Dealing with Disgruntled Employees: Proceed with Caution

Every employer must deal with a disgruntled employee at one time or another.  However, recent cases demonstrate that the manner in which you deal with these employees can leave you exposed to a variety of legal claims.  We will explore some of the issues which have recently made their way through the court system in the hope of alerting you to potential problem areas.

1. Your employee hires a lawyer to resolve a dispute with you.

In a recent case, an employee told her boss that she was pregnant.  Within a week after her announcement, she claimed that her hours and pay were reduced by half.  The employee retained a lawyer to write a letter to her employer, asserting that she was being discriminated against on the basis of her pregnancy in violation of the Fair Employment & Housing Act.  Within a week, the employee was fired.  She filed a lawsuit, claiming that her employer had retaliated against her, not because she was pregnant, but in retaliation for the letter sent by her lawyer.  The jury found in favor of the employee and the Court of Appeal affirmed the judgment, concluding that the employee’s actions in retaining a lawyer to negotiate with her employer on her behalf were protected by the Labor Code.
The lesson to be drawn here is that, once your employee hires a lawyer to negotiate a dispute with you, you must proceed with extreme caution.  Firing the employee for hiring a lawyer is illegal.

2. Your employee goes on extended workers’ compensation leave and expects you to continue paying his/her benefits indefinitely.

In this case, an employee went out on workers’ compensation leave after she hurt her back.  Her employer had a policy to cover employees’ health insurance benefits for the first 12 weeks of leave, citing the fact that employees are allowed 12 weeks of family leave under the Family Medical Leave Act.  When the 12 weeks was up, the employee was told that her health insurance premium was her responsibility.  The employee filed a complaint with the Workers’ Compensation Appeals Board, claiming that her employer’s actions constituted illegal discrimination against her because she was on leave for a work related injury.  The Workers’ Compensation Appeals Board agreed, finding that it is discriminatory to treat an employee who is injured on the job differently than one who is actively working.  The employer was ordered to pay the employee’s health premiums, plus a 50 percent increase in her weekly benefits up to a maximum of $10,000 as a penalty.

The moral of this story is that you may not treat an employee who is on leave for a work-related injury any differently than you treat an employee who is still on the job, unless you can justify it with a good business reason.  It must be noted that it is very difficult to use the business reason exception and that there is little guidance on what is considered a valid business reason and what is not.

3. Your employee testifies against you in a suit brought by another employee.

In this case, an employee gave deposition and trial testimony against his employer in a lawsuit filed by another employee.  Thereafter, his employment was terminated.  The employee brought a lawsuit, claiming that his termination was in retaliation for his testimony and violated public policy.  The Court of Appeal allowed the case to go forward, finding that there is a public policy embodied in the Labor Code which prohibits retaliation against an employee who has taken time off from work to appear in court as a witness.

This case is similar to earlier cases in which employees were allegedly terminated for testifying at an unemployment or workers’ compensation hearing.  In nearly every case of this type, the court has allowed the employee to proceed with his/her lawsuit, finding that the right to testify is protected by public policy and that an employee cannot be terminated for doing so.  Moreover, if you terminate an employee who has testified within a short period of time after the testimony, even if that termination is based upon a legitimate reason, the employee will likely be able to state a claim for retaliation by arguing that your legitimate reason for termination was a pretext.

The bottom line in each of these cases is that disgruntled employees should be handled carefully to avoid expensive litigation.