FAQ - Advice for Employers

WHAT STEPS SHOULD A BUSINESS CONSIDER BEFORE FIRING OR DEMOTING AN EMPLOYEE?

• Consider These Issues Before Firing or Downgrading an Employee
  Before you fire an employee or take some other negative employment action in today’s climate, you should know your rights as an employer. Often it is better to follow a procedure or have some sort of established company policy. It may be wise to consult an employment attorney about the particulars of the firing to be sure how much care is advisable. Unless you have entered into a contract  with a termination provision or are subject to a collective bargaining agreement, your employee is considered an employee-at-will.  Thus, for smaller companies almost all employees are employees-at-will.  This legal term means that  with certain very important  exceptions, categories of  possible discrimination, most of which are discussed below, you are free to fire for any reason or no reason.  Employees do not have a right to  sue over a nasty boss or  difficult work situations (again with  certain limits).  Be sure that you have followed any contractual promises, including proper notice,  and that you have paid the employee for unused vacation days, earned commissions, and other earned compensation or you will run afoul of the Wages Act.  Since defending against a claim of discrimination can be expensive and damages, including emotional distress, can be large, caution is advised.  When in doubt, it is a good idea to document the reasons for a negative employment action (firing, etc.).  Documentation is  essential  if you expect a problem with a claim of discrimination.  How do you best do this?

• The Basic Procedures to Minimize Exposure to Claims of Employment Discrimination
  Advisable in any “problem” firing is to begin documenting performance problems, attitude problems, tardiness,  or interpersonal issues, such as  problems with the manager.  Try to do so  at the earliest possible time and, ideally, these should be  put as  notes in the personnel file, including as part of the note, “discussed …. “  with the employee.  Do not wait until the annual or semi-annual review.  In employment discrimination cases, the issue is almost always pretext in firing and, if you have documented well  the problems with the employee, you will find that you probably have a winning defense.  The first thing that an experienced plaintiff’s  employment attorney will ask the company for the personnel file under G. L. Ch. 149, § 52C to see if you have a good defense.  This personnel file is something you  have to make available to the employee  for copying within 5 days.  It is wise to be familiar with this statute.  Careful documentation may scare off a lawsuit.

WHAT ARE THE MAIN AREAS OF EMPLOYMENT DISCRIMINATION CLAIMS?

• The Big Four of  Employment Discrimination: Age, Sex, Handicap & Race (& Ethnicity) 
  Secondly, be aware of what constitutes employment discrimination.  The big four are age discrimination, sexual harassment, handicap or disability terminations and discrimination based on race or ethnicity.  They are made unlawful by  G. L. Ch. 151B, a complicated statute.  It is enforced by the Massachusetts Commission Against Discrimination (the MCAD).  You should know that anyone over age 40 is in a “protected” or suspect class for age discrimination.  If you fire that person and hire a much younger person (how much is a legal issue itself) without documentation of other reasons that are valid and not pretext for discrimination,  you face greater exposure for age discrimination.  You will face damages of the kind discussed under advice to employees.  Those damages are not pretty and are among the worst in the employment field.  Showing that the employee that you hired or promoted over the one fired or demoted (in the protected age category) was clearly more qualified will be a defense.  You can still prove your case by offering  good reasons to have fired the employee without the documentation,  but your defense may be more difficult.
  
  Sexual harassment lawsuits have been a growing field in employment discrimination law for years and, as long as human nature is what it is, a business of any size is at risk.  Number one in prevention is to establish a strong, no tolerance policy, communicated to all employees with periodic training in sensitivity and careful monitoring by and, in particular, of managers.  Next is prompt investigation of complaints and appropriate remedial action.   On the other hand, false accusations that can ruin a career may result in a lawsuit. The manager facing this possible scenario can be in a tough spot.  Elements of sexual harassment include traditional “quid pro quo” situations, where a “rogue” manager seeks sexual favors in exchange for advancing an employee or not taking a negative employment action, and pure creation of a “hostile work environment.”
  
  The third area is one that many companies will also face with increasing frequency (as with age discrimination) due to an aging work force: handicap or disability discrimination.  When an employee reports a medical problem and asks for a reasonable accommodation, it is probably time to consult an employment attorney.  Both the legal definitions of whether that person qualifies as a handicapped person and how they are applied are constantly being litigated and are very fact specific. G.L. Ch. 151B defines a "handicapped person" as any person who "(a) [has] a physical or mental impairment which substantially limits one or more major life activities.  .  .  (b) [has] a record of such impairment; or (c) [is] regarded as having such impairment." Mass.  Gen.  L.  ch.  151B, sections 1(16), (17).  Attorney Morse has a case before the Massachusetts Court of Appeals involving  the definition of handicap in the case of an employee who has Attention Deficit Disorder and Dyslexia.  The law requires an employer to enter into a consultative process to provide a reasonable accommodation.  This is also a requirement of Federal Law under the Americans with Disabilities Act (“ADA”).  With definitions more protective of employees and increasingly smaller businesses being regulated under Massachusetts’s employment discrimination statutes and  MCAD regulations, we focus here on them.   While you may be required to give a reasonable accommodation, what that is can be an issue both under the ADA and G.L. 151B.
  
  On other occasions, the employee is unable to meet the essential requirements of the job or he is unable to show that his handicap meets other requirements such as that it impairs his ability to function in a broad range of jobs.  These can be potent defenses when raised by the knowledgeable employment counsel.  Again, if performance problems are the real reason for letting such a person go, collecting evidence after the fact or, better, having documented it before hand will be the best strategy.
  
  Employment discrimination based on race and ethnic discrimination still occurs in the workplace if  our firm’s practice is any indication.  If you fire a poorly performing employee who falls  within a protected class, he or she may well try to claim discrimination.  The good news is that the MCAD cases show an even-handed approach when a race neutral employer fairly applies honest employment standards in the workplace.  It dismisses approximately half of the claims for lack of probable cause.  As in any claim of  employment discrimination, a policy of fairly promoting minorities, women and homosexuals and properly documenting employment problems beforehand or getting statements of performance or other problems from managers and  fellow employees after the fact is the best defense to a false claim of discrimination.

WHAT ARE SOME LEGAL STRATEGIES TO MINIMIZE POSSIBLE LEGAL LIABILITY?

• Strategies to Minimize Liability for Claims of Discrimination
  Some of the strategies are suggested in the above discussion of the law.   If you face a potential problem or have an actual case, get to an experienced employment attorney at once.    An ethical  advocate,  with the goal of either cutting short the dispute that cannot be won or winning one that can,  will make a realistic assessment of your defenses.  An attorney will look at  whether the risk of the exposure on the facts makes settlement or defense advisable.  The attorney will look at the factors discussed above and many others to assess the kind of damages your company faces.
  
  If you have had to respond to a claim made with the MCAD or  had a case transferred to court, counsel will check the statute of limitations – whether the employee has sued within the proper time.  If settlement is a reasonable option, when to settle is often the question.  Employees are under a duty to find another job (“mitigate” or lessen damages in the legal terminology) and if they do secure other employment, your financial liability may be lessened.  Their failure to look for another job is a defense.  Thus, you may want to allow a bit of time for the employee to search for and hopefully secure another job.
  
  An early and creative approach to the case may discourage counsel on the other side from taking a marginal case further since unemployed former workers rarely have the funds to pay on an hourly basis.  The plaintiff’s counsel must make a careful economic decision as to whether this particular case is worthy of taking a chance on as a contingent fee case.  Does he want to pursue it if it looks more like a loser?  Often the approach that many large firms take is to slog through it and make it as expensive as possible for the other side.  They paper the employee’s counsel to death and run up legal fees.  While proper representation requires a lot of work, it should be aimed at winning or settling and not  just trying to wear down the other side.  I have seen that backfire when a settlement is  finally advisable and the client feels that he may have lost twice.   Thus a reasonable settlement  should often be part of the goal of most employment litigation.  This approach is further advisable due to the uncertainty of most agency and court proceedings.
  
  Proper evaluation of a case often cannot be done until a stage, known as discovery of the facts, has been completed.  After that process, both parties and their counsel should have a fairly complete picture of the strengths and weakness of each other’s case. For further information, see our discussion of Civil Litigation.

WHY IS THE MASSACHUSETTS WAGE ACT SUCH A HOT TOPIC OF LIABILITY FOR BUSINESS FOR COMMISSION INCOME AND OTHER COMPENSATION ISSUES?

• The Wage Act With Stiff Penalties and Issues Regarding Compensation Is Worthy of Careful Attention and Consultation with a Lawyer The Massachusetts Weekly Wage Act, G.L. Ch. 149, Section 148, has become the latest and greatest arrow in plaintiff’s counsel’s quiver aimed at the unsuspecting business. Surprisingly, these include some companies big enough to have large firms or legal departments to advise them about the Wage Act. The Act requires, with certain exceptions, that wages be paid at the latest within a week of when they are earned. The Wages Act also requires, among other things, that an employer pay in full the wages of any discharged employee on the day of discharge.  According to the statute, the term 'wages' includes holiday or vacation payments due on the date of discharge as well as commissions finally determined and due.
  
  For violations of the state Wage and Hour Law, an employee may  recover three times the unpaid  compensation, attorneys'   fees and costs, and the  attorney general may assess civil penalties.  See G.L. c. 151, Sect. 1B; G.L. c. 149, Sect. 27C.  Such claims often arise when an employee has been terminated with unpaid compensation due.
  
  Certain types of compensation, stock options and the definition of covered commission income, are some of the hot topics today since neither the law nor Massachusetts regulations help give guidance as to certain parameters of the law. We await appellate court guidance on these issues of liability for businesses.