Common Mistakes In Handling Discrimination Claims

Too many small, and sometime large, employers have learned the hard way that common assumptions about employment law lead to costly mistakes. Take, for instance, the story of JoAnn – an entrepreneur who, while likely never condoning any unlawful conduct, is potentially facing an expensive battle because of the way her management responded to an issue.

JoAnn walked into the office of Michael, the site manager at one of her companies. She presented a “charge of discrimination” form she received from the Equal Employment Opportunity Commission. “Who is this guy, and what’s this about? It says he worked here, was called racist names, and then fired when he complained.”

Michael read and thought for a minute. “I remember him. He was a temp and only here a few days. A real lazy whiner. He did say something about his lead man making comments. Someone told the temp firm not to send him out again or he quit before I could look into it.” Michael read further. “Hey, no problem. It says here this Title VII law only covers employers with fifteen or more employees, and we only have twelve on that payroll. Plus, he was not even our employee.” “Well, alright,” JoAnn replied, “it doesn’t look like anything to worry about. Just send this EEOC a letter and that should be the end of it.”

Contrary to JoAnn’s belief, the former temporary employee will be able to sue JoAnn and her companies. Her management’s response has left her and the business exposed. Her company has committed five of the most common mistakes employers make in responding to complaints of harassment and discrimination.

1. Wrongly assuming the law does not cover you.

Although JoAnn believes she has nothing to worry about because of Title VII’s employee threshold, she is mistaken, for numerous reasons. First, while Title VII is limited to employers with fifteen employees, the claims here are race based. There is another federal law that prohibits racial discrimination and retaliation that is more powerful than Title VII. That statute, known as “Section 1981,” prohibits discrimination and retaliation by employers, regardless of their size. Under Section 1981, individuals can be sued and there are no caps on punitive or other damages as there are under Title VII. Finally, depending on the claim, the employee can sue up to four years after the fact without ever having gone through the EEOC.

There are several other ways that JoAnn’s company may be covered. First, under many circumstances, temporary employees may be counted along with the employees paid directly by the company for purposes of determining that the law applies. Second, the number of employees at all of JoAnn’s companies may be aggregated under a “single employer” analysis depending on how they are managed and run. Although this is a problem for small employers when it comes to Title VII, similar rules apply for other employment statutes like the Family and Medical Leave Act (“FMLA”), which have higher thresholds and are even more costly to administer.

2. “Not my employee, not my problem.”

Many employers mistakenly rely on temporary service or employee leasing contracts, which state that employees are employed by the temporary service. The law often takes a different view. The EEOC and the courts employ a “joint employer” analysis, which recognizes that more than one entity may exercise control over the individual’s employment to qualify as an employer. If JoAnn’s company was controlling the individual’s work and providing the supervision, chances are good that it will be considered an employer of the temporary employee.

3. Treating the complaint as the problem

A common mistake, even in the largest corporations, is to treat the complaint as the problem to be solved. Companies that react with a “bunker mentality” focus on the complaining individual and start to defend themselves, rather than address the core issue. An employee complaint may lack merit, but when it appears that the employer was more interested in disputing it than investigating and resolving it, the chances of going to trial increase significantly.

4. Thinking there’s nothing more to do once the employee is gone

Most employers are aware that they have a duty to investigate harassment claims. Should an employer, however, investigate once the problem is “over” because the employee is gone? It’s a trick question. The employee’s departure may signal that the company’s problems are just beginning. An employer should sincerely investigate and reach out to even former employees. If the individual will not cooperate, the employer can at least show a good-faith attempt to investigate. There may be other potential witnesses to interview or evidence (e.g. security video, e-mails) that should be reviewed and preserved. A lawsuit may not be filed for years, and trying to get the evidence at that late date will be difficult, at best.

5. Not having an objective review of the situation

The only persons who appear to have made any decisions here are the individual accused of harassment and possibly Michael, who summarily dismissed the concerns and did no investigation. Nobody ensured that both sides were heard, that statements and evidence were preserved, or that any legitimate concerns were addressed. The company’s opportunity to present a defensible narrative has been compromised.

A few simple measures on management’s part would have have better protected JoAnn and her company from what may now become an expensive case to d