Archive for the ‘Hiring and Firing’ Category

It’s been widely reported that an employer in Florida fired fourteen otherwise fine employees for wearing the color orange. When I explain to employers that they can technically fire employees at will for any reason, including the color of clothes the employee was wearing that day (yes, I’ve really used that example many times!), I always meant it as an absurd example of the breadth of the employee-at-will standard. Apparently, this firm has a lawyer like me who likes to use absurd examples, and took it way too literally. Bad idea.

Employers really can fire employees for the color of their clothes (except in this situation, which I will get to). But what employer in their right mind would do so? Herein lies the problem. If your company is charged with discrimination, all the terminated employee has to do is articulate a “prima facie” case, which is an easy standard. If the employee is in any protected class, and then the employer replaces the terminated employee with someone not in a protected class, the prima facie case is established. Then, the employer must articulate a legitimate, non-discriminatory reason for the termination. A show of hands for those employers and their lawyers who would like to go in front of a judge and jury and explain why firing someone for wearing orange was legitimate.

In this case, the employer was a law firm. Yes, law firms can do really stupid things with respect to employment issues. It has been reported that the law firm believed that the orange suits were some sort of protest, even though the employees denied this. The employees’ explanation was that they went out together for a drink on payday. One would think that such camaraderie would be encouraged. Moreover, if the employees actually were engaged in a protest, their actions would likely have been protected as concerted activity under the National Labor Relations Act. Some courts have even held that the employer violates the NLRA when the employer fires an employee under the mistaken belief that the employee has engaged in protected concerted action, but actually has not.

There could be other situations where it would be unlawful to fire an employee for the color of their clothes. Aside from the legal implications, callously firing fourteen employees for wearing orange was a shitty thing to do. Dumb, too. Now the firm is dealing with a lot of bad press. Fired Employee Meloney McLeod, has been widely quoted as saying that she is a single mom with four kids, and “I’m out of a job just because I wore orange today.” She’s become the poster-child for how heinous the actions of the firm were.

How would you like to be an employee of that firm now? Would you be proud to work there? Would you give your all for the company, or would you be polishing your résumé and looking for the first opportunity to leave? Worse yet, how would you feel if you were a client of that firm? Would you be proud to say that they were your lawyers? Would you want them representing you in Court, knowing that jurors can and will Google the lawyers on trial? In short, this was a really dumb move that will come back to bite the employer.

If you have any questions about firing employees for wearing mauve, mustard, teal or other non-standard colors, give me a call at 617.338.7000.

By Adam P. Whitney

“Bob,” a new hire, seemed to be a capable, though not stellar employee in the mornings. Apparently, however, he turned his lunch hours into happy hours. Employees began to notice that he turned into Mr. Hyde in the afternoons. He did little work in the afternoons and even fell asleep at his desk on a few occasions. Other employees even complained of excessive flatulence in the afternoons. Bob was demeaning toward the female employees. He boorishly tossed Hershey Kisses at them and asked them to join him for drinks after work. They somehow resisted his charms. Poor Bob was promptly terminated before he caused the company any real problems.

Hiring the wrong person is a costly and time consuming endeavor, even if you promptly terminate him (in fact, most employers do not promptly terminate; human nature being what it is, employers do not want to think that they made a bad decision). The question becomes, how do you hire the right person in the first place?

A careful vetting process is important. If you read my blog often, you know that one rogue employee on your staff can ruin your whole day, or your whole year. While many management lawyers will caution you against Google and social media searches, you won’t hear that from me. While there is a theoretical risk that you will find some “prohibited” information on someone’s Facebook page, it’s well worth the theoretical risk to vet the job candidate. I say to do a complete as possible internet search to look for legal reasons to reject the candidate.

Also, you should really check references and ask probing questions. Be wary of references that provide vague answers or faint praise. Listen carefully.

Conduct a second interview and ask tough questions. Most interviews are cursory and the employer does all the talking. Make sure that the candidate can handle the position and is right for the position.

Sometimes business and family don’t mix well. Family business disputes can be particularly emotional. I’ve seen it all, brothers against brothers, sisters against brothers, sons against fathers, etc., etc. Jealousy and greed can bring out the worst in family relationships. A wise judge recently told me that (when it’s sibling against sibling) sometimes it all comes down to who got the better bicycle for Christmas when the parties were growing up. It’s not really that simple, but there is a kernel of truth there.

I’ve represented both employers and employees in family businesses. When things go bad in these situations, things can get really nasty. The adage that the ones you love can hurt you the most holds true here. I recently settled a case for a fired stockholder-employee for $1.4 million, who was fired by his elderly father after working for the company for thirty years. We alleged that his sister, also a long-term employee, manipulated the elderly father into turning against my client, who was a superstar salesman. This case was reported in Massachusetts Lawyers Weekly as one of the biggest settlements of 2011.

http://masslawyersweekly.com/2012/02/15/son-fired-from-family-business-after-30-years/

Click to access LargestVS2011.pdf

It’s inevitable that if you have a private business, you will have to consider whether to have family members work there. Sometimes private businesses grow into a family; sometimes your family grows into your business. The more successful the business, the more pressure there will be to hire family members. You may have siblings who need a job. You may have adult children who you want to bring into the business and eventually take over for you when you retire. You may start a business with a son or parent or sibling. All of these things are very common. Things are always hunky dory at the beginning. Maybe even for years.

But, inevitably, personal feelings will get in the way of running the business. Your family members may feel that they are different than other employees. They may feel that the same rules do not apply to them. They may overvalue their worth to the company. They may think of themselves as an owner when they are not. They may be jealous of you as the owner. The opposite is true too. Sometimes the family-member employee is taken for granted. Sometimes other family members are jealous of the other family-member employee who is a superstar, as in my recent case.

If you make decide to hire a family member, here are some general guidelines to avoid some nasty problems:

– Treat your family members like other employees and hold them to the same standards.
– Similarly, try to separate personal feelings and issues with business issues.
– Consider carefully the issue of stock ownership (see my post on terminating stock-holder employees). There are a lot of issues here, such as buy-sell provisions, which are beyond the scope of this post.
– Have clear written employment agreements and comply with the law. Family members can and will sue you for violations of wage statutes, etc.
– Communicate frequently on expectations for salary and ownership potential for the future. Your adult child may think that you are retiring at sixty and giving her the business. You may plan to work until eighty and/or sell the business. These different expectations can lead to big problems.
– Similarly, don’t let issues and problems build for years. Family members can turn into Rogue Employees, too.
– Consider arbitration clauses. Although I’m not always a fan of arbitration, you may not want your family’s dirty laundry aired out in court.

If you are a private business owner or a stockholder in a close corporation, I can help you with these issues. Call me at 617.338.7000.

Adam P. Whitney.

Let’s hear it for H.R.! There’s a cheer you don’t hear in the office much. H.R. is the butt of many jokes, including a lot of funny ones about Toby on The Office (Michael Scott said on one episode: “If I had a gun, with two bullets, and I was in a room with Hitler, Bin Laden and Toby, I would shoot Toby twice”). But from an outside counsel perspective, I absolutely love dealing with clients who have professional, competent human resources personnel.

Whether you owners of the company know it or not, your H.R. manager is worth his or her weight in gold because they keep your company out of so much trouble. Today’s human resources professionals are just that, professionals. More than ever before, H.R. has to know so much about federal and state laws and regulations on leave issues, disability issues, pay issues, benefits issues, etc., etc. And the laws change all of the time, so they need to continually update their knowledge. Some H.R. professionals are specialized in some of these areas, and probably know as much as many lawyers.

H.R. professionals know how to document what needs to be documented. This may sound tedious or boring, until you are faced with a lawsuit or potential lawsuit. Then, having proper documentation can make all of the difference. We have a saying in my business, “if it’s not in writing, it didn’t happen.”

H.R. professionals keep your legal fees down in two ways. One, as mentioned above, they keep you out of trouble, including lawsuits and government inquiries. Two, they can handle a lot of things themselves without having to call the outside lawyers. Most H.R. professionals I know seem to know the precise time when a situation morphs from an H.R. issue to a legal issue.

I know that H.R. professionals do many other critical things as well. If used correctly, they are strategic partners for management and set the tone for the company culture. I’m simply giving my perspective as outside counsel. This brief post is not meant to give a full overview of the entire profession.

If you’re company is not large enough to have a full-time H.R. staff person, consider a company that will serve as your out-sourced human resources division. There are plenty of outsourcing companies who will do that for you. Here’s a good article on outsourcing: http://humanresources.about.com/cs/strategichr/a/outsourcing.htm

If you are an H.R. professional at a private company in Massachusetts, or if you have taken on those duties by default (as sometimes happens), I would love to work with you. Call me at 617.338.7000.

By Adam P. Whitney

I promise not all of these will be about sex, but I like to get people’s attention, so I’m sticking with the salacious stories again this week. Most of us in the Boston area have heard about the local school teacher who was discovered to have allegedly been a gay porn actor on the side. This doesn’t make him a bad person or even a bad teacher, but his background did bring negative publicity to his employer. Google “Malden teacher, porn actor” and you’ll get a lot of hits.

The takeaway here is that, in the internet age, anything that employees do can be easily discovered by anyone, including the media (the local news media uncovered this story). Employers have to be mindful of this, and have to remind their employees to be mindful of this. Careful employers search employment candidates on the internet before hiring, and more extensive background checks can also be done. While doing that can, theoretically, create legal exposure, many employers are willing to take that risk. Most employers want to just run their business and avoid controversy. That doesn’t always mean that you can automatically fire or refuse to hire an employee based on some information found in the internet. Take the above example, if the teacher ends up being fired, he could potentially have claims for discrimination, because sexual orientation is a protected class in Massachusetts (I’m not saying he would win, just that he has a potential claim). When you have any question, check with your employment attorney before making a hiring or firing decisions based on an internet or background check, or call me at 617.338.7000.

I’ve been thinking about giving notable examples of rogue employees from the popular press. So why not start with this one. Boston.com reported today that a stripper at the Glass Slipper in Boston may have caused some problems for her employer by not following a city ordinance that prevents physical contact between dancers and customers. The article is here:
http://www.boston.com/Boston/metrodesk/2011/12/boston-strip-club-could-face-sanctions-over-lap-dance/0bkmvq1aybdsoIsxPCmDSI/index.html?p1=Local_Links

Apparently, a $300 tip was enough of an inducement to ignore the city ordinance and, presumably, the club’s own rules. The employer could face fines or a suspension of its license. The takeaway here is that your employees are your agents. When they commit wrongdoings while performing their job duties, your company could be exposed (no pun intended) to government sanctions or civil liability. While you can never completely control your employees, make sure that they know the rules and laws of your industry and make sure that they are following them. If not, consider whether employing the rogue employee is worth the risk.

This week I have had a rash of clients dealing with ex-employees behaving badly. Employees who feel that they have been unfairly fired may want to cause harm to your company. And they know how to hit you where it hurts. A favorite devious tactic is to harm your business relationship with your clients or customers by badmouthing you, or by undermining your credibility. They do other devious things too. Once it gets to that point, or you see it about to get to that point, your options are merely brute force and damage control, which are certainly not mutually exclusive. Below, I’ll discuss how to handle these options. In a later post, I’ll discuss how to avoid getting to the point where you are left with these unenviable options.

The Brute Force Option

Clients often come to me after an employment relationship has ended badly and the ex-employee has gone rogue to harm the company. In my world, lawyers can write letters and file lawsuits, but there is not much else that they can do to stop the misbehavior of a rogue ex-employee. In appropriate circumstances, law enforcement can be involved.

I generally opt for the stern letter first. Some of my colleagues call these “nastygrams” because they are usually pretty threatening; some call them “cease and desist” letters. I call them “stop the nonsense” letters. A well-written stop the nonsense letter can actually be very effective. If the rogue ex-employee is told the specific legal exposure that he is creating for himself, many will realize that they are being self-destructive more than they are actually hurting the company. This letter has to be written very carefully (for a variety of reasons) to both show the employee the exposure he is creating for himself, as well as show the employee the way to avoid further exposure.

The brute force option of last resort is a lawsuit against the rogue ex-employee. In rare cases, these are necessary, but no one really wins these lawsuits, other than the lawyers collecting fees (I like collecting fees too, but only if the client has a fair chance to get a good result). Even if the employer obtains a total victory, it is very unlikely that the employer will collect significant damages. These cases can be bitter, hard-fought and expensive. No one will be happy in the end unless the employer has such significant resources that vindication is priceless. I usually try to talk clients out of these suits, but I will and have pursued them if they have merit. The fruitlessness of suits can also be true for many types of suits against rogue ex-employees, including embezzlers and trade secret thieves, but it is not always the case. I have some nice judgments against ex-employees, but a judgment is just a very expensive piece of paper that gives you some rights to collect from the assets of the ex-employee, if any.

Damage Control

You should know best how to perform damage control and protect your valuable relationships with your clients. Cut off the rogue ex-employee,s access to your e-mails, cell phones, computers, etc., etc. If possible, cut off all chains of communications that the ex-employee can have with your client (the stop the nonsense letters can direct the employee to not trespass onto your property or your clients’ property and to not contact your clients). If appropriate, inform the client in advance that you have a rogue ex-employee who may try to defame you. Apologize in advance and assure the client that you are dealing with it. The client will appreciate and understand this, and may even be an ally.

If you have a rogue ex-employee who you need help dealing with, call me at 617.338.7000.

By Adam P. Whitney

Massachusetts is an employment at will state, so you can surely fire an employee who has no contract for a term if you have just cause to do so, right? If that employee is a stockholder in a close corporation, the answer may well be no. This is a not well-known area of law, and lawyers can easily make mistakes in this area.

Let’s start with general principles. A “close corporation” is usually a smaller business, such as a family business, with a small number of shareholders where the stock is not publicly traded and there is no ready market for the stock and substantial stockholder participation. A great many smaller businesses will qualify as close corporations.

In Massachusetts at least, a stockholder in a close corporation may have a reasonable expectation of continued employment in the business. This is a question of fact, but if the stockholder either invested in the corporation with the understanding of continued employment, or stayed employed with the expectation of continued employment, then the minority stockholder has certain rights to continued employment. The same is true for partnerships, LLC’s and other business entities where the employee holds an equitable interest in the company.

These cases present a special circumstance of the intersection between employment and business/corporate law. Even for those of us who practice substantially in both employment law and business litigation, the cases can be factually and legally challenging. There are often substantial emotional issues involved, as many close corporations involve family businesses or close friends who are shareholders.

Having a reasonable expectation of employment doesn’t mean that a stockholder employee can never be fired. But, there must be a business purpose for the termination. This is a higher standard than just cause. The controlling stockholders have a fiduciary duty of the utmost good faith and fair dealing to a minority stockholder. In addition to having a business purpose for the termination, the controlling stockholders must consider less harmful alternatives to termination. There is no laundry list of less-harmful alternatives, as every factual scenario is distinct. The less-harmful alternatives which must be considered depends on the business purpose for the termination. For example, if the business purpose for the firing is that the employee is not getting along with other employees, less harmful alternatives could include job-coaching or counseling, moving the employee off-site, etc.

The takeaway is that the attorney representing the close corporation which intends to fire a minority shareholder must proceed with great care. It may well be malpractice to advise the close corporation that it can terminate a minority shareholder – even when the minority shareholder has committed some misconduct and is an employee at will – without identifying the business purpose and advising the client to fully explore less harmful alternatives.

If you are the controlling owner of a small business and you are having trouble with a stockholder, call me to discuss your options and obligation. If you are a minority shareholder and you have been terminated, or suspect that you are about to be terminated, I may be able to help you as well (as long as there is no conflict). We have successfully represented both controlling shareholders and minority owners. As always, the above is general information and not legal advice.

By Adam P. Whitney 617.338.7000.

Say what? When I advise employers on termination issues, I am most comfortable approving a termination when the employee has committed serious misconduct, such as stealing from the company. However, even though Massachusetts is an at-will state, and employers usually are on safe grounds to fire an employee who has stolen from the company, there are exceptions.

Take the recent case brought by the EEOC against Walgreens. Walgreens fired a cashier who opened and ate a $1.39 bag of potato chips because she was suffering from low blood sugar, on account of her diabetes. The case was brought under the Americans with Disabilities Act. Walgreens apparently considered the employee’s actions to be stealing from the company. It is not reported whether there was an investigation prior to the termination. Some reports suggest that the employee planned to or did pay for the chips after the fact.

I won’t comment on who should win this claim without having more facts. What Walgreens should have done was to conduct an investigation, including especially questioning the employee. Given that she was reportedly an 18-year employee with no disciplinary problems, maybe Walgreens should have given her the benefit of the doubt. If she did plan to pay, then allowing her to grab the chips and eating them (and pay for them later) would likely be considered a reasonable accommodation.

In a written statement, the EEOC wrote that “[a]ccommodating [a] disability does not have to be expensive, but it may require an employer to be flexible and open-minded.” That is good advice, when you have an employee who may be considered disabled (which is now very broadly defined), you should always have reasonable accommodations in the back of your mind.

Another situation where you could be held liable for firing an employee for stealing is the case of disparate treatment. If, for example, you do not fire white employees who are caught stealing, but do fire a black employee who has committed the same offense, you could be held liable for racial discrimination. This was the theory that a plaintiff used in Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122 (1997).

Although the employee lost (after what must have been an expensive legal battle all the way to the highest court in Massachusetts) on factual grounds, the legal theory was sound. Employers must be careful to be consistent with their policies, especially in matters of discipline. Of course, this advice is contradictory to the lesson in the Walgreen’s case. As you will read elsewhere in my blog, sometimes disabled employees have to be treated differently. This fits in nicely with my theme – sometimes you’re damned if you do; damned if you don’t.

The takeaway here is that, maybe, you can never be sure that a termination will not lead to an expensive lawsuit. If you cannot fire an employee after you have determined that they were stealing with the company, when can you fire them? I’m not trying to be alarmist. The vast majority of employees who have allegedly stolen from the company can be safely fired. But, as you can see, that’s not always the case. If you do have any questions on whether you can terminate, and how to do it, call me at 617.338.7000.

By Adam P. Whitney, Esq.

If we are being honest we must admit that many of us will eventually get “too old” to do our jobs. This won’t happen to everyone. I have had cases against lawyers in their 90’s who were quite capable. I imagine that Jack LaLanne would have been a fine lifeguard or firefighter even in his 80’s. But most of us could not do those jobs in our 80’s.

Don’t take this post the wrong way; I’m strongly against age discrimination. Although I usually work for employers, I’ve successfully represented older workers who have been real victims of age discrimination. It’s ugly. And the resulting emotional and economic harm to an older worker can be devastating. While racial discrimination is often subtle and covert, age discrimination can be blatant and overt.

This post is aimed at the very real situation of a good employer having an elderly worker who can no longer perform all of the job duties. In this economy with people unable to retire, and because baby boomers are aging, this is a situation that frequently repeats itself. Take this hypothetical “damned if you do; damned if you don’t” situation, which is a mixture of real cases I’ve worked on. Say an employer has a much older worker; elderly, in fact. Far from wanting to discriminate, the company feels great affection for the employee, and has kept him much longer than his performance warrants. Let’s say that the public’s or the client’s safety depends on the employee performing his job duties.

What is the employer to do? By letting the employee slide for years, the employer is in a weak position because it has no record of poor performance. If the employer fires the employee, it exposes itself to an age discrimination claim. If the employer does not fire the employee, clients may be dissatisfied, or someone could be injured. Damned if you do; damned if you don’t. There may also be physical issues that make the employee qualified as disabled under state and federal law, requiring that you provide reasonable accommodations before termination.

There’s no magic bullet to this situation, but if it is a safety issue, you have to err on the side of safety. But it is clear that employers must rely on objective criteria. Well-drafted and honest job descriptions, which are enforced for all employees equally, are your first line of defense. Performance evaluations are your second line of defense. If you routinely evaluate, or even test, all of your employees in an equal, objective, unbiased fashion, and record the evaluations, you will be in a better position (You have to be careful that the evaluations or tests themselves are not biased, which could lead to liability). Also, you should have objective and equal responses to the evaluations/testing. You cannot let some employees slide, because you have then set a precedent that will allow an employee to show bias if you enforce your standards against only some of your employees. Document everything when it happens. Employment lawyers have a saying, “if it’s not in writing, it didn’t happen.”

This will cost you time and money, I get that. But don’t look at it as a waste of time. In addition to helping you avoid liability, won’t it also help you to serve your customers? Won’t it reinforce to your workers that the job description is important and that you take it seriously? Won’t it help you to revise your job descriptions if they are not accurate? Won’t you discover where you need more training? Won’t it help you get valuable feedback from your employees? Won’t you weed out underperforming workers and strengthen your business? Only you can answer these questions, but I’d be surprised if you said “no” to all of them. Maybe this isn’t feasible for every company and every position, but if you put your mind to it, you should be able to come up with some objective ways to evaluate employees.

The other advice here is to be honest with your employees. Of course, don’t say “you’re too old” for the job. Don’t suggest that the employee retire. I said honest, not suicidal. In fact, age really isn’t the issue, in spite of what I wrote above. The issue is the individual’s performance. Some people can suffer early onset dementia at age 60. Some people have their wits about them in their 90’s.

Make it about their performance. Don’t try to soften the blow and tell the employee that you’re eliminating the position when you are not. Don’t tell employees that you are moving in a new direction, or seeking some “new blood,” which is code for hiring younger workers. Just be factual and rely on performance issues. It will still hurt the employee, and they may not want to accept that they cannot perform. But deep down, they will know that you are right. I think it is easier to accept that we all get older and lose some of our abilities than to accept that your employer rejected you just because you are older. If you make an employee feel the latter, you may well buy yourself an expensive lawsuit.

If you have any questions on how to deal with an underperforming worker, call me at 617.338.7000.

By Adam P. Whitney