By Dhyana Levey
Daily Journal Staff Writer
The news about the economy just went from bad to worse - that is, if you are on the losing end of a wrongful termination suit.
As companies buckle under financial stress and give way to massive
layoffs, attorneys, government agencies and an online legal matching
service are reporting a spike this year in discrimination and wrongful
And lawyers who aren't noticing a recent boost in employment-related
claims say they are bracing for a rush in 2009, especially if the
economy doesn't pick up.
"If I was going to use my practice as a radar to how the economy is
doing, it would be indicative that the economy is doing bad," said
Therese Lawless, an employment plaintiff's attorney with San
Francisco's Lawless & Lawless. "My business is booming, but I'm not
gleeful about it. ... It's tough times."
LegalMatch, an online service that matches clients to lawyers, logged a
32 percent increase in wrongful termination cases and a 34 percent rise
in employment discrimination cases in California from 2007 to 2008.
Employment discrimination cases filed dually nationwide with the U.S.
Department of Fair Employment and Housing and the U.S. Equal Employment
Opportunity Commission grew from 3,319 in the 2007 fiscal year to 4,072
in 2008 - an increase of 753 cases, according to Phyllis W. Cheng,
director of the fair employment department, who posted comments about
the trend on a recent Daily Journal article.
Lawless listed older employees, people who take time off for medical
reasons and women on leave for pregnancies as those who tend to face
the brunt of layoffs.
"Age discrimination is a huge problem in our culture," she said. "That
increases when it comes to company-wide layoffs. It's an opportune time
for employers to take the older workers and lump them in with other
Unless an employer has objective criteria in place for downsizing,
older or disabled workers and minorities find themselves more often
getting the boot, agreed Todd Schneider, a plaintiff's attorney with
Schneider Wallace Cottrell Brayton Konecky.
He said his office has taken in about a 150 percent increase this year
in wrongful termination claims. However, that doesn't necessarily mean
a hike in viable lawsuits, he added.
"It could mean new cases, or it could just mean that people are being
terminated and are angry about it," he said. "But I do believe that in
an economic downturn, the potential for increased litigation is there."
Mark Ross, who defends employers as a partner in the San Francisco
office of Seyfarth Shaw, said he hasn't experienced a notable rise in
employment complaints. But he said he has been receiving upward of four
calls a day from employers planning to downsize, who are concerned
about potential legal liabilities.
"I wouldn't be surprised if we are at the foothills of the mountains,"
he said. "What you are likely to see in the coming months is an attack
on the methodology to pick people [for layoffs]."
Companies run into trouble when, anxious to reduce costs, they lay
people off without the proper explanations behind their decisions, Ross
said. If a mass layoff includes a disproportionate number of employees
of a certain age, gender or race, the employer could face a lawsuit -
regardless of the intent behind the decision.
"I have yet to meet an employer who wakes up one morning and says - how
am I going to get rid of all my old people, how am I going to get rid
of all my women?" Ross said.
Natalie Pierce, a San Francisco shareholder at Littler Mendelson, which
defends employers, said she's been concerned by calls from companies
planning to use outdated 2001 paperwork while downsizing.
Older documents might not comply with more recent anti-age
discrimination policies that must disclose to employees older than 40
the reasons behind their dismissals, she said.
Pierce agrees that a boom in employment-related lawsuits is on the
horizon. Companies that plan ahead and terminate employees with meaty
severance packages while they can still afford to do so will be in
better shape, she said. But those taken off guard by tough economic
times won't have the resources to handle downsizing as efficiently.
As companies lose money, their severance packages will become less
generous - giving way to disgruntled ex-employees, she said. And a
company downsizing quickly and unexpectedly could make procedural
If an employer doesn't have the proper language in its releases, a
laid-off employee could sign the release, take the severance package,
and then still sue, she said.
However, attorneys should take care with all the hype surrounding the
bad economy, warned Cliff Palefsky, an employment discrimination
plaintiff's lawyer with McGuinn, Hillsman & Palefsky.
While companies certainly are downsizing, there's nothing inherently
wrongful about an economically related layoff, he said. And bringing
unnecessary lawsuits can hurt a worker's future.
"If I was giving advise to someone in a difficult economy, I'd tell
them to weigh the benefits of a lawsuit on their next job," Palefsky
said. "If you walk into a job interview and say 'I was an employee in
good standing who got laid off,' there's a lot better chance to get
that job if there isn't a lawsuit."
This article appears on Page 1 of the Verdicts and Settlements