Employee Performance Rating Systems: Avoiding and ...media.straffordpub.com/products/employee...Oct 04, 2016 · Avoiding and Defending Against Discrimination Claims, WARN Act Violations

Employee Performance Rating Systems:

Avoiding and Defending Against

Discrimination Claims, WARN Act Violations Implementing Objective Processes, Record-Keeping Systems, and

Communication Protocols to Mitigate Disparate Impact and Treatment Claims

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TUESDAY, OCTOBER 4, 2016

Presenting a live 90-minute webinar with interactive Q&A

Hanna B. Raanan, Esq., Ogletree Deakins Nash Smoak & Stewart, Costa Mesa, Calif.

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Employee Performance Rating Systems:

Avoiding and Defending Against

Discrimination Claims and WARN Act

Violations

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ogletreedeakins.com

Presented by Hanna B. Raanan

© 2016, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Road Map

Legal Developments

Designing and Implementing

Performance Ratings System

Using Performance Ratings in

Employment Decisions

Defending Against Discrimination,

Retaliation and WARN Act

violation claims

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5

Cases To Know About

Anderson v. Yahoo, Inc., 16-cv-00527 (Filed Feb. 1,

2016, in the Northern Dist. Of California)

Former Yahoo Inc. editor sued company alleging that its

performance review system was discriminatory.

Claims that Yahoo’s QPR (quarterly performance review)

process was manipulated to allow managers to unlawfully

terminate hundreds of employees without proper cause.

Alleges that the QPR process essentially operates on a

curve, requiring managers to assign some employees low

ratings, resulting in their termination.





6

Cases To Keep in Mind

Donaldson v. Microsoft Corp., 205 F.R.D. 558 (2001)

Plaintiffs’ in a class action claimed that the evaluation system

was excessively subjective and that the structure of

Microsoft’s then-existing hiring, classification, promotion and

compensation system had a disparate impact on female and

minority employees.

At issue was Microsoft’s “stack ranking” system, similar to

Yahoo’s ranking system, requiring all employees to be

reviewed twice per year. At each review, every employee was

assigned a score of 1.0 to 5.0. Microsoft utilized a strict

“curve” in rating employees.





7


Malewski v. NationsBank of Florida NA 978 F. Supp.

1095 (S.D. Fla. 1997)

Plaintiff claimed that NationsBank’s stacked ranking system

was subjective and allowed the company to discriminate

against her for perceived disability (cancer).

NationsBank, luckily, kept well-documented performance

reviews evidencing plaintiff’s poor performance and

consistent failures to adapt to the changing responsibilities of

her position both before and after her diagnosis. As a result,

the Court granted Summary Judgment in favor of

NationsBank.





8


Kelley v. Sun Microsystems Inc. 520 F. Supp. 2d 388

(D. Conn. 2007)

Kelley, a woman over the age of 50 when hired, alleged that

despite being ranked equally with a younger male associate

during Sun’s general performance ratings, she was selected

for termination as a result of the manager’s bias toward

women of her age group.

The Court found that, in light of comments made by her

supervisor and other male employees, coupled with the fact

that she was terminated despite being equally ranked with a

younger male associate, the inference of discrimination was

present and Sun’s Motion for Summary Judgment was

denied. Atlanta / Austin / Berlin / Birmingham / Boston / Charleston / Charlotte / Chicago / Cleveland / Columbia / Dallas / Denver / Detroit (Metro) / Greenville




9

Designing and Implementing

Performance Ratings Systems Documentation

Job Description

Necessary Performance Criteria

Notification

Performance Reviews

Discipline

Documenting Discipline

Performance Improvement Plans (PIPs)

Termination





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How Do Your Employees Feel About

Performance Reviews?

49% of American workers find managers take

performance reviews seriously.

44% say they receive constructive feedback.

47% say they would feel better if the review process

were a two-way street.

24% believe reviews are not given on a regular basis.

18% feel long-term career goals are not discussed.

Results from Adecco Staffing North America 2006 Performance

Reviews Survey





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Basic Principles Regarding Documentation

Be clear- avoid ambiguity

Use objective statements

Be consistent and fair

Avoid discriminatory/stereotypical comments





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Pre-Employment Documents

General Considerations

Always keep and retain pre-employment records,

including:

• Vacancies

• Applications

• Job description and objectives

• Notes taken on reference calls





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Posting notices, advertisements and

announcements relayed to employees

Interview schedules

Hiring plans and recruiting documentation

Interview questions and any notes taken

Offer letters and rejection letters





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Your notes on any records are preserved for use in

subsequent lawsuits

Written comments, if any, should be job-related and

unrelated to protected characteristics





15

Documentation and Notification

Unsuccessful Candidates:

Notify these candidates promptly

Retain all applications, resumes, notes and any other pre-

employment documentation

If sought, provide only job and skill-related reasons for that

candidate’s rejection





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Key Components of

Documentation Job descriptions

Performance appraisals

Disciplinary action

Company Policies and Procedures





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Job Description - Purposes

Inform applicants/employees

Make hiring decisions

Appraisal process

Support disciplinary action

Work conditions

Required training, education, skills

ADA/FMLA/FLSA issues





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Job Description - Contents

Demonstrates essential job functions

Detailed description of physical and mental

requirements

Required education, certifications, experience

“Catch-All” Provision: All other tasks assigned by

management

Review and update periodically (with HR involvement)





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Job Description - Examples

Ok : Frequent lifting required

Better : Must be able to lift objects up to 50 pounds on

average 1-2 hours per day





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Ok : Load and unload trucks

Better : Loads and unloads trucks, either manually or

using equipment such as forklifts and pallet jacks





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Ok : Operates a forklift

Better : Forklift certified





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Ok : Works in different climate conditions

Better : Works in different climate conditions, including

non-air-conditioned warehouse and refrigerated trailers





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Discipline





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Disciplinary Actions -

General Rules

Investigate each complaint thoroughly

Check for consistency

Act promptly

Document and add specifics





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Disciplinary Actions-

Making the Disciplinary Decision

How have other employees been disciplined for

similar offenses?

Work history

Prior performance appraisals and evaluations

Prior disciplinary history





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Documentation regarding disciplinary actions can be used to:

show consistent treatment; and

establish a non-discriminatory business justification





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Immediate documentation ensures

Accuracy

-and-

Credibility





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Issuing the Disciplinary Action

Give copy to employee

Allow employee to comment in writing

Get employee signature to acknowledge

receipt

If employee won’t sign, supervisor should

notate such and date





29

Performance Improvement Plans

Address unsatisfactory job performance Not for misconduct or policy violation (use corrective action)

Often issued when employee receives a “Below Standards” performance rating

But not necessary to wait until performance review occurs

Employees normally should not be given an opportunity to go on a PIP a second time





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Performance Improvement Plan

Elements

Detailed description of performance deficiencies

Specific performance improvement objectives

Length of the PIP period – 30/45/90 days

Continuous feedback/meetings to monitor progress

Documented progress from employee

Require continuous improvement

No guarantee of employment through PIP period





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Performance Appraisals





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Type of Issues Requiring Evaluation or

Discipline

Attendance

Rule Violation

Performance





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Why are Performance

Evaluations Important to

Employees?

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Why are Performance Evaluations

Important to Employees?

They provide employees with fair notice of

performance issues.

They provide employees with direction for ways to

improve.

They inform employees of what managers expect

from them.





36

Why are Performance


Managers?

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Important to Managers?

They allow managers to measure actual

performance against expectations. AP=EP?

They allow managers to set future goals and

expectations by which to judge future

performance.

They allow managers to compare performance of

all employees under their supervision.





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Why are Performance


Employers?

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Important to Employers?

They help employers keep and promote better people.

They help employers determine eligibility for bonuses or

raises.

They ensure fairness and consistency.

They provide support of disciplinary action.

They provide a shield/achilles heel in a lawsuit.





40

Performance is the Most

Common Reason for

Discharge

41

The Annual Performance Appraisal

Process: Key Issues

Determine frequency of evaluation.

Determine necessity for multiple

documents/forms.

Train supervisors regarding the document.

Educate employees and new hires about what

to expect from the performance appraisal.





42

The Annual Performance Appraisal

Process: Key Issues (Cont’d)

Have the form reviewed by HR.

Conduct the performance review meeting.

Ensure retention of the document/form.





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Contents of a Good Evaluation

Focus on objective job-related criteria.

Identify criteria independently.

Formulate company-wide expectations of

performance.

Be detailed and specific.

Be honest and accurate.





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Contents of a Good Evaluation

Give the employee the opportunity to comment and sign the form.

Honest evaluations identify problem areas and provide the employee the opportunity to improve.

Inaccurate evaluations are unfair to the employee and may limit the company’s legitimate need to discipline or discharge the employee in the future.





45

What to Avoid in Evaluation

Untimely evaluations

Generalities

Sarcasm and humor

Use of word “probation”

Stressing positives to balance evaluation or make employee feel better

Comparing employee to co-workers

Discussing promotions





46

Some Practical Examples for

Written Evaluations

Avoid generalizations. A supervisor should

clearly state standards and expectations,

identify areas where the employee has met

and exceeded expectations, and identify the

employee’s problem areas. For example:





47

Wrong: “Your work is too sloppy and must improve.”

Correct: “You must meet the production quota of 12 units per hour, with no more than 10% scrap.”

Some Practical Examples for Written

Evaluations





48

Wrong: “You must improve your attendance and punctuality.”

Correct: “In any six-month period, you may not experience more than one unexcused absence and you may not have more than two unexcused instances of tardiness.”


Evaluations





49

Wrong: “We expect you to be more of a team player.”

Correct: “When dealing with co-employees and supervisors, provide a short, written response to all co-worker requests within one day, specifying how the request will be met. You should follow through with all commitments made in the written response.”


Evaluations





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Wrong: “You have a poor attitude.”

Correct: “On March 21, I saw you yell at your

supervisor in front of customers.

This is not appropriate conduct.”


Evaluations





51

Wrong: “Your performance is substandard.”

Correct: “Your production level in the third

week of June was only at 50% of

average.”


Evaluations





52

Wrong: “Your performance is improving; keep up the good work.”

Correct: “Last review, you were asked to reduce errors by 10%. You have exceeded this standard and have reduced errors by 15%. You need to maintain this error rate. Please let me know what I can do or what tools we can provide to allow you to perform even better.”


Evaluations





53

Performance Appraisals -

The Meeting

Schedule and complete on

time

Focus on behavior and

performance

Be objective

Warn of consequences

Don’t compare to others





54

Performance Appraisals -

The Meeting (cont.)

Listen for concerns of discrimination

Look for positive solutions

Document discussion immediately

Allow employee to comment (in writing)

Obtain employee signature of

acknowledgement





55

The “Termination”





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Example:

John Smith is a long-term employee with 1) "average" to "exceeds expectations" performance evaluation ratings and 2) no substantial disciplinary write-ups other than minor attendance violations. His supervisor, Ben Bright, has been with the Company for six months and has aspirations of rising to the top. John suffers an on-the-job back injury on January 10th. He files a workers' compensation claim on February 5th. In March, Ben comes into your office, stating that John is a poor employee and that he plans to fire John immediately.

Should you have a concern?





57

Example:

Employees at your company normally receive verbal counseling and written warnings prior to being terminated. Don Johnson, the plant supervisor, enters your office and informs you that he would like to terminate Ben Williams, an African-American, for gross negligence in the performance of his job duties. Don indicates that he just wanted to let you know what he was planning to do but that he already has a meeting set up with Ben for 1 p.m. in which he plans to terminate this employee.

What should your response be?





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Four Truths to Recall When

Terminating an Employee 1. Juries care about fairness, not legality

2. Juries favor employees

3. Juries always give employees the benefit

of the doubt

4. The government is not neutral





59

The “Termination”

Be discreet and confidential

Plan

Who will attend

Who will conduct

What will be communicated

How communicated





60

Termination Tips

Have a witness present and have witness document discussion

Keep meeting short and professional

Refer to prior counseling sessions

Carefully phrase the reason

Document entire discussion





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Termination Mistakes That Lead to

Large Jury Verdicts Prior acceptable, satisfactory evaluations

immediately before termination;

Terminating for cumulative problems, even

though no discipline imposed for prior

conduct/performance;

Failure to conduct a full investigation and

give accurate reason(s) for action;





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Thank You

.

ogletreedeakins.com

Hanna B. Raanan

[email protected]

714-800-7988

© 2016, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.