Fighting the high cost of 'getting even' at work

August 16, 2011: 10:21 AM ET

Employee retaliation lawsuits are at a record high, and they're hard for companies to win. So what can companies do?

By Anne Fisher, contributor

FORTUNE -- For many years, race discrimination charges were the most common complaint against employers, but that has changed. The new no. 1, reports the U.S. Equal Opportunity Commission, is retaliation, meaning alleged actions by employers aimed at getting even with workers who have made other complaints.

In 2010, these cases -- 36,258 of them -- cost companies $404 million, the highest annual total the EEOC has ever obliged private-sector employers to pay. Not only that, but "each one costs six figures to fight in court, regardless of the outcome," notes Kelly Kolb, an employment lawyer at Fowler White Boggs. "They're expensive even if the company wins."

Not that the company is likely to win, for a couple of reasons. First, the definition of retaliation is a bit slippery. Until a few years ago, an employee who filed a retaliation charge had to show some financial loss, such as a firing or demotion, that a boss meted out as punishment for complaining about, say, sexual harassment in the workplace.

Then, in 2006, the Supreme Court decided that definition was too narrow. The upshot of a landmark case, Burlington Northern Santa Fe v. White, is that plaintiffs no longer need to have suffered a monetary setback in order to make a charge of retaliation stick.

"Now, anything that would discourage someone from complaining about unfair practices at work can be considered retaliation," notes Kolb. "It could range from passing you over for a promotion to refusing to let you leave early for your kid's softball game."

A second reason why employers usually lose retaliation lawsuits: Juries don't trust them. Says Kolb, "Jurors are predisposed to believe that employers retaliate."

So what can companies do? One tactic: If you're planning to fire someone, don't telegraph the fact in advance. Kolb says that plaintiffs' attorneys often engineer "a set-up": "If you say to an employee, 'Be in my office tomorrow at 2:00 to discuss whether you're going to be let go or quit,' that person can call a lawyer who will instruct him or her to email you a barrage of complaints before 2:00 so they can claim that the firing was 'retaliatory.'"

As a broader matter of policy, Kolb says many retaliation complaints could be avoided if managers took "a more structured approach than in the past. Everything having to do with a person's performance needs to be documented, so that you have a clear paper trail showing the exact reasons for whatever actions someone's boss may have taken."

Just as important, human resources staffers need to be kept apprised of everything that happens, Kolb adds: "In court, you need to be able to show that there was an objective third party involved, so that any personal animus between a boss and a subordinate was not the motivation behind the company's actions."

Of course, HR departments decimated by outsourcing and layoffs may find such painstaking prevention a tall order and that, Kolb, says, may be a big part of the problem.

"So many HR functions now are so shrunken that managers may be tempted to say, 'Instead of bothering HR with this, we can just handle it ourselves,'" he says. "But letting individual managers make [these] decisions all on their own can be a very costly way to go."

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About This Author
Anne Fisher
Anne Fisher
Contributor, Fortune

Anne Fisher has been writing "Ask Annie," a column on careers, for Fortune since 1996, helping readers navigate booms, recessions, changing industries, and changing ideas about what's appropriate in the workplace (and beyond). Anne is the author of two books, Wall Street Women (Knopf, 1990) and If My Career's on the Fast Track, Where Do I Get a Road Map? (William Morrow, 2001).

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