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The Litigators: A Continuing Series
Fallout from the battered economy is beginning to pile up on the desks of San Diego’s labor and employment attorneys. As layoffs mount across Southern California, many of the unemployed are finding it harder to land new jobs. As a result, say local labor lawyers, increasing numbers are trying to cushion their fall by taking one final check from employers on their way out the door. “We’re seeing a huge increase in wrongful termination claims especially in this last year, many of them based on alleged discrimination or harassment,” says Kelly Capen Douglas, a partner at Luce Forward and chair of the firm’s labor and employment practice group. Douglas says many claims are rooted in perceived sexual, racial, age or disability discrimination.
After graduating from Duke University Law School, Douglas joined Luce Forward in 1993. Like most large law firms, this one works almost exclusively for employers who, Douglas says, have a duty to respond to workplace claims of discrimination or harassment. However, even after an investigation, determination and corrective action has been taken, she says an employee may still harbor dissatisfaction and lingering hostility which can surface again if that person is fired even many months later. But depending on the circumstances, adds Douglas, employees often end up with much less than they expected, or nothing at all. “A lot of employers are not afraid to fight claims,” she says. Sandra Young, a partner and the only labor and employment specialist in the Downtown offices of Allen Matkins, expects to see many more claims over the next few months as those now getting pink slips fail to find new jobs. Many of those, she predicts, will come from older workers alleging age discrimination because they feel there is no other reason for their dismissal. However, Young believes employers who have to cut jobs are seldom so arbitrary. “Most are very good at trying to make the best business decisions by trying to keep their best people.” Young, a San Diego native, took a double major in biology and psychology before graduating from UCLA Law School in 1993. She worked initially in Orange County and joined Allen Matkins four years ago. She argues it is crucial for employers to maintain sound systems of job performance ratings and evaluations so all decisions can be based on what she calls “objective evidence.” “We always advise employers to do accurate performance evaluations for many reasons. Even in the best of times there may be a need to discipline or dismiss people, and in these difficult economic times it’s even more important.” Another potential silver bullet to ward off aggrieved employees may be a carefully constructed severance package combined with outplacement services to help employees search for new jobs. George Howard, a partner with Pillsbury Winthrop, the firm’s senior labor attorney in Southern California and a 23-year labor law veteran, says any large employer should at least look at these options.
“Severance can save employers money and at the same time keep people happy,” he says. “Our advice to mid-sized to large companies is to pay it (severance) if they’ve got the money. It’s definitely worth it to avoid claims and for the PR benefits.” Howard agrees with Young that layoffs are usually well thought out and not arbitrary. “Employers must make sure their criteria are not discriminatory. It usually comes down to seniority, skills and performance.” Another widely anticipated consequence of tougher economic times is an increase in union activity as labor organizers seek recruits and worried workers opt for safety in numbers. Although San Diego is not traditionally a union stronghold, labor lawyers here are stepping up their advice for employers about how to respond to growing union influence. Consensus among labor attorneys suggests less than 5 percent of disputes ever reach a jury. Some are so shaky they are thrown out on pretrial motions while the majority end in some form of negotiated settlement. “Alternative dispute resolution is a huge trend,” reports John Collins, who says mediation and binding arbitration are designed to save the expense and time involved in a trial. Collins, a seasoned labor and employment lawyer with 32 years’ experience in San Diego, usually arbitrates a couple of cases each year. That’s in addition to his role as chairman of Sheppard Mullin’s statewide labor and employment practice group, which comprises about 50 lawyers from seven California offices. He has been involved in this field since graduating from Stanford in 1969 and says the appeal lies in the combination of negotiation, litigation and counseling employers on how to avoid problems in the first place. Collins enjoys union negotiations involving large clients such as San Diego Gas & Electric, the Association of Builders and Contractors, the hotel and restaurant industry, and retailers like Nordstrom and Costco.
Today, as a partner and one of Seltzer Caplan’s eight-member labor and employment practice group, he notes the increasing prevalence of mandatory arbitration clauses in employment contracts. He cautions employers to be very fair in drafting such clauses — under which employees may waive their rights to settle labor disputes through jury trials — as courts have found employers taking unfair advantage of workers. Generally, Eaton says, employees tend to be wary of arbitration; they prefer to let a jury decide the issue, pinning their hopes on the possibility of a substantial award. Employers tend to lean toward arbitration, comfortable with a process usually presided over by a retired judge and therefore regarded as more conservative and less susceptible to emotional arguments. Two other major trends with San Diego labor lawyers are a spike in disability discrimination claims and a wave of high-profile class actions over wages and hours. An amendment to California’s Fair Employment and Housing Act last January loosened the definition of disability to something that “limits” rather than “substantially limits” a major life activity. Eaton says this makes it much easier for employees to assert disability claims; conversely, it has become harder to fire them for poor performance and it puts the onus on employers to accommodate more special workplace needs and flexible schedules. Pillsbury’s George Howard says since the law change many more people are looking for protection under the act, and while this isn’t a get-out-of-jail-free card, it is something employers need to address before a claim arises. Meanwhile, Howard says, huge class actions, like one involving about 600 Taco Bell employees, and headline-grabbing verdicts, like the $90 million decision against Farmers Insurance, have been fanning the flames over exempt (paid a set salary with no overtime) and non-exempt status. Howard believes 100 to 200 class actions are pending around California as employees stake claims for thousands of hours of unpaid overtime. John Collins says his firm, Sheppard Mullin, probably has handled more than 50 of these wage and hours cases in California, many of them in the retail, banking and insurance sectors. “They show no signs of going away,” he says. “Cases are still being filed and I don’t see an end in sight in the near future.” Rod Betts, chairman of Gray Cary’s statewide employment services practice group, says claims hinge on whether employees have been rightfully categorized as exempt or non-exempt. Betts, who joined Gray Cary 20 years ago straight from Kansas University Law School, says some professional and executive positions are clearly exempt while some employees are equally clearly non-exempt. But in between, especially for those working in middle management, there are many shades of gray. He references the case of a fast-food night manager who is supervising 10 other staff but should not really be considered exempt as he spends most of his shift flipping burgers alongside the hourly paid workers. Betts says these claims started in the fast-food industry before moving into retail and other sectors, with The Home Depot one of the most recent targets. He says his practice group spends more than half its time helping employers avoid potential problems by training them in aspects of labor law and drafting clear and concise employee handbooks and policy manuals. Looking at the general role of the labor lawyer, Betts is a firm believer that prevention is better than cure, and it’s certainly much cheaper.
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Some believe national origin is the reason for their unfair dismissal, and Douglas wonders if September’s terrorist attacks will spur an increase in such claims over the next year or two, especially among people from the Middle East.
Dan Eaton, a Harvard Law School graduate in 1989, came to the San Diego offices of Seltzer Caplan via B Street neighbors Gray Cary and the Los Angeles firm Proskauer Rose.