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LEGAL ISSUES

The Year in Court
 

A brief look at 1993 court rulings on disability, firing, sexual harassment, and hiring.
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Regulations issued under the Americans with Disabilities Act (ADA) have received much attention in the past year, but it's hard to sense their limits until people start suing one another. Here's a roundup of the court cases decided this year that will mean the most to small businesses:

Disability. In the first jury trial litigated under the ADA, a jury awarded more than half a million dollars to an employee at AIC Security, in Chicago. The company had fired him because he had a brain tumor, even though a doctor had indicated that he could still work. In addition to back pay and compensatory damages, the jury awarded punitive damages of $250,000 each against the company and the owner, thus circumventing the $300,000 cap placed on punitive damages by the Civil Rights Act of 1991, says Ira Michael Shepard, a partner at Schmeltzer, Aptaker & Shepard, in Washington, D.C. He adds: "Punitive damages are not generally compensable by insurance."

Firing. Shepard also points to a recent age-discrimination lawsuit, Partington v. Broyhill Furniture Industries. In this case, "there was little, if any, evidence of actual age bias," Shepard notes. However, the fact that a more experienced employee would normally be retained over a less experienced one was enough to indicate age discrimination. The lesson: keep records of performance reviews to back up firing decisions.

Sexual harassment. Coit Drapery Cleaners v. Sequoia Insurance Co. is an old story with a new twist. The owner, a self-described "dirty old man," invited a woman employee to join him in a game of strip poker, tried to get her into a hot tub with him, and asked her to have sex with him. When she refused his advances, she was fired. The company settled out of court for $1 million and assumed the owner's insurance would pay two-thirds of the cost under general liability. When the insurers refused to pay, the dirty old man sued them. But the court decided insurance need not cover harassment when it is willful and intentional.

Hiring. Jack Raisner, a law professor at St. John's University, in New York City, notes a recent case in the District of Columbia that endorsed the use of "testers" in ferreting out discriminatory hiring practices. Two testers claiming similar credentials apply for the same job. In this case, the defendant, the owner of an employment-referral service, offered to waive application fees for women in exchange for sex. The jury awarded the plaintiffs $79,000. "While managers complain that this is entrapment," Raisner says, "the court has suggested that employee discrimination is so invidious, the government can take these measures to eradicate it." The case will encourage institutions such as the Fair Employment Council of Greater Washington, one of the plaintiffs in the D.C. case, to use testers.

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Last updated: Dec 1, 1993




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