Scenario No. 1: An employee with chronic attendance problems approaches you asking for FMLA leave on the basis of clinical depression. The employee’s absence record places him on the verge of discharge.
There is a medical certification of the employee’s condition, but it is several years old and you have not noticed any behavior recently (that is, prior to the potential discipline) that could suggest the employee is unable to work.
Scenario No. 2: Your company faces staggering retiree health insurance obligations. Global competition is up, sales are down, the company has not been profitable for years, and these “legacy” costs threaten to put the company over the edge — if not now, then some day.
Scenario No. 3: A recently discharged employee files a harassment lawsuit in state court. You are certain the suit is groundless, but a couple of your key managers are implicated. You have also learned from a friend of the discharged employee that the suit could be settled for $30,000.
Legal issues like those presented above accompany almost every employment decision faced by company executives and personnel managers. In response, executives regularly contact labor and employment law attorneys for advice.
Your lawyer should initially give you an opinion on the merits and legal ramifications of the issues presented. For example, counsel may advise the employer in Scenario No. 1 of the possibility of an up-to-date medical certification and the pitfalls of discharging an employee who is eligible for FMLA leave.
In Scenario No. 2, counsel may advise the employer that its benefit documents should be reviewed for evidence of “vesting” of such benefits and alternatives should be explored.
In Scenario No. 3, counsel may indicate to the employer whether it appears that the unlawful harassment has in fact occurred, what the legal process going forward is likely to involve, and how to prevent such claims from occurring in the future.
Your lawyer should then provide some idea of the likely outcome on each issue, considering the applicable law, the company’s work force, and the individuals involved. Counsel should also present alternative methods and strategies for achieving desirable outcomes.
Counsel is ethically required to leave the ultimate decision as to what to do next up to the client. Thus, the ultimate issues must be resolved through a “business decision.”
How should executives go about resolving these issues? What factors should be considered in deciding whether a certain course of action is worth the risks involved?
Though final decisions must be made by the client, legal counsel can be of considerable aid in identifying factors to be considered in addressing legal matters. Many of these factors apply to all legal issues faced by businesses. Some, however, are unique to the employment field because of the ongoing nature of the employment relationship.
Costs: How much money is at stake, win or lose? What types of damages are potentially recoverable? Are “pain and suffering” or “mental anguish” damages a possibility? Can the company be liable for the other party’s legal fees? How much will the company’s own legal fees be? Will the issue eventually be tried before a judge or jury unsympathetic to the employer and thus willing to “up the ante” on damages? Does the situation involve novel or sophisticated legal issues that are likely to trigger a lengthy appeal process? What is the cost of not proceeding?
Hidden costs: This “cost” side of a legal cost/benefit analysis must include time that company personnel will spend in depositions, in conference, on the telephone, keeping records and reviewing records.
Precedential value: How important is a certain outcome to the company? Is the dilemma likely to come up again? Does it need to be effectively addressed immediately or will there be a more opportune time? In a union setting, how will a result in litigation or arbitration, adverse or otherwise, later affect the parties’ bargaining positions?
Importance to and effect on employees: It must be remembered that the employment relationship is an ongoing one and that all employees are often affected by decisions made during litigation. Thus, always ask whether word of the company’s decision will filter down to employees. How will they react to the decision? Does this reaction make a difference?
The company’s future plans: What impact does the decision have on the company’s future plans? Will the significance of the issue decrease over time because the company is considering making important changes in operations or management, or even ownership?
The corporate philosophy: If the company has a particular philosophy or approach to employee relations, does it compel a certain result?
Counsel’s advice: Sympathetic labor counsel can view various issues from management’s perspective without losing objectivity. Clients should feel free to ask their lawyer what he or she would do, given the circumstances. Responsive lawyers are problem solvers and sophisticated clients use this resource in a cost-effective and timely manner.
Dave Khorey and Bill Rohn are partners with the law firm of Varnum LLP.