A California appellate opinion issued yesterday offers a fact pattern and jury verdict familiar to employment counsel: A longtime employee resists a proposed change pushed by his new boss, citing an anxiety disorder; the new boss finds the claimed anxiety a dubious excuse; the boss learns the employee has been moonlighting and potentially using company resources for this side venture; and the boss decides to terminate the employee for violating the company’s conflict of interest rules. The employee sues and wins.
The San Bernardino jury’s verdict was no doubt painful to T-Mobile: $320,042 in economic damages, $700,000 for noneconomic damages and emotional distress, and $4 million in punitive damages (equal to one day of net income for T-Mobile in 2016). T-Mobile was also ordered to pay $480,315.00 in attorney’s fees to plaintiff, in addition to incurring its own fees and costs. The appellate court reduced the punitive damages to only $1.53 million, but if you value a day of your business’s profits, it is worth taking a few minutes to learn from this cautionary tale.
(The following facts are taken from the appellate opinion. Because the employee won at trial, the appellate court was required to consider the evidence in a light most favorable to the employee.)
From 2007 to 2014, Stephen Colucci was a store manager at a T-Mobile retail store in Ontario, CA. In February 2014, Brian Robson became the new district manager overseeing various stores, including Colucci’s.
Robson planned to transfer Colucci to a mall kiosk location, but Colucci claimed an anxiety disorder made him unable to work in a crowded mall. Robson was highly skeptical of Colucci’s condition–“this is the most ridiculous thing I’ve ever heard”–but Colucci obtained a doctor’s letter and T-Mobile’s HR advised Robson that he could not transfer Colucci to the mall kiosk.
In July 2014, Colucci complained to Robson that an associate was spreading inflammatory rumors about Colucci. After agreeing to investigate, Robson did nothing, and told Colucci he should “quit complaining” and that he had been “nothing but problems.”
Around the same time, a part-time sales associate informed Robson that Colucci had an outside business, had used a T-Mobile fax machine for the outside business, and required the associate to answer calls for that outside business while on duty for T-Mobile. The catch? 1. The sales associate had recently been disciplined by Colucci and wanted a transfer. (At trial, the associate’s statements were “largely discredited.”) 2. Colucci’s prior boss knew about the outside work, other T-Mobile employees had side businesses, and T-Mobile’s policy allowed occasional personal use of T-Mobile equipment.
Robson started an investigation, enlisting loss prevention for support. One day before Robson and loss prevention visited the store to interview him, Colucci called T-Mobile’s “integrity line” to complain that his complaint to Robson was unresolved and left his work environment tense. When Robson arrived to interview Colucci, Colucci was experiencing back pain aggravated by anxiety over the tense work environment. Colucci complained to Robson and requested medical leave, which Robson granted.
Two hours after Colucci left, Robson recommended to HR that Colucci be terminated for cause due to the conflict of interest, bypassing T-Mobile’s progressive discipline policy. The loss prevention manager assisting Robson later told the loss prevention team that Colucci had been “turned into a customer” (i.e., fired) because of his complaints or the way he acted.
What can we learn from this?
1. Beware the retaliation trap.
Discrimination is a well-understood risk in the workplace. Harassment, especially sexual harassment, has been well-publicized lately. But retaliation is and remains an underrated risk for employers.
Not all jurors are inclined to attribute discriminatory motive to employer conduct, but virtually everyone understands and acknowledges that people hold and act upon grudges. Employers need to be particularly attuned to potential retaliation claims where, as here, a supervisor wants to discipline an employee who complained about the supervisor, or a supervisor or management has made disparaging comments about the target of proposed discipline. Employers need to be proactive and clear that retaliation will not be tolerated.
2. Take all disability accommodation requests seriously
Robson’s disbelief of Colucci’s anxiety disorder is not uncommon. Whether or not you believe such disability claims are abused by employees, employers need to recognize that courts and juries are increasingly holding employers accountable for discriminating against or failing to accommodate employees asserting mental disabilities. T-Mobile properly accommodated Colucci’s anxiety by blocking his transfer to the mall kiosk, but Robson’s incredulity went unaddressed with costly results.
3. Investigate timely and completely
When an employee lodges a complaint, do not let it languish. An investigation should commence in a timely manner. Ask yourself today who would handle such a complaint, so that you can assess whether that person would be able to conduct a timely investigation. If that person is you, but your daily task list is bursting at the seams, what is the likelihood you can drop everything on short notice to address a complaint?
A workplace investigation must also be competent, which means (among many other things) interviewing all relevant witnesses. Here, T-Mobile’s investigation of the potential conflict of interest failed to achieve an interview of the accused employee. (T-Mobile’s investigation of Colucci’s complaints never even got off the ground).
4. Terminations for policy violations are not bulletproof
I see it a lot. A legal complaint or settlement demand comes in, and the potential client is insistent that its frivolous because the complaining employee was fired for cause. (All of my actual clients are, like my son and my favorite dog, perfect in every way.) It is difficult to rationalize paying money to a former employee you fired for misconduct.
Almost surely, some at T-Mobile felt this way about Colucci’s claim. But plaintiff’s counsel can chip away at the armor of an employee misconduct defense, as happened here. Robson’s credibility was tainted by his comments and Colucci’s complaint against him. The determination that Colucci’s side hustle warranted discipline was weakened by evidence that other employees did the same thing. And the validity of the discipline was undermined by the failure to follow T-Mobile’s progressive discipline policy.
5. Consider a complaint hotline
Part of the appellate court’s reasoning for trimming the punitive damages award was T-Mobile’s “integrity hotline” for employee complaints, which evidenced that the company maintained policies and procedures to prevent workplace misconduct. A complaint hotline can undercut arguments that an employee felt he or she had no recourse to complain about harassment or mistreatment.
That said, make sure a complaint hotline works for your business. Such a hotline can be a double-edged sword if complaints are not acted on.