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  • Writer's pictureAndrew Kinstler

EMPLOYMENT DISPUTES: Litigate or Mediate?

Employment-related claims are increasingly common, especially in our current economic climate. These disputes adversely affect both the individual employee who is at odds with their employer, the employer, the company the employee works for, and perhaps even co-workers.

Employment disputes have far reaching effects that may be overlooked but can effectively disrupt the normal course of business. As a result, it’s critical to resolve most employment disputes quickly, confidentially and in a cost-effective manner. That is rarely possible in litigation, an environment where results are slow, expensive and public.

Below, is an example of a Washington Supreme Court case related to employment issues that might affect how pending and future employment cases are analyzed in Washington. This particular example is relevant due to the state's at-will employment laws. This means that businesses may fire any employee at any time, for any or no reason, as long as they are not violating any employee protection laws.

In 2017, the Washington State Supreme Court published its opinion in the matter of Mikkelsen v. Public Utility District No. 1 of Kittitas County, et al. In Mikkelsen, where the female plaintiff sued her former employer (a utility district) for wrongful discharge based on gender and age discrimination, and failure to follow the progressive discipline policy. The plaintiff in Mikkelsen was a long-standing and exemplary employee who did not have any documented performance issues. The plaintiff, however, did have some interpersonal issues with her new manager that she alleged arose out of his gender bias. Plaintiff was encouraged by a utility board member to circulate a survey to determine whether other employees also felt the manager had gender biases. When the manager learned about the survey, he immediately fired plaintiff. Subsequently, the utility stated it terminated plaintiff “without cause” (which it was purportedly entitled to do because plaintiff was an at-will employee).

Plaintiff sued, alleging she was fired because of her age and her gender, and that the termination was in violation of an adopted progressive discipline policy that required terminations be for-cause. The trial court granted summary judgment in favor of the employer on all claims. The Washington Supreme Court overruled the trial court on the gender discrimination claim and the for-cause claim and remanded to the trial court for further proceedings.

The opinion is significant on a few points:

First, on review of the discrimination claims, the Court considered the McDonnell Douglas burden-shifting analysis and held that, contrary to how that test is generally applied in other jurisdictions, Washington law does not require a plaintiff show they were replaced by a person not in their protected class. The Court also reiterated that “where there are reasonable but competing inferences of both discrimination and nondiscrimination, it is the jury’s task to choose between such inferences—not the courts.” This reinforces prior statements by Washington courts that summary judgment is seldom appropriate in employment discrimination cases due to the difficulty of disproving discriminatory motivation.

Second, the Court held that the plaintiff could go to trial on the issue of whether the termination of her employment violated the utility’s progressive discipline policy. That policy stated that all employees served as “at-will” employees, who could leave their employment or be terminated at any time and granted the employer broad discretion to implement any disciplinary action in any situation. However, the policy also emphasized that employees should be treated fairly and implied that dismissal could not occur arbitrarily.

The Court said this conflict rendered the policy “ambiguous” and that the policy “could plausibly be read as modifying [the plaintiff’s] at-will status” and establishing an expectation that employees may not be fired without cause. The Court concluded that an ambiguous discipline policy can create an issue of fact that defeats summary judgment, even though the policy expressly stated that it did not “not give any employee a right to continued employment or any particular level of corrective action.” The Mikkelsen case may therefore open employers to new claims that an employee handbook creates rights that the employee can enforce against the employer, even in the face of a disclaimer stating that the handbook does not create such rights.

Employers and employees engaged in “wrongful termination” litigation face significant risks on both sides. Employee claims are routinely dismissed on summary judgment and winning a reversal such as was obtained by the plaintiff in Mikkelsen is rare. On the other hand, the employer faces a “one way attorney fee” risk, in that the prevailing plaintiff can recovery his or her attorney fees, but the prevailing employer rarely has a basis to recovery its fees. Further, damages in these cases can be substantial, as virtually every potential juror will have been an employee at some point in their life, and probably expected to be treated fairly by their employer.

Mediating a settlement of these cases early on can save all involved from these risks. Early mediation will often involve emotionally charged, interpersonal conflicts and resolving these disputes quickly and confidentially is essential to maintaining a productive, profitable company. In addition, mediating instead of litigating employment claims leaves room for a valued employee to continue working for the employer or may involve a payment that is a fraction if the cost of defense to resolve the risk.

For the employee, an early settlement can allow the employee to move on and either get back to employment, or if the employee is leaving the company, provide a space for the employee to negotiate terms of departure. Such results would be near impossible if the parties went to trial.

If you would like Pacific ADR to help with your employment related dispute, please contact us at:

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