Are Employers Afraid of Employees?

A recent BusinessWeek story offers a glimpse into just how litigious America has grown.

The story, "Fear of Firing," says many U.S. employers are so afraid of pricey lawsuits they avoid firing underperforming employees.

The story points out that most U.S. workers can claim some sort of protection because of laws created over the last 40 years. Given how easily employees file suit, the story says, employers will keep problem workers on board just to dodge the often-exorbitant costs and ill-repute of lawsuits.

According to the BusinessWeek story:

THESE WORKERS WIELD A POTENT WEAPON: They can force companies to prove in court that there was a legitimate business reason for their termination. And once a case is in court, it's expensive. A company can easily spend $100,000 to get a meritless lawsuit tossed out before trial. And if a case goes to a jury, the fees skyrocket to $300,000, and often much higher. The result: Many companies today are gripped by a fear of firing. Terrified of lawsuits, they let unproductive employees linger, lay off coveted workers while retaining less valuable ones, and pay severance to screwups and even crooks in exchange for promises that they won't sue. "I've seen us make decisions [about terminations] that in the absence of this litigious risk environment, you'd have a different result," acknowledges Johnny C. Taylor, Jr., head of HR at IAC/InterActiveCorp (IACI ), the conglomerate that runs businesses such as Match.com and Ticketmaster.

The story says keeping lackluster employees can be a wet blanket for workers who perform well:

This set of divergent incentives puts line managers in a tough position. When they finally decide to get rid of the underperforming slob who plays PC solitaire all day in her cubicle, it can be surprisingly tough to do. And that, in turn, affects productive workers. "Few things demotivate an organization faster than tolerating and retaining low performers," says Grant Freeland, a regional leader in Boston Consulting Group's organization practice. ... 

The cost and distraction of lawsuits lead many employers to engage in contortional, and at times perverse, litigation avoidance. Defense attorney [Lisa] Cassilly offers the story of one of her clients, a hospital in the Southeast forced to reduce its ranks because of budget cuts. The head of one department elected to let go a female employee in favor of keeping a more junior male, whom he had spent a great deal of effort to recruit and whom he felt was more valuable. But the hospital overrode that choice and laid off the man out of concern that it would be more exposed in a lawsuit by the woman.

Getting Beyond a 'Fear of Firing'

This article raised several questions for me. As an employee, I value laws to protect me--but why does America need so many categories of protection? Shouldn't there be a limit to what employers will tolerate, without fear of dropping thousands of dollars?

Some of the scenarios in the article reminded me of workplace situations friends have described to me, or which I've experienced first-hand. It's demoralizing, as the story suggests, when you work hard and see others getting by with much less effort. Nevermind that managers often expect you to pick up slack for lackluster employees.

There's got to be a better way for handling problem employees. Employers dancing around lawsuits and running scared--that just doesn't cut it.

Any thoughts?
-kc

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