Lawrence Moreau was chief financial officer for Los Angeles-based Direct Express, which was later acquired by Paystation America. Less than three months after starting work, Moreau was fired for allegedly touching two female employees inappropriately. He sued, claiming the charge was unfounded and a company pretext to break his three-year employment contract. Now a Los Angeles jury has sided with Moreau and awarded him $710,000.
CFO Suspended Pending Harassment Investigation
Moreau’s problems started at his birthday party, which was attended by co-workers and company president Louis Krouse, who allegedly witnessed Moreau touching the two women. The employees never complained. But several months later, Moreau was informed that he was suspended pending a full investigation. Four days later he was fired.
Charges Were Trumped Up, Employee Says
Moreau sued Paystation America. He claimed Krouse and other managers knew the sexual harassment charge was groundless and the company never even investigated. Moreau charged that the real reason he was fired was that the company’s planned initial public stock offering fell through and the firm wanted to get out of its obligations to pay Moreau under his employment contract.
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Employer Cites Performance Problems
Paystation America argued that Moreau didn’t have an employment contract and therefore could be terminated at will. The company also contended that in addition to the alleged harassment incident, Moreau was fired for failing to complete a company audit and misrepresenting himself as a certified public accountant.
However, Moreau’s attorney Howard King told CEA that Moreau had a signed letter offering employment for three years and outlining employment terms. King also said the audit was overdue when Moreau was hired and was not completed until a year after his termination. Moreau’s expired CPA license was another pretext used to get rid of him, according to King, because it wasn’t required for the position. Paystation’s attorney did not respond to CEA’s calls for comment.
The jury found Moreau had an employment contract, which Paystation breached, and awarded him $107,000. Plus, the jury ordered Paystation and Krouse to pay Moreau $500,000 for emotional distress and tacked on another $103,000 in punitive damages against Paystation. The company has appealed.
Avoiding Similar Problems
Sexual harassment charges require careful handling to help prevent backlash lawsuits by the alleged harasser. Explain the charges to the accused employee and the investigation procedures you will follow. Give the person a chance to respond to the accusations and the information the investigation discloses. And meticulously document how you investigated the harassment complaint.
Another common problem arises when an employee claims that an offer letter amounts to an employment contract. If you intend an employee to be at will, state that clearly in your employment offer letters and reiterate it at every opportunity. Also, refrain from stating a projected duration of employment, as this may imply a promise to employ the individual for at least that long. And it’s best to have the employee sign a separate at-will agreement.