How to Avoid Class Litigation

Failure to Afford Employees Equal Opportunity to Compete for Job Openings

Some employers lack systems for making job vacancies known to eligible candidates, hinder the ability of some employees to apply for job vacancies, or deny equal access to career-enhancing opportunities. Where employers fail to publicize vacancies or limit notice of vacancies in a manner that excludes some employees who are eligible for selection, they create the opportunity for managers to rely upon personal preferences and stereotypes in identifying candidates for promotion or other job openings.

Similarly, providing notice of vacancies for only brief periods of time and providing notice by means, such as electronic methods, to which some employees do not regularly have access also raises doubts about whether the process is fair. Where work assignments and training opportunities can enhance the strength of a candidate's application, employees' attorneys examine the way that the system allocates those assignments and whether it does so equitably.

Employee assignments to different facilities or to different departments within the same facilities where work varies in its career-enhancing potential may also warrant close scrutiny. Another red flag is a company's insistence upon supervisors' approval before employees can apply for vacancies. Finally, managers should not discourage particular employees from pursuing vacancies, especially where the managers rely upon stereotypes about a candidate's fitness. For example, in one case, numerous reports alleged that male managers were discouraging female candidates from seeking management positions, saying that the work was too demanding for a woman, and that male candidates needed extra money to support their families. Red flag!

Failure to Guide Managers in Discretionary Decisions

It is not enough that managers be told to exercise discretion in making important employment decisions. Employers must provide detailed guidance on how to do so. Companies must also specify concrete and job-related factors on which the decisions are to be made. The broader the discretion afforded the managers, the more specific guidance is needed.

For example, conducting performance evaluations and setting compensation constitute the most common practices in which the unguided exercise of discretion creates risk to employers. A system of performance evaluations that is unaccompanied by specific guidance and training about how each facet should be conducted and how each factor should be evaluated and weighted is a ready target for possible litigation. Simply telling managers to use their best judgment in evaluating performance, or that they simply judge candidates based on merit, could easily grace the first page of a class complaint.

Although a little less obvious, the use of performance evaluation factors that are not anchored in observable behavior also presents ripe opportunities for managers to apply personal biases. In what may be a misguided effort to inject common sense into the performance review process, some employers create vulnerability by using factors like loyalty, appearance, or personal warmth to assess performance. It is equally risky to empower managers to use unrecorded factors in making performance evaluations. Such subjective factors tend to reflect more about the manager's personal life experiences than the employee's merits.

The means by which managers set starting compensation and make regular pay adjustments, such as annual raises, also require attention. Setting broad pay scales, but failing to provide proper guidance about how to set each employee's pay level within that scale creates opportunities to exercise bias. Employers who fail to identify with particularity each factor used in pay adjustments create the same risk. The most reliable foundation for pay adjustments is a recent performance appraisal. Employers who permit managers to rely upon other criteria do so at some risk, unless the criteria are recorded, can be readily measured, and are demonstrably related to an employee's value to the employer. Similarly, employers that allow managers to recognize broad or frequent exceptions to the general rules on performance appraisals and compensation heighten the odds of litigation. While employers may need to allow for limited, discrete exceptions to their workplace rules, the occurrence of and need for such exceptions should be recorded and reviewed at a higher level before they are permitted.

Failure to Make Job-Related Employment Decisions

All the work-related rules in the world will not save an employer's personnel system if the factors used in employment decisions fail to measure success in the actual job to which they apply. Promotion decisions based upon factors that do not seem to bear a close relation to the important job tasks will raise questions.

As Human Resource professionals know, there are well-established protocols for systematically determining the knowledge, skills and abilities required to perform particular jobs. Employers can reduce their exposure to litigation by undertaking this kind of job analysis and using the result to establish the factors on which selections will be made, performance will be evaluated, and compensation will be set.

But when employers fail to undertake any form of professional job analysis, leaving to their managers the sole selection of the factors used in employment decisions, or who rely on outdated analyses, these decisions may suggest that discrimination has occurred.

Failure to Monitor Individual Management Decisions

Employers who fail to regularly review the personnel decisions of their managers or who fail to maintain or review workforce data about fundamental personnel decisions miss a great opportunity to identify and address patterns suggestive of discrimination before litigation forces them to do so.

In the absence of regular reviews of individual personnel decisions, managers may lack a sense of accountability — that is, an understanding that their decisions and the grounds for them will be subject to scrutiny. Similarly, employers that fail to collect data on the selections made and the applicants for each selection, on each component of compensation paid, or on the performance evaluations conducted miss a valuable opportunity to examine their managers' personnel decisions.

While the failure to undertake these forms of self-examination and to hold managers accountable for personnel decisions is not fatal to an employer's personnel system, it invites questions about whether the employer is truly committed to equal employment opportunity and whether bias in the workplace exists unaddressed. Monitoring manager decision-making and personnel decisions is not the end of the inquiry, of course. Employers that engage in these forms of self-examination must evaluate the results dispassionately. They must investigate and address anomalies or patterns suggesting discrimination, rather than ignore them.

Failing to Act on a Pattern

Once an employer has evidence that practices have potentially harmed a protected group, doing nothing risks exposure to a punitive damage award. Employers that use workforce data to conduct meaningful analyses of their personnel decisions must also ensure that the data collected, to the greatest extent possible, captures the variables bearing on their personnel decisions. An employer that believes an employee's education is relevant to particular promotion selections, for example, should maintain current education data. Otherwise, it risks difficulties in offering differences in education as a legitimate explanation for observed disparities.

Failure to Respond Promptly and Effectively to Employee Complaints

Most employers maintain departments that investigate complaints of employment discrimination. But the existence of such departments alone will do little to remedy discrimination in the workplace unless the office investigates and redresses complaints promptly and effectively, and employees regard it as doing so. When attorneys hear complaints about a company's Human Resources office, it is often a warning that the pursuit of equal employment opportunity is a low priority, or that the office has failed to be accepted as a legitimate and safe place where employee complaints may be brought. Widespread complaints about a Human Resources office suggest that the company may have failed to recognize and address ongoing patterns of discrimination. The absence of complaints about the human resource professionals, however, may not demonstrate the converse – that is, that all is well in the workplace.

Another aspect potential plaintiff attorneys look for is whether the employer maintains multiple avenues for lodging complaints. Can complainants bypass the chain of command to lodge complaints against their supervisors? Does the Human Resources office employ staff who are trained and operate professionally and who determine whether complaints have merit? And how are results of investigations reported and to whom? Not surprisingly, any allegations that employees who lodged complaints were subject to retaliation later are troubling. They almost certainly lead to a lawsuit.

Epithets And Bigoted Humor in the Workplace

There is little dispute that ethnic, racial, gender or other epithets expressed in the workplace are surefire hot buttons. The same is true of bigoted jokes and other expressions of intolerance dressed up in friendlier clothes. However, often more important to employment attorneys is the employer's response to these incidents, even where they are isolated. How did managers handle the incident? Did senior management address the matter, and what message did they communicate? What, if any, discipline was applied to persons who made bigoted remarks? What, if any, action did the company undertake to investigate the conditions that gave rise to the incident? What, if any, precautions were taken to reduce the likelihood of its recurrence?

Conclusion

The price of avoiding class litigation is constant vigilance and a commitment, by word and deed, to treat the protection against discrimination in the workplace as among a company's highest priorities. Instead, far too often preventing discrimination is a gesture supported half-heartedly by managers who regard it simply as an unwelcome expense.

Companies that treat diversity as a valued business goal will avoid, or at least reduce, their exposure to these cases. They tackle the signs of trouble above with the same zeal and attention as they promote business growth.

In the past year, large settlements of “pattern or practice” employment discrimination claims against several major companies, and the largest civil rights class action suit in American history against Wal-Mart Stores, have prompted questions about what employers can do to avoid being the next target. The following are key indicators in determining whether a company is in danger of class litigation.

A Repeated Pattern of Individual Complaints

Equal employment opportunity class cases develop when individuals complain about employment practices they allege have been applied in a discriminatory fashion. Often, the first complaints are insufficient alone to demonstrate a pattern of conduct that would warrant further investigation, much less the filing of a class suit. But if these complaints are tracked in a database, patterns may emerge over time that warrant further investigation. Plaintiffs' attorneys look for patterns, and prudent employers should do the same.

Failure to Afford Employees Equal Opportunity to Compete for Job Openings

Some employers lack systems for making job vacancies known to eligible candidates, hinder the ability of some employees to apply for job vacancies, or deny equal access to career-enhancing opportunities. Where employers fail to publicize vacancies or limit notice of vacancies in a manner that excludes some employees who are eligible for selection, they create the opportunity for managers to rely upon personal preferences and stereotypes in identifying candidates for promotion or other job openings.

Similarly, providing notice of vacancies for only brief periods of time and providing notice by means, such as electronic methods, to which some employees do not regularly have access also raises doubts about whether the process is fair. Where work assignments and training opportunities can enhance the strength of a candidate's application, employees' attorneys examine the way that the system allocates those assignments and whether it does so equitably.

Employee assignments to different facilities or to different departments within the same facilities where work varies in its career-enhancing potential may also warrant close scrutiny. Another red flag is a company's insistence upon supervisors' approval before employees can apply for vacancies. Finally, managers should not discourage particular employees from pursuing vacancies, especially where the managers rely upon stereotypes about a candidate's fitness. For example, in one case, numerous reports alleged that male managers were discouraging female candidates from seeking management positions, saying that the work was too demanding for a woman, and that male candidates needed extra money to support their families. Red flag!

Failure to Guide Managers in Discretionary Decisions

It is not enough that managers be told to exercise discretion in making important employment decisions. Employers must provide detailed guidance on how to do so. Companies must also specify concrete and job-related factors on which the decisions are to be made. The broader the discretion afforded the managers, the more specific guidance is needed.

For example, conducting performance evaluations and setting compensation constitute the most common practices in which the unguided exercise of discretion creates risk to employers. A system of performance evaluations that is unaccompanied by specific guidance and training about how each facet should be conducted and how each factor should be evaluated and weighted is a ready target for possible litigation. Simply telling managers to use their best judgment in evaluating performance, or that they simply judge candidates based on merit, could easily grace the first page of a class complaint.

Although a little less obvious, the use of performance evaluation factors that are not anchored in observable behavior also presents ripe opportunities for managers to apply personal biases. In what may be a misguided effort to inject common sense into the performance review process, some employers create vulnerability by using factors like loyalty, appearance, or personal warmth to assess performance. It is equally risky to empower managers to use unrecorded factors in making performance evaluations. Such subjective factors tend to reflect more about the manager's personal life experiences than the employee's merits.

The means by which managers set starting compensation and make regular pay adjustments, such as annual raises, also require attention. Setting broad pay scales, but failing to provide proper guidance about how to set each employee's pay level within that scale creates opportunities to exercise bias. Employers who fail to identify with particularity each factor used in pay adjustments create the same risk. The most reliable foundation for pay adjustments is a recent performance appraisal. Employers who permit managers to rely upon other criteria do so at some risk, unless the criteria are recorded, can be readily measured, and are demonstrably related to an employee's value to the employer. Similarly, employers that allow managers to recognize broad or frequent exceptions to the general rules on performance appraisals and compensation heighten the odds of litigation. While employers may need to allow for limited, discrete exceptions to their workplace rules, the occurrence of and need for such exceptions should be recorded and reviewed at a higher level before they are permitted.

Failure to Make Job-Related Employment Decisions

All the work-related rules in the world will not save an employer's personnel system if the factors used in employment decisions fail to measure success in the actual job to which they apply. Promotion decisions based upon factors that do not seem to bear a close relation to the important job tasks will raise questions.

As Human Resource professionals know, there are well-established protocols for systematically determining the knowledge, skills and abilities required to perform particular jobs. Employers can reduce their exposure to litigation by undertaking this kind of job analysis and using the result to establish the factors on which selections will be made, performance will be evaluated, and compensation will be set.

But when employers fail to undertake any form of professional job analysis, leaving to their managers the sole selection of the factors used in employment decisions, or who rely on outdated analyses, these decisions may suggest that discrimination has occurred.

Failure to Monitor Individual Management Decisions

Employers who fail to regularly review the personnel decisions of their managers or who fail to maintain or review workforce data about fundamental personnel decisions miss a great opportunity to identify and address patterns suggestive of discrimination before litigation forces them to do so.

In the absence of regular reviews of individual personnel decisions, managers may lack a sense of accountability — that is, an understanding that their decisions and the grounds for them will be subject to scrutiny. Similarly, employers that fail to collect data on the selections made and the applicants for each selection, on each component of compensation paid, or on the performance evaluations conducted miss a valuable opportunity to examine their managers' personnel decisions.

While the failure to undertake these forms of self-examination and to hold managers accountable for personnel decisions is not fatal to an employer's personnel system, it invites questions about whether the employer is truly committed to equal employment opportunity and whether bias in the workplace exists unaddressed. Monitoring manager decision-making and personnel decisions is not the end of the inquiry, of course. Employers that engage in these forms of self-examination must evaluate the results dispassionately. They must investigate and address anomalies or patterns suggesting discrimination, rather than ignore them.

Failing to Act on a Pattern

Once an employer has evidence that practices have potentially harmed a protected group, doing nothing risks exposure to a punitive damage award. Employers that use workforce data to conduct meaningful analyses of their personnel decisions must also ensure that the data collected, to the greatest extent possible, captures the variables bearing on their personnel decisions. An employer that believes an employee's education is relevant to particular promotion selections, for example, should maintain current education data. Otherwise, it risks difficulties in offering differences in education as a legitimate explanation for observed disparities.

Failure to Respond Promptly and Effectively to Employee Complaints

Most employers maintain departments that investigate complaints of employment discrimination. But the existence of such departments alone will do little to remedy discrimination in the workplace unless the office investigates and redresses complaints promptly and effectively, and employees regard it as doing so. When attorneys hear complaints about a company's Human Resources office, it is often a warning that the pursuit of equal employment opportunity is a low priority, or that the office has failed to be accepted as a legitimate and safe place where employee complaints may be brought. Widespread complaints about a Human Resources office suggest that the company may have failed to recognize and address ongoing patterns of discrimination. The absence of complaints about the human resource professionals, however, may not demonstrate the converse – that is, that all is well in the workplace.

Another aspect potential plaintiff attorneys look for is whether the employer maintains multiple avenues for lodging complaints. Can complainants bypass the chain of command to lodge complaints against their supervisors? Does the Human Resources office employ staff who are trained and operate professionally and who determine whether complaints have merit? And how are results of investigations reported and to whom? Not surprisingly, any allegations that employees who lodged complaints were subject to retaliation later are troubling. They almost certainly lead to a lawsuit.

Epithets And Bigoted Humor in the Workplace

There is little dispute that ethnic, racial, gender or other epithets expressed in the workplace are surefire hot buttons. The same is true of bigoted jokes and other expressions of intolerance dressed up in friendlier clothes. However, often more important to employment attorneys is the employer's response to these incidents, even where they are isolated. How did managers handle the incident? Did senior management address the matter, and what message did they communicate? What, if any, discipline was applied to persons who made bigoted remarks? What, if any, action did the company undertake to investigate the conditions that gave rise to the incident? What, if any, precautions were taken to reduce the likelihood of its recurrence?

Conclusion

The price of avoiding class litigation is constant vigilance and a commitment, by word and deed, to treat the protection against discrimination in the workplace as among a company's highest priorities. Instead, far too often preventing discrimination is a gesture supported half-heartedly by managers who regard it simply as an unwelcome expense.

Companies that treat diversity as a valued business goal will avoid, or at least reduce, their exposure to these cases. They tackle the signs of trouble above with the same zeal and attention as they promote business growth.