I was disappointed earlier this week to see a consultant quoted in an otherwise good article in the Wall Street Journal -- "Employee Theft Often Leads Small Firms to Make Bad Choices" -- as advising the "bogus RIF" strategy with employees who are suspected of theft.
Talk about bad choices!
What's the "bogus RIF" strategy? That's when you're really firing an employee but don't want to admit it, so you call it a "RIF," or a "layoff," or a "job elimination."
This is a terrible idea, but employers often want to do it -- partly out of a desire to be kind to the employee being terminated, and partly out of an understandable desire to avoid conflict.
If you read this blog regularly, you know that I strongly advocate that employers tell the truth. Sure, you may not want to provide every detail of your decision making process, but whatever you do say should be true "to the best of your knowledge."
Why? Well, first, because it's the right thing to do. Second, there are these pesky things called unemployment claims, and EEOC charges, and lawsuits that you might want to defend someday. And if you give a false reason for a termination, it will come back and bite you.
Here's an example of how a phony RIF can really mess you up:
ENTRAPPED! A Horror Story
You suspect that your 55-year-old administrative assistant, Melanie, is giving herself paid time off that she hasn't earned. (In other words, embezzling PTO.) You haven't proven her guilty beyond a reasonable doubt, but there is enough "smoke" that you know you don't want her working for you any more. You just read that Wall Street Journal article, and you want to be nice, so you tell her that you are "eliminating her position." You fill out her unemployment paperwork and say the same thing. Once she's gone, you advertise for a new administrative assistant and hire 25-year-old Josh, who seems well qualified and very honest.
You probably know what's coming, but I'll continue anyway.
Melanie files an EEOC charge, claiming that you discriminated against her because of her age and her sex. You respond, "No, it was a job elimination." The EEOC investigator asks, "Oh yeah? Well, then why did you replace her?" Darn. "Well, ok, we called it a RIF, but the real reason we fired Melanie was that we thought she was stealing!" Melanie retorts, "Nunh-unh. They told me they were eliminating my position. They even let me collect unemployment." The EEOC investigator asks to see your unemployment filings, and sure enough - in a document that you signed under penalty of perjury, you said that Melanie's job was eliminated.
The worst true "bogus RIF" story I ever heard came from my law partner, Randy Loftis. Many years ago, he was representing a plaintiff in an age discrimination case, and the employer claimed that it was a "job elimination." The plaintiff's job? President of the company.
So you lose the EEOC charge, and Melanie sues. By this time Josh hasn't worked out either, and thanks to modern technology you've decided that you really don't need an administrative assistant any more. So you figure, "Fine. I got in trouble for saying Melanie stole, so I'll go back to the reason we gave her in the first place, and say we don't need an administrative assistant."
Problem solved?
Melanie's attorney gets a copy of the EEOC investigative file, which shows that you went back and forth between claiming it was a job elimination or a termination for suspected theft. You file a motion for summary judgment, and Melanie's attorney says you should lose because you gave "shifting explanations" for the termination. The shifting explanations are a pretext for discrimination based on age and sex. The judge agrees, and you go to trial, and the jury, like everyone else you've dealt with so far, will consider the fact that you flip-flopped on your explanations. (Melanie wins a zillion dollars, which the judge reduces to back pay and 10 years' front pay, plus $300,000 in compensatory and punitive damages, plus Melanie's attorney's fees.)
On your first day back at work after the trial, your boss calls you in. The HR manager is there as a witness. The boss looks at you sadly and says, "Your position is being eliminated."
And that, my friends, is why I don't recommend the "bogus RIF."
SWEETNESS AND GOODNESS AND SUGAR AND SPICE: A Happy Story
When you terminate Melanie, you tell her it's because you have reason to believe that she is giving herself PTO time that she hasn't earned. She cries and stomps her feet and argues, but you stay firm. You tell her that you are willing to let her draw unemployment but that you are not going to lie to the unemployment commission. When you fill out the paperwork under oath, you give the true reason for the termination but add, "Employer does not intend to contest claim for unemployment." Then you hire young Josh.
Melanie goes to the unemployment hearing by herself and says you fired her on a trumped-up charge of stealing even though there was no evidence, and she wins her benefits. No big deal to you, because her one-sided testimony cannot be used against you or the company. She files an EEOC charge, and you tell the EEOC exactly what you told her and the unemployment commission. The EEOC dismisses the charge.
Melanie can't find a decent lawyer who is willing to sue you, so she probably doesn't sue at all. But if she does, you file a motion for summary judgment, which is granted because a good-faith belief that an employee is stealing -- even if mistaken -- is a legitimate, non-discriminatory ground for discharge. And you've been consistent all along, so there is no "fact issue" for a jury to resolve. Melanie probably won't bother to appeal, but if she does, you win on appeal.
After the case is over, you get a promotion and big raise for having handled Melanie's termination so well.
(We didn't want you to have nightmares tonight.) Do not fall into the trap of the "bogus RIF"!
. . . AND ALSO OF INTEREST . . .
By Tony McGrath in our Madison, Wisconsin, office: "DOL's Companionship Rule Gets the One-Two Punch."
- Partner
Robin has more than 30 years' experience counseling employers and representing them before government agencies and in employment litigation involving Title VII and the Age Discrimination in Employment Act, the Americans with ...
Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act).
Continue Reading
Subscribe
Contributors
- William A. "Zan" Blue, Jr.
- Obasi Bryant
- Kenneth P. Carlson, Jr.
- James M. Coleman
- Cara Yates Crotty
- Lara C. de Leon
- Christopher R. Deubert
- Joyce M. Dos Santos
- Colin Finnegan
- Steven B. Katz
- Ellen C. Kearns
- F. Damon Kitchen
- David C. Kurtz
- Angelique Groza Lyons
- John E. MacDonald
- Alyssa K. Peters
- Sarah M. Phaff
- David P. Phippen
- William K. Principe
- Sabrina M. Punia-Ly
- Angela L. Rapko
- Rachael Rustmann
- Paul Ryan
- Piyumi M. Samaratunga
- Robin E. Shea
- Kristine Marie Sims
- David L. Smith
- Jill S. Stricklin
- Jack R. Wallace
Archives
- November 2024
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010