are several protective measures that employers need to consider: 1. Require arbitration. The supreme court has upheld agreements between employers and employees to arbitrate claims of employment discrimination. All New Jersey employers should now require such agreements. 2. Create a document trail. Employers should always inform employees in writing about incidents of poor performance. 3. Be blunt. As uncomfortable as this may be, employees need to be told in writing, in terms that cannot later be misunderstood, that they will lose their jobs unless performance improves within a specified time. 4. Do not let problems fester. Implement a formal written warning procedure, followed by termination where performance does not improve. If employees must only show up for work to preserve a discrimination claim, employers must show up in court with a substantial paper trail of poor performance to avoid a bad result. Carl A. Salisbury is with Killian & Salisbury of Clark, N.J.

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