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Making economic argument for staff cuts? Better make sure the math adds up

by on
in Discrimination and Harassment,Firing,Human Resources

Here’s something for small business owners to consider when purporting to terminate an employee for financial reasons. If the owner spends lavishly elsewhere, that may be evidence that money was just an excuse for a discriminatory termination.

Recent case: Frank, a medical doctor, went to work at a pain management clinic operated by David, also a physician. When Frank, who suffered from a bone disorder, broke his arm and couldn’t work, he asked for leave.

Instead, David fired him, allegedly because the clinic needed to save money and not because Frank was disabled and needed leave.

Frank sued, alleging disability discrimination.

At trial, it came out that David spent lavishly on a yacht, an airplane and other business ventures. In fact, it seemed that David was financing his other businesses largely with proceeds from the pain clinic.

Plus, it turned out that Frank actually generated far more revenue for the clinic than it paid him in salary. That cast doubt on David’s claim that Frank was terminated to save money.

The lower court allowed the evidence and Frank won the case. David appealed, arguing that his lifestyle shouldn’t have been used as evidence against him. The court disagreed and upheld the lower court’s decision. (Tiffany v. Smith, No. D058510, Court of Appeals of California, 4th District, 2012)

Final note: Always make sure that any financial reasons for termination look rock solid—not like an excuse for terminating someone for illegal reasons.

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