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Keep details of discrimination settlements confidential

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in Employment Background Check,Employment Law,HR Management,Human Resources

Is your HR office involved in settling discrimination complaints? If so, consider including confidentiality clauses as part of any settlement if the employee is going to stay onboard. Then shield the employee’s supervisors from any details of the settlement.

Here’s why: Any subsequent discipline—especially if it comes close on the heels of the settlement—may be grounds for a retaliation lawsuit. Courts and juries get suspicious when a protected activity is followed shortly after by an adverse employment action.

As the following case shows, if managers and supervisors know too much about the settlement and discuss it among themselves, that may be the evidence that persuades a judge to send a case to trial. That’s especially true if it turns out the second investigation was hurried, incomplete or sloppy.

Recent case:
Connie Hainline joined The Home Depot as a cashier in 1992. In 1999, she was promoted to regional installation manager. Two years later, The Home Depot changed the requirements for the position to include experience as a store manager, which Hainline lacked. Hainline was demoted to operations assistant store manager for The Home Depot’s Evergreen store.

Hainline filed a charge with the EEOC in March 2002, claiming the company changed its job requirements as a pretext to remove women from regional installation manager positions. She and the company settled her claim in October 2004, and Hainline received a settlement check that November.

Also in 2004, Hainline offered a cashier position to a woman pending the results of a background check. Hainline scheduled the woman for orientation before realizing the woman’s paperwork had not yet been returned.

When Hainline asked the store’s HR manager whether she should cancel the woman’s orientation, the manager told her not to on the grounds that it would make The Home Depot look stupid. On the day the woman reported for orientation, her background check returned. It revealed a felony conviction, forcing the company to withdraw its employment offer.

After a second, similar incident, The Home Depot fired Hainline in December 2004 for violating its code of conduct.

Unfortunately for The Home Depot, Hainline’s attorneys were able to show that The Home Depot managers discussed the settlement during some of the same meetings in which they discussed her alleged code of conduct violations. Plus, those managers apparently decided to terminate her even before the investigation was complete—before they checked whether other similarly situated employees had been fired for the same types of transgressions.

The trial court saw the timing as highly suspicious. Issue a settlement check in November, fire the employee in December, and you have what can only be considered a case of unforgivably bad timing—or blatant retaliation. A jury will decide which it was. (EEOC v. Home Depot, No. 06-CV-01950, DC CO, 2008)

Final note: Another approach is to push for settlements that don’t include retention. It may cost more to get the employee to leave, but it makes for a cleaner break with the past. Include a “no application or rehire” clause.

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