It was an employer’s worst nightmare come true. A manager fired for sexual harassment turned around and sued for wrongful termination and won $1.7 million in damages. But now, the same case has ended as a significant victory for employers who face charges they fired someone based on untrue allegations.
In a new ruling, the California Supreme Court has thrown out the award to the accused harasser and limited a jury’s ability to second-guess your termination decisions. And the case doesn’t just protect you from a claim that you damaged the career of an employee fired because of accusations of sexual harassment. It applies any time you dismiss a worker for misconduct.
To help you take advantage of the court’s decision, we’ve prepared a 3-point checklist of specific steps to take in investigating allegations against employees.
Employees Claim Harassment
The case involved a senior vice president of Rollins Hudig Hall, a Southern California insurance broker, accused by two female employees of sexual harassment. The women claimed the executive, Ralph Cotran, exposed himself to them and made obscene phone calls to their homes.
Rollins gave Cotran a chance to respond to the charges, and company investigators interviewed 21 people about the complaints. During the probe, another female employee informed Rollins that Cotran had made obscene phone calls to her when they worked together at another company. Rollins concluded the women’s accounts were credible and fired Cotran.
Accused Harasser Sues and Wins $1.7 Million
Cotran turned around and sued the company for wrongful termination. He said he had an employment contract allowing Rollins to terminate him only for good cause. Cotran claimed he had consensual sexual relationships with the women, and the charges of inappropriate conduct were untrue.
After hearing the evidence, the judge told the jury to determine whether Cotran had actually committed sexual harassment. The jury concluded he had not and awarded him $1.7 million in damages.
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New Employer Protection
But the California Supreme Court overturned the jury’s award because, it said, Rollins was forced to meet too high a standard in defending its decision to terminate Cotran. The question, the court ruled, should not have been whether Cotran actually committed sexual harassment but rather whether the employer, after an appropriate investigation, reasonably believed the allegations were true.1 The case now returns to the lower court for a new trial.
The court stressed that employers need wide latitude in making em- ployment decisions without fear of being second-guessed by a jury. And that’s true of any decision to terminate a worker for misconduct-not just in sexual harassment cases.
But although you don’t need ironclad proof that allegations against an employee are true, the court’s ruling doesn’t mean your employment decisions are immune from scrutiny either. Instead, the court made clear that termination decisions must be backed up by a fair and thorough investigation which supports a good faith belief that the worker was guilty.
Investigation Strategies
The court didn’t spell out exactly how to satisfy the requirement of a full and reasonable investigation, but there are several steps you can take to lay the groundwork for defending against a future claim. And even though technically you can fire at-will employees without good cause, it’s a good idea to follow these procedures whenever misconduct is the reason for your decision to terminate:
- Conduct a rigorous investigation. Have procedures in place for a prompt and thorough inquiry into all complaints. Carefully interview everyone involved and scrupulously document each step of the investigation in a special file.
- Listen to the accused. For an investigation to pass muster under the court’s new standard, you must notify the accused of the charges and provide the person with an opportunity to respond. Make sure the employee understands the claims that were made and the investigative procedures you will follow. Give the person sufficient time to tell their side of the story. Take the employee’s comments seriously and keep an open mind; the accused worker must have a genuine opportunity to influence your decision, or your investigation may be dismissed as a mere formality.
- Evaluate the evidence. Finally, after looking at all the evidence and evaluating witness credibility, determine whether the complaint is valid, unjustified or inconclusive. Document the reasons for your conclusion in writing. The more evidence you have, the more likely you’ll be able to convince a jury you acted in good faith and your decision to terminate was reasonable. Just as important, a good investigation will help you defend against a potential lawsuit by the accuser if you decide to take no action.