Here's more incentive to make correct employment decisions the first time around: A recent court ruling makes clear that employees can still sue under Title VII even if your organization quickly reverses a decision.
It doesn't matter if you do everything you can to make the employee "whole" again, including paying any lost wages or benefits.
Recent case: Laura Phelan, a maintenance worker at Chicago's Cook County Hospital, claimed to have been sexually harassed by two male co-workers. When she complained to, the hospital offered her a transfer or termination. She accepted the transfer. But the same co-workers still hounded her, so she asked for medical leave. The hospital denied her request and fired her when she called in sick.
Phelan filed an EEOC complaint four months later. Just two days after that filing, the hospital reinstated her with full back pay.
Phelan still followed through with the suit. The 7th Circuit let the case go to trial, saying it refused to "allow employers to escape liability by merely reinstating the aggrieved employee months after termination, whenever it becomes clear that the employee intends to pursue her claims in court." Other federal appeals courts have ruled that even a one week unpaid suspension was enough of an "adverse employment action" to support a lawsuit. (Phelan v. Cook County, No. 01- C-3638, 7th Cir., 2006)
Final tip: If you have any doubt about a discharge or pay cut, call a timeout. It's safer to suspend an employee with pay while you thoroughly investigate and document the case. And if you reinstate an employee, do so as part of a settlement agreement in which the employee waives discrimination claims.