But the economy is very different now. And the ex-CFO, who was 52 when he lost his job, found himself competing with hundreds of highly qualified, middle-aged executives looking for work. He turned down the seven-month severance offer and joined a growing number of job-cut victims–many of them white-collar workers–who have turned to the courts instead. Forgoing the traditional severance package and job search, they are instead focusing their efforts, and often their money, into pursuing wrongful termination lawsuits and negotiating more lucrative severance settlements.
The number of employment cases involving civil rights filed in federal court more than doubled from 1992 to 1996 to more than 23,000 (the most recent figures available), and has continued to grow since then, according to the Insurance Information Institute. AIG Insurance says that overall claims of employment practice violations–which include sexual harassment, breach of contract as well as discrimination–have doubled in the past few years. And monetary awards for employment-related claims have jumped about 290 percent, according to Genesis Insurance Company. The Equal Employment Opportunity Commission reports a similar rise in complaints filed. Last year, workers filed nearly 84,500 job discrimination complaints against their employers with the-the highest number in seven years.
“I have never seen this kind of trend before,” says Taber, who has practiced employment law for more than a decade. “I have seen cases that should not have been brought forward–and would not have been in the past. There is almost a presumption now that if a senior executive is terminated that they will talk to lawyer and consider litigation as an option.”
Unable to find another job over the past year, the ex-CFO in this case has been pursuing a wrongful termination claim alleging discrimination for his nationality (he was an American working for the subsidiary of a European firm) for nine months so far–and the case is still pending. “Ordinarily this sort of case would have been settled already,” says Taber. “Instead, he is now talking about selling a vacation home in Florida to pursue the lawsuit; there’s a certain level of desperation here.”
Sure, that’s easy to say when you’re a lawyer representing the multi-million-dollar company that fired him. But to many laid-off workers–particularly those who’d grown used to a six-figure salary and the lifestyle that accompanies it–calling a lawyer can seem a better alternative than pounding the pavement in a dismal job market. Even among those not quarreling with the fact that they were let go, many are now pushing claims that they are owed more in their severance packages, says Judith Keyes, a labor and employment lawyer at Morrison & Foerster LLP in San Francisco.
Such trends are not unusual when the job market is this bad, especially as companies continue to lay off tens of thousands of workers a month. Even with the recession over, the nation’s unemployment rate rose to 6.4 percent last month, a nine-year high. Still, while an increase in wrongful termination cases was expected, employment lawyers say the number is much higher than they’d anticipated.
“I have never seen such a fever pitch,” says attorney Barbara Kate Repa, a California-based consultant on workplace discrimination. “For some, lawsuits have become a bastion of hope in some way, which is bizarre.”
The economy is not the only factor fueling the boom in wrongful termination and other employment-related claims. The labor force is also changing. More minorities are entering the job market and older workers are staying in it longer, which increases the possibility of discrimination. In addition, post-9/11 backlash against Muslim employees and those of Arab origin has prompted a wave of discrimination claims.
The largest increases in discrimination complaints in 2002 were for age discrimination, with about 20,000 complaints filed, up 14.5 percent from the previous year, followed by national origin (about 9,000 complaints, up 13 percent), and religious beliefs (about 2,600, up 21 percent). While more than half of the overall discrimination complaints resolved in 2002 were dismissed for lack of reasonable cause, the EEOC obtained $257.7 million in benefits for those whose discrimination cases had merit-more than twice as much as it had collected in 1992 and more than any year since.
That doesn’t necessarily mean that there is more discrimination in the workplace, but there is certainly more awareness of the issue. Employees who file a wrongful termination case can cite a variety of claims–from breach of contract to sexual harassment–but discrimination is commonly cited.
Have these cases gone too far? “It’s a matter considerable debate, but I doubt it myself,” says Robert Covington, a Vanderbilt Law School professor who specializes in labor and employment law. “The cases I read still seem to be pretty strong, which indicates there is still bias in the workplace.”
Most cases stem from Title VII of the Civil Rights Act, which has been around for nearly four decades. The Age Discrimination in Employment Act was enacted in 1967 but the Americans with Disabilities Act was passed just 13 years ago. Then the Civil Rights Act of 1991 strengthened civil rights laws to provide for damages in cases of intentional employment discrimination. High-profile cases–like the Supreme Court’s decision this year in Desert Palace vs. Costa–have also increased interest in pursuing such claims. In that case, Costa alleged sexual discrimination when she was fired from a casino in Las Vegas casino, while the casino argued that she offered no direct evidence of discrimination. But the justices found in her favor, ruling that discrimination filings can still be valid without direct evidence of discriminatory behavior. The decision should make it easier to file such cases in the future, say lawyers, which worries many employers.
“My big advice to employers in a climate like this is to learn the law–and have practices in place to minimize the risk of someone going to a lawyer,” says Amy DelPo, employment lawyer and author of “Create Your Own Employee Handbook: A Legal & Practical Guide,” out this month from Nolo Press.
Just in case, a growing number of companies are purchasing employment practices liability insurance policies, which covers the costs of settling most employment-related claims. Just a handful of companies offered the policy when it was introduced about a decade ago, but with the sharp increase in employment-related lawsuits, more than 60 firms now offer the policies, according to the Insurance Information Institute.
Many employers are also doing more to keep employees happy, instituting anti-discrimination training and stricter codes of behavior–moves that could benefit both employees and employers in the future.
“The good that comes from this is that it makes employers more conscious,” adds DelPo. “The best is to try and keep employees from wanting to file complaints in the first place.”
