How company owners can protect themselves from employee litigation.
And you thought your employees liked you? With recent changes in the law turning workplace litigation into a gold mine for lawyers, it's not only large companies that find themselves on the sharp end of an employee lawsuit. Is there anything you can do to protect yourself?
If you want to hear someone bash the American legal system, talk to an employer who feels he has been wrongly accused of workplace discrimination. You'll get an earful about an area of law commonly called "legalized blackmail." A business owner or manager who has been ensnared in this bewildering web of jurisprudence has likely turned deeply resentful of a system that critics say has gone haywire.
Employment litigation has exploded. The number of discrimination lawsuits has risen by more than 2,200% over the past two decades; they now account for an estimated one-fifth of all civil suits filed in U.S. courts. Already an epidemic, employment litigation is sure to worsen as the work force grows more diverse.
The ramifications of the explosion are creating havoc in thousands of companies. Legal-defense costs in employment lawsuits can be staggering. Awards to plaintiffs can cripple small businesses. Moreover, the litigation often lasts for several years, consuming huge amounts of management's time and energy. Even for employers who are ultimately vindicated, the process itself is punishing. And in the wake of one of these fights, companies often undergo a sort of personality change, turning legalistic and strained as management moves to prevent exposure to claims from job applicants and employees.
"The whole country is much more litigious, but employees are phenomenally more litigious," says Miami lawyer Elizabeth du Fresne, who once represented plaintiffs and now defends management.
Few people would argue that antidiscrimination laws are uncalled-for. There are still racists. There's still discrimination against older people and people with handicaps. And there are still managers -- of both sexes -- who think putting their hands all over the help is a fringe benefit of being the boss.
Still, the impression that emerges from interviews with numerous lawyers and employers is of a well-intentioned body of law that has become tremendously burdensome and abused. Berserk, warped, twisted, absurd: those are the sort of terms employers use when describing their nightmarish legal tangles with workers.
One small-company president, who spent $50,000 on legal fees fighting a wrongful-termination charge, sums up his feelings this way: "We've been in business and owned by the same family for 80 years. We had a nice reputation in the community. The fact that this employee was able to drag us through the courts on an utterly worthless claim and cost us all this money and aggravation made it clear to me that the system is out of control."
Even lawyers are appalled at the abuses they see. Robert Fitzpatrick is a Washington, D.C., lawyer who has practiced employment law for 25 years, representing both management and employees. He is fervid about eradicating discrimination -- he cut his teeth as a civil-rights lawyer in Mississippi in the 1960s. Still, he is disturbed by what he now regards as "a legal war" in the workplace.
"There's always a small percentage of cases where the person was blatantly and egregiously wronged, discriminated against on the basis of race, age, sex, disability, whatever," Fitzpatrick says. "Those are the cases that a judge and jury ought to hear. But that's not how the system works now. It's just everybody trying to rip off some money whenever they get offended. It's an outrage when you have to pay $100,000 to defend yourself against something that anybody can tell in two hours is bogus."
Judges, too, sometimes think things have gone too far. Consider a 1991 discrimination case in Los Angeles, in which the plaintiff, a 56-year-old construction-company executive, claimed he was forced to quit his job because of his age. After a 38-day jury trial, he was awarded $2.1 million in economic damages, $2 million for emotional distress, and $1.6 million in attorneys' fees and costs -- a total of $5.7 million.
In reviewing the case last year, an appellate-court judge upheld the verdict and award as legally valid. But then, in his decision, he took the highly unusual step of writing that this area of law "is quickly running out of control and the citizens of California will be the ultimate victims and losers....Commerce in California cannot flourish with such multimillion dollar verdicts readily attainable."
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Expanded Legislation
Starting in 1963 with the Equal Pay Act, Congress began a long legislative campaign to expand employees' rights. Part of the impetus was a big drop in labor-union memberships. For several decades before, unions had shielded roughly a third of the work force from the whims and caprices of management. Their decline left a growing number of employees without recourse for perceived wrongs. Increased legislation essentially made the courts a de facto replacement for union grievance procedures.
Four federal laws have generated most of the ensuing litigation. They are Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, religion, sex, or national origin; the Age Discrimination in Employment Act of 1967 (ADEA), which protects workers who are at least 40 years old; and the Americans with Disabilities Act of 1990 (ADA), which outlaws discrimination against people who are disabled, including the obese. Finally, there's the Civil Rights Act of 1991, which has set off a gold rush by plaintiffs and their lawyers.
