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Smaller raise can count as ‘adverse action’ that triggers lawsuit

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in Discrimination and Harassment,Firing,Human Resources,Leaders & Managers,Performance Reviews

Make sure your employee evaluation process includes clear-cut instructions and guidance for managers on how to link performance with compensation.

Reason: A new court decision says that giving employees a smaller-than-justified pay raise can count as an "adverse employment action," which serves as the basis for a job discrimination lawsuit.

In the case cited below, supervisors weren't given any written criteria to help them determine who should receive better evaluations and raises. Totally subjective evaluation criteria leave employees open to supervisors' possible prejudices. And it leaves your organization more vulnerable to liability for illegal discrimination.

Better approach: Draft written guidelines stating how supervisors should judge employees' strengths and weaknesses and how such evaluations correspond to pay raises. Provide rating systems or checklists, if possible. Base the guidelines on actual job criteria that are clearly outlined in job descriptions and employee-development goals. The outcome of performance evaluations and salary reviews should never take employees by surprise.

Recent case: Corrections officer Thalia Gillis received a 3 percent raise after her supervisor rated her as "meeting" expectations. She felt she deserved an "exceeded" expectations rating, which would generate a 5 percent raise. She sued for race discrimination. (Gillis is black; her supervisor is white.)

To win a discrimination lawsuit, employees must show that they suffered an "adverse employment action," such as a firing, demotion or pay cut. The initial court ruling tossed out Gillis's case, saying that her raise didn't count as an adverse action.

But a federal appeals court disagreed and sent the case back for trial, saying a smaller-than-appropriate raise can count as an adverse action. "An evaluation that directly disentitles an employee to a raise of any significance is an adverse employment action under Title VII," the court said.

Although it gave no benchmark, the court hinted that denying a higher raise must have a significant effect on an employee's compensation to count as an adverse action. (Gillis v. Georgia Dept. of Corrections, No. 04-11014, 11th Cir., 2005)

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