Category Archives: Law

A Retrospective on Healthcare, and Where Do We Go from Here?


800px-Capitol_Building_Full_ViewRegular readers of this blog know that I am not a fan of Obamacare. It is overly prescriptive, too costly, and has been poorly implemented. Readers also know that I have said from the beginning that it needed corrections.

I have never been hung up on whether Congress called it repeal or replacement, as long as our healthcare system was fixed . . . or at least improved.

In November 2013, I recommended the following reforms:

  • Put all forms of health insurance (employer-based and other) on an equal footing
  • Permit a wide variety of insurance plans, from catastrophic plans to high-deductible plans to those with varying levels of coverage and exclusions
  • Provide direct subsidies to the poor and seriously ill so they can purchase healthcare coverage on the open market
  • Repeal the individual and employer mandates

I said,

“In short, the type of healthcare insurance to buy should become a decision that individuals make, not the government. Insurers should be free to design policies that consumers want, and to price them at levels that are profitable. We should abandon the notion that the federal government knows what one-size-fits-all insurance programs are ‘best’ for Americans.”

The Republican bill that Congress could not pass, the American Health Care Act (AHCA), was far from perfect in addressing my concerns, but it addressed some of them. I thought it was better than the Obamacare statute as it exists now. Frankly, the fact that no one liked it made me think the AHCA was as good as we were going to get.

But it went nowhere. Apparently, the split between the ultra-conservative and the establishment branches of the Republican Party is wider than 218 votes, and no bill could bridge the gap.

As the Wall Street Journal stated on March 24, 2017, in The ObamaCare Republicans:

“[The AHCA] worked off the reality that the U.S. health system has changed under ObamaCare and thus an orderly transition is necessary to get to a free-market system without throwing millions off insurance. The GOP also is a center-right coalition with competing views and priorities. The bill had flaws but was the largest entitlement reform and spending reduction in recent decades.”

So, given that Obamacare needs reform, where do we go from here?

I don’t know.

HHS sealHHS Secretary Tom Price can work on regulatory reforms, but only within the confines of the Obamacare language. Some of the most pressing issues are part of the statute and cannot be changed (though the Obama administration delayed some of them, or gave exceptions, and perhaps the Trump administration will do the same). Some of these issues include:

  • The tax on medical devices
  • The details of the mandated benefits (“essential health benefits”)
  • The Cadillac tax on employer healthcare plans, which, if implemented, will suck in more and more employers over time as the cost of mandated benefits rises

The fundamental problem with healthcare in the U.S. is that most Americans have not paid the full cost of their care since the 1930s, when employers began offering medical insurance as a benefit. As with all consumer goods and services, Americans want high quality, high quantity, and low prices on healthcare. Any economist can tell you that you can’t have all three—two of the three is the best you can hope for. The ideal system is often a compromise on all three. When healthcare prices are artificially lowered for the consumer, they make irrational decisions on quantity and quality—overusing the system and expecting Cadillac care for Fiat prices.

In my opinion, our healthcare system will not be fixed until employer-based plans are no longer the preferred way of covering the cost. Don’t get me wrong, many employers do an excellent job of managing their healthcare benefit plans. But the distortion in the market caused by these plans is increasing and is only made worse by Obamacare.

The different tax treatment of employer-based premiums and premiums for individual plans is unfair. The proposed AHCA would have helped in that regard, though it wouldn’t have fixed the problem entirely.

As the Wall Street Journal editorial said:

“An ideal free health-care market is never going to happen in one sweeping bill. The American political system is designed to make change slow and difficult, thank goodness. Republicans have to build their vision piece by piece, carefully gauging how to sustain their policy gains politically—the same way Democrats expanded the welfare and entitlement state over the last century.”

I suppose that’s where we go from here.

What do you think?

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Favorite Firing: Discharge for Dishonesty Is Not FMLA Retaliation


FMLA DOL.pngWhen the Family and Medical Leave Act became law in 1993, it immediately changed the relationship between managers and employees. It became much harder to discipline employees for attendance, if their absences were even arguably covered by the FMLA. But a recent case demonstrates that if an employee lies about his or her need for FMLA leave, then discharge for the dishonesty is appropriate. See Sharif v. United Airlines, Inc., No. 15-1747 (4th Cir. Oct. 31, 2016).

The Facts: Masoud Sharif, an employee of United Airlines in the U.S., had suffered from a diagnosed anxiety disorder for several years, and he was frequently absent from work due to panic attacks. For many years, United Airlines approved his requests for FMLA leave. In fact, in the two years prior to his discharge, Mr. Sharif took 56 days of approved FMLA leave.

Mr. Sharif and his wife (also a United employee) went on a three-week vacation to South Africa in 2014. He used time-off days for most of the time, but not for two days in the middle of the scheduled absence. He tried to swap shifts for those two days within United’s swap policy. He found someone to cover one shift, but not the other. While still in South Africa on the day that his absence was not covered, he called to request FMLA leave for that shift. (He did not call to request the leave until it was too late to fly back to the U.S. from South Africa, and he had no airline reservation back to the U.S.)

The Sharifs returned to the U.S. in time for Mrs. Sharif’s first scheduled shift after the irvacation. United then noticed that Mr. Sharif had only requested FMLA leave for the one shift he was scheduled to work during his vacation. Mr. Sharif had similarly taken FMLA leave during a planned absence in 2013. Therefore, United decided to investigate.

When United managers questioned him, Mr. Sharif first claimed he was not scheduled to work on the day in question, but he did not explain why he requested FMLA leave for that day. He gave inconsistent and implausible statements about trying to fly home from South Africa, then claimed he suffered a panic attack over his inability to return home, which is why he requested FMLA leave.

United determined that Mr. Sharif had been dishonest in his request for leave and during their investigation. Dishonesty was a violation of the United “Working Together Guidelines.” The airline suspended him without pay. United was prepared to discharge him for fraudulently taking FMLA leave and for making false representations during the investigation. On the recommendation of his union, Mr. Sharif retired, so he would not be terminated.

Mr. Sharif later filed suit alleging the threat of termination constituted retaliation for taking FMLA leave. The district court granted United’s motion for summary judgment, and the Fourth Circuit affirmed. The Fourth Circuit held that termination of employment for abusing FMLA leave and for lying during an investigation into the FMLA abuse is not retaliation under the FMLA.

The Moral: This is another case where an observer wonders what the employee was thinking. Several of Mr. Sharif’s statements were easy to refute based on airline schedules. The whole situation—leaving one day uncovered in the middle of an international vacation, then requesting FMLA leave on that day—would raise the specter of employee dishonesty in any objective mind. Common sense should prevail in a case like this, and fortunately it did.

As the Fourth Circuit held,

“Sharif has failed to create an issue of triable fact that the explanation United Airlines provided for his discharge was a pretext for retaliation for taking FMLA leave. To hold otherwise would disable companies from attaching any sanction or consequence to the fraudulent abuse of a statute designed to enable workers to take leave for legitimate family needs and medical reasons.” [emphasis added]

In its decision, the Fourth Circuit provided guidance for determining whether FMLA retaliation has occurred, when the circumstances surrounding the request for leave or the leave itself triggers an investigation and adverse action. The Fourth Circuit stated that an employer’s retaliatory intent “can be established either by direct evidence of retaliation or through the familiar burden-shifting framework articulated in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800–06 (1973).”

The well-known McDonnell Douglas analysis requires the employee to establish a prima facie case of retaliation. If the employer then rebuts the prima facie case with a legitimate, nondiscriminatory reason for the adverse action, the employee then has the burden to prove that the proffered explanation is pretextual.

The Fourth Circuit explained that both pretext and employer intent can be demonstrating by considering

“ ‘among other things, the historical background of the . . . decision; [t]he specific sequence of events leading up to the challenged decision; [d]epartures from the normal procedural sequence; and . . . [any] contemporary statements by members of the decisionmaking body.’ See Reno v. Bossier Parish Sch. Bd., 520 U.S. 471, 489 (1997) (quoting Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 267-68 (1977)).”

The Fourth Circuit went through these factors and found that United’s past acceptance of Mr. Sharif’s FMLA claims, Mr. Sharif’s inconsistent explanations, the timing of his and his wife’s vacations, and the lack of any attempts to make return reservations so he could work the shift, all demonstrated that United did not retaliate.

Mr. Sharif also claimed that he should have received lesser discipline for not working the shift. However, the Fourth Circuit cited the frequently quoted words supporting court decisions in support of employers:

“courts are not ‘a kind of super-personnel department weighing the prudence of employment decisions.’ DeJarnette v. Corning, Inc., 133 F.3d 293, 299 (4th Cir. 1998).”

Because Mr. Sharif’s offense amounted to “misrepresentation and fraud,” the Fourth Circuit found that discharge was appropriate, thus establishing that there are at least some occasions in which an employer can still manage attendance.

Have you ever dealt with suspected FMLA misrepresentations? What was the outcome?

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Favorite Firing: Do Not Terminate a Disabled Employee Without a Reasonable Accommodation Dialogue


EEOC sealBack in May 2016, Lowe’s, the home improvement store giant, agreed to pay $8.6 million to settle a lawsuit brought by the EEOC over Lowe’s firing of many individuals with disabilities when they exceeded the maximum amount of disability leave Lowe’s provided. The problem, as the EEOC saw it, was that Lowe’s failed to engage in reasonable accommodations beyond the standard disability leave policy. See U.S. Equal Employment Opportunity Commission v Lowe’s Companies, Inc., et al., C.D. Ca., Case No. 2:16-CV-03041-AB-FFM.

The Facts: This lawsuit began with three charges of disability discrimination filed by three employees of Lowe’s back in 2007 and 2009. These three plaintiffs alleged that Lowe’s violated the Americans with Disabilities Act (ADA) by terminating their employment when their medical leave of absence exceeded Lowe’s 180-day (later extended to 240-day) maximum leave policy. The plaintiffs claimed that failure to engage in any discussion about further accommodations beyond the maximum leave violated the ADA. They wanted extended leaves of absence as a reasonable accommodation.

The EEOC agreed with the plaintiffs and also claimed that thousands of other Lowe’s employees were in the same situation. The EEOC ultimately filed a lawsuit in the Central District of California, the terminated Lowe’s employees were found to be a suitable class, and the case proceeded as a class action.

It was settled in May 2016, and the Court approved the settlement on May 12, 2016. (A copy of the Consent Decree can be found here.) Lowe’s admitted no wrongdoing, and the Consent Decree is not an admission. However, the company did agree to settle the lawsuit for $8.6 million and also consented to comply with a variety of non-monetary provisions. Lowe’s agreed to contact the terminated employees in the class and pay their damages out of the $8.6 million fund, as calculated by the EEOC, and to donate the remainder (if any) to non-profit organizations benefiting the disabled.

Lowe’s also agreed to amend its policies so that it would “engage in the interactive process with any employee with a disability who requests leave as a reasonable accommodation.” And the company agreed to retain Equal Employment Opportunity consultants approved by the EEOC for four years. These consultants will advise on policies, track all requests for accommodation, and educate managers on their duties under the ADA.

The Moral: There are few bright lines when it comes to working through disability situations. If an employee requests an accommodation, the employer ignores that request at its peril. A firm policy regarding leaves of absence is no longer a firm policy—exceptions must be at least considered if the employee claims to be disabled and to need more time away from work.

When the ADA was first enacted in 1990, I worked with managers to parse through how to simultaneously comply with disability leaves, worker’s compensation laws, absence policies, and the like. The situation grew even more complex with the passage of the Family and Medical Leave Act in 1993. I used to tell managers to stack up all the applicable laws and policies like slices of Swiss cheese. Only if an employee’s situation fit in gaps in every layer could the employee be discharged with minimal risk.

What the Lowe’s case shows is that some of the legal layers have no gaps—all employees requesting a reasonable accommodation should at least be given consideration, and an employer cannot have a blanket rule prohibiting certain accommodations. The EEOC will not accept any mandatory maximum leave policy.

The Lowe’s case is also interesting because of the broad relief granted pursuant to the Consent Decree. The provisions in the Lowe’s decree are the types of relief that the EEOC is likely to seek in every disability case it decides to take to court. Employers should consider whether and when accepting these types of interference in their business are worth disposing of a lawsuit, particularly a large class action case of the type that Lowe’s faced. It doesn’t take a loss in court to cause upheaval in the business; settlement can also be onerous.

It is best, therefore, to avoid as many lawsuits as possible. Therefore, engage in an interactive reasonable accommodation dialogue, document that engagement and all options considered, and be clear on why the employee’s requested accommodation is not reasonable and would constitute an undue hardship on the business.

When have you dealt with a difficult reasonable accommodation case?

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Book Review: The Last Days of Night, by Graham Moore


moore-coverI haven’t posted many book reviews on this blog. Most of the business books I read aren’t that compelling. Most of the fiction I read doesn’t pertain to the themes of this blog. But I recently finished a novel that provides a fascinating look at corporate and legal culture in the 1880s—The Last Days of Night, by Graham Moore.

The protagonist in Moore’s novel is Paul Cravath, a fictionalized version of the attorney who later founded the New York law firm Cravath, Swaine & Moore. Other major characters include Thomas Edison, George Westinghouse, J.P Morgan, and Nikola Tesla. None of these men comes across very positively. In this novel (and the author makes it clear that the book is fiction, though well-researched), Edison obtained his patent on the electric light bulb fraudulently, Westinghouse ordered a fire set in Tesla’s warehouse, J.P. Morgan switched his allegiance from Edison to Westinghouse for financial gain, and Tesla was a complete kook (albeit brilliant).

The book is engaging. There’s enough science in it for science lovers, but it’s easy enough for non-aficionados of science to gloss over it and still enjoy the story. Cravath’s character clearly is representing Westinghouse without really understanding direct current and alternating current, giving readers permission to do the same.

What I enjoyed the most was the look into early corporations—the forerunner of General Electric owned by Thomas Edison, Westinghouse owned by George Westinghouse, and even Morgan’s banking firm—as well as the development of the modern law firm associate structure created by Paul Cravath. There were plenty of corporate and financial shenanigans depicted in the novel, as well as one-up-man-ship between Cravath and his partners. The story could easily have taken place today in the internet world. In fact, many of the chapters open with quotes from Steve Jobs and Bill Gates that are eerily relevant to the electrical industry of more than a century ago.

What I didn’t like was wondering what was true and what wasn’t as I read. Moore confesses in his author’s note,

“This book is a Gordian knot of verifiable truth, educated supposition, dramatic rendering, and total guesswork.”

He offers a chronology of the actual events on his website. However, his changes to the true chronology and the unverifiable actions attributed to the primary characters ultimately caused me to be more skeptical of the book than I wanted to be. Had it been a novel not using real people as primary characters, I could have accepted it much better.

I’ve had some experience at incorporating historical characters into novels (though not in Playing the Game; I’ve written books under another name as well), but I have never depicted true personages as murderers, thieves, frauds, and corporate moles. And when I’ve written historical fiction, I’ve kept my description of events as close to their true chronology as I can.

Still, the author’s note gives me some satisfaction that Moore has accurately described the flavor (if not the chronology) of the invention of the light bulb, the “battle of the currents” between direct current and alternating current, the development of the modern law firm, as well as the implementation of the electric chair for the death penalty. I do recommend the book. But take it with a grain of salt.

What books depicting corporate intrigue have you enjoyed?

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Favorite Firing: Not All Objections to an Employer’s Practices Are “Protected Activity”


 

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Photograph by Honza Soukup on Flickr

Today’s favorite firing case comes from California, which labor and employment attorneys know is a pro-plaintiff venue. But in Dinslage v. City and County of San Francisco, et al, the employer won a lawsuit because the plaintiff could not proof a prima facie case of retaliation. The case involved the distinction between retaliation for opposing discriminatory employment practices and for opposing other allegedly discriminatory practices of the employer (in this case, practices directed at the public).

 

The Facts: David Dinslage worked for the Recreation and Parks Department in San Francisco for over thirty years until he was laid off during a reduction in force. His duties included overseeing programs for adults and children with disabilities. His group in the Department organized special events for people with disabilities.

During the last few years that Dinslage worked at the Department, his managers made changes to the programs he handled. The primary change was to shift the focus from providing separate, segregated programs to people with disabilities to ensuring all programs were accessible, so that the programs were more inclusive, which the Department believed was the current “best practice” in providing services to the disabled. Therefore, many of the segregated special events Dinslage had organized were eliminated.

In 2009-2010, the Department was reorganized to focus more on inclusion, and also to meet budget reductions and eliminate some staff. Dinslage disagreed with the program changes and ultimately refused to accept and implement the changes his superiors envisioned, resulting in him receiving a lower performance rating.

When his position was eliminated, Dinslage applied for a new position in the Department, but he was not selected. After his forced retirement, he and other employees sued San Francisco.

Dinslage claimed age discrimination, retaliation, and harassment in violation of the FEHA (Cal. Gov. Code §12940, subds. (a), (h), and (j)). He alleged his termination and other adverse actions were based on his age. He also claimed retaliation and harassment based on his age and in retaliation for his objections to the Department’s changes in programs for people with disabilities.

The Moral: The Department and the City won their motion for summary judgment in the Superior Court, and Dinslage appealed. The California Court of Appeals upheld the summary judgment for defendants on both the age discrimination and the retaliation claims. On the retaliation claim, the Court of Appeals held that plaintiff failed to make out a prima facie case, because his opposition to the changes in how the Department offered programs for the disabled was not directed at an unlawful employment practice, and therefore could not support a claim of retaliation.

As quoted in the Court of Appeals opinion, the Superior Court found:

“Defendants have met their burden to show that Plaintiff did not engage in protected activity under the FEHA,” because the “evidence shows that Plaintiff did not speak out against the Defendants for engaging in discriminatory conduct directed at Defendants’ employees.” The court found Dinslage’s evidence “only shows that [he] spoke in public forums regarding his concern that the . . . Department’s reorganization would cause layoffs and the potential negative effects the reorganization would have on members of the public who have disabilities.”

Thus, the trial court found Dinslage had failed to establish the first element of his retaliation claim, because he had not shown he had engaged in protected activity under the FEHA.

The Court of Appeals agreed with the lower court that Dinslage had not stated a prima facie case of retaliation. The appellate court stated:

“For protection under the ‘opposition clause,’ an employee must have opposed an employment practice made unlawful by the statute.”

The employee can state a claim for retaliation

“not only when the employee opposes conduct that ultimately is determined to be unlawfully discriminatory under the FEHA, but also when the employee opposes conduct that the employee reasonably and in good faith believes to be discriminatory, whether or not the challenged conduct is ultimately found to violate the FEHA.”

The employee’s belief must be both subjectively and objectively reasonable.

But the Court of Appeals found that Dinslage’s objections to what he considered to be unwise and/or improper actions by the Department were insufficient to allege that he had opposed activity protected under FEHA. The Court of Appeals cited cases involving plaintiffs who had complained about police conduct against the general public and about their employer’s environmental practices. Because these were not employment practices, objections to such practices could not state a claim under FEHA.

Thus, the Court of Appeals said,

“Neither the ‘unlawful practice’ nor the ‘good faith belief’ requirement is satisfied where the practice complained of was not directed at employees but, instead, was directed to individuals who are not in an employment relationship with the defendant.” (citing Taneus v. Brookhaven Memorial Hosp. Medical Center (E.D.N.Y. 2000)).

The Court held that Dinslage could not

“reasonably have believed his actions constituted protected activity, because there is no dispute his opposition was not directed at the Department’s employment practices.”

This case is good news for employers. It clarifies both that the only activities that can support a claim for retaliation under FEHA are objections to employment-related practices, that the plaintiff must reasonably believe that he or she is opposing a discriminatory practice under FEHA, and that the plaintiff’s belief must be both subjectively and objectively reasonable.

Have you ever dealt with a retaliation claim where the Dinslage holding might be helpful?

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Favorite Firing: When a Customer Harasses an Employee


adult-15814_1280The usual adage in American businesses is “the customer is always right.” And usually that is true. I’ve posted on a few occasions about the need for many organizations to improve their customer service. But it isn’t always true. Sometimes the customer is dead wrong. Today’s “favorite firing” is about a case where the customer was wrong, and then an employee alleged she was treated improperly when she complained about the customer’s behavior. After the alleged retaliation, the employee quit. So strictly speaking, this is a constructive discharge case, not a firing.

The Facts: In Prager v. Joyce Honda, Inc. (Aug. 22, 2016), Nicole Prager, a 20-year-old receptionist at the Joyce Honda dealership, complained to her managers that a high-profile customer pulled on her shirt and revealed her bra. There was no doubt as to what had happened, because the incident was caught on the dealership’s surveillance tape.

Her managers discouraged her from filing charges against the customer because he was a really good customer who had purchased 20 cars over the years and regularly had his cars serviced at the dealership. Despite her managers’ cautions, Ms. Prager did file charges. In fact, once she made the decision to file, the dealership managers called the police and provided an office at the dealership where she could talk to the police. (Later, the customer pleaded guilty to offensive touching and paid a fine.)

After she filed the charges, Ms. Prager alleges that some of her her co-workers began behaving coldly toward her. In addition, she received two written warnings for leaving work early on two occasions. One of these occasions occurred prior to filing the complaint against the customer and the other was an incident after she filed the charges. She objected to the reprimands, saying they were retaliatory and that she had left work early before without being disciplined. Her managers said they reprimanded her because she had not communicated about her leaving early on these occasions, as she had in the past. Nevertheless, the employer offered to rescind the disciplinary warnings, but Ms. Prager resigned instead.

In her lawsuit claiming retaliation and constructive discharge, Ms. Prager alleged that the dealership had become a hostile workplace environment for her, which justified her resignation. The trial court dismissed Ms. Prager’s lawsuit, saying that employers were not responsible for the conduct of customers in the workplace. Ms. Prager appealed.

The Appellate Division in the New Jersey courts also rejected her complaint, although the Appellate Division said that filing a police report against the employer’s customer was a protected act. However, though she could state a claim for retaliation, she had not sufficiently alleged a retaliatory consequence in her complaint—she had resigned immediately after receiving the reprimand and the dealership had offered to make the reprimands go away. The court said

“no reasonable juror could find that conduct ‘so intolerable that a reasonable person would be forced to resign rather than continue to endure it.’”

The Moral: Any complaint of harassing behavior by an employee should be taken seriously. And once an employee complains, the employer must be careful not to retaliate. Those are givens. Moreover, managers should be supportive of employees who complain and who decide to take their complaints to higher authorities, whether those authorities be internal company investigators, administrative agencies, or external law enforcement.

In this case, reading the Appellate Division’s opinion is instructive. It is clear from what the court says that part of the problem was that this employee was young and inexperienced in dealing with harassment and the follow-up complaint process. Her managers did not help the situation—they did pressure Ms. Prager not to complain about a valued customer, though they ultimately did support her. This case is a good reminder that we take our employees as they are, and must adapt our responses in some respects to their unique circumstances.

The timing of the warnings to Ms. Prager was unfortunate at best, and possibly retaliatory, though the court held that the two warnings in this situation were not sufficiently retaliatory to support constructive discharge. The management rationale for the warnings—that Ms. Prager was not communicating with them—probably should have been dealt with through a verbal discussion, at least initially, saving the heavier discipline of a written warning for a later occasion more distant from the harassment.

Nevertheless, there is good news for employers in this case, namely that constructive discharge is difficult to prove. If managers show an ongoing willingness to work with an employee in reasonable ways, it will be hard for the employee to prove that the workplace is so intolerable that he or she must resign. While any disciplinary action against an employee who has complained of discrimination or harassment should be carefully considered, it is appropriate to hold employees accountable for their performance and for following reasonable company policies.

When have you dealt with allegations of constructive discharge?

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Performance Management Isn’t About Deadwood


MP900341467I recently wrote about performance management and the abolition of performance reviews at certain companies. Then I read a Wall Street Journal article last week stating that one of Kimberly-Clark’s goals is “managing out deadwood.” So much for doing away with performance reviews at that company.

The article states that Kimberly-Clark has about a 10% total turnover (voluntary and involuntary), and that employees are expected to “keep improving—or else.” I don’t disagree with a focus on continuous improvement, and a 10% turnover is not excessive. Still, performance management and “managing out deadwood” are two different things in concept, if not always in the end result. And they have different consequences both from a legal and from an employee relations perspective.

From the legal perspective, talking about employees as “deadwood” can lead to complaints of age discrimination. See Herr v. Nestlé U.S.A., 2003 Cal. App. LEXIS 855 (June 12, 2003), described here.

Any indication that an employee over age 40 is past his or her usefulness is problematic. Of course, employees can be ineffective performers at any age, but the tendency at many companies that initiate performance improvement drives is to focus on employees who have been sitting around for awhile—and who tend to be in the protected age group.

From the employee relations perspective, it can be demoralizing to adequate performers to know that managers are snapping at their heels, that as soon as the worst performers are out, a continuous improvement drive will mean employees who are in the lower mid-tier are now at the bottom.

Yet a true continuous improvement program means there is always someone at the bottom. It’s not like one manager told me once, “We’re done—we fired all our poor performers last year.”

Despite my quip above (“so much for doing away with performance reviews . . .”), there actually is no disconnect between abandoning annual reviews and an emphasis on performance improvement. In fact, it may be easier to focus on performance issues with the more regular discussions between managers and employees advocated by such companies as General Electric, Adobe Systems, and others.

Whatever performance culture a company decides to adopt, the important thing is to train managers to handle it well, to avoid the legal pitfalls of only focusing on older low performers or others in certain protected groups, and to keep the emphasis both encouraging and disciplined.

Performance management isn’t about getting rid of deadwood. It’s about improving every employee’s performance—including that of managers.

When in your experience has a performance management emphasis caused legal or employee relations problems?

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