A recent study released by UCLA-RAND Center for Law and Public Policy detailed the “average” defense costs and jury awards in California employment law discrimination cases.

The study shows:

• The median legal costs to a defendant/employer through trial are $150,000. Even if the case goes to summary judgment — meaning a judge dismisses the charges before going to trial — the employer’s legal costs are about $75,000.
• And all that cash doesn’t include awards to employees who successfully waged lawsuits. The data for 360 cases in which 207 plaintiffs won show the median award in the low six figures.
• Of the 207 cases in the study where the plaintiff prevailed, the verdicts ranged from mid-five figures to low seven figures. The median verdict was in the low six figures.
• Verdicts for race and national origin discrimination tended to be at the higher end; discrimination for medical conditions and sexual orientation tended to be on the higher end.

The fact that the Ledbetter case involved a 20-year-long pay dispute has lead to the thinking that payroll and associated records have to be kept nearly forever. Of course it’s a good idea to keep comprehensive records, but –

• Pay records alone may not be the best defense against a bias claim, and
• Courts recognize that there’s a limit to the amount of recordkeeping companies can maintain, especially small companies.

So, what is the best defense against wage-bias claims? The attorneys at Fisher & Phillips recommend:

• Providing employees with a system to challenge wage decisions on the basis of discrimination. This will both help prevent discrimination as well as provide the employer with the ability to create a record at the time of the decision.
• Adding objective factors to the decisionmaking process that allow decisions to be defended. In other words, try to be sure that your process has defined measures — output, quality, etc. — for awarding pay raises and promotion. That’s better than just vaguely saying or writing, “You did a good job this year.” What’s a “good job”?
• Setting a baseline for all raises and requiring written documentation and review for any deviation from the baseline, up or down. If almost everyone gets, say, a 3% raise, what justifies some people getting more or less than that?
• Providing decisionmakers with forms that guide them in explaining their decisions. As much as possible, don’t leave it up to supervisors to be creative. Hand them the forms that meet your criteria.

Nothing will guarantee that your company will never be sued for wage discrimination. All you can do is set up the best system to prevent lawsuits and to defend yourself in case of a lawsuit.

Here’s an easy recipe for a lawsuit: A manager sees a resume and likes the candidate’s qualifications — but after meeting the applicant in person, immediately changes his mind.

That happened in one recent case.

An employee applied online for a job at a debt collection agency. She had eight years of relevant experience, and the hiring manager liked her qualifications enough to invite her in for an interview.

But once the candidate met the manager in person, she was immediately turned down for the job. Why? Apparently because she was blind.

According to the candidate, once the manager realized she was blind, he told her, “This isn’t going to work out,” and sent her on her way.

The woman tried to explain that she’d spent eight years doing similar work for eight years with the help of assistive technology for the blind, but again the manager told her she wouldn’t be considered for the job.

She took her complaints to the EEOC, which helped her sue. She won a $55,000 settlement.

This case highlights the need to train managers on disability discrimination while recruiting. Advances in technology have made it possible to accommodate more qualified employees than ever — and at a lower cost. According to a recent study by the Job Accommodation Network, 56% of accommodations cost nothing at all, while another 37% involve only a small, one-time cost ($600 on average).

As this case shows, failing to explore those options can create big legal problems — but that’s not all. As the EEOC’s lawyer in the case noted, the candidate had been successful performing similar work in the past, and company missed out on her skills and expertise.

Cite: EEOC v. Sentry Credit, Inc.

For starters, the median award for all employment-related claims in 2009 skyrocketed by 60% over 2008.The median amount last year was $326,640.

That scary stat comes from the latest survey by Jury Verdict Research. Here’s more from the survey:

• The claim where your company will most likely pay the most: retaliation. Judges and juries are especially tough when they perceive than a supervisor got tough with an employee who filed a complaint about discrimination or other unfair treatment.
• The claim your business will pay the most for if it goes to a jury: age or disability discrimination.
• The claim your company is most likely to get hit with: sex or race discrimination. They remain the most common.

The new year is a great time to review your policies with all supervisors to ensure everyone understands what’s OK and what’s not in terms of managing people.

Some of the most expensive discrimination cases against employers in the last year resulted from managers who said the wrong thing at the wrong time — remarks that carried more weight than even the best documentation.

Good documentation is always crucial. But two cases in particular underscore the idea that managers need to be aware that what they say really does matter — and could become part of damaging testimony in court.

Case: Marcus et al. v. PQ Corp.

Total damages paid by employer: $6.2 million

The details: Two employees, ages 61 and 57, got laid off by a Pennsylvania chemical manufacturer. The two dragged the employer into court and charged they’d been targeted because of their age.

The company’s case had a solid foundation. Funding for the two positions had been eliminated, and so there was a strict financial reason — and no discriminatory basis — for the layoff. The ex-employees argued that the company had manipulated salary budgets so that the older employees would be the first to go.

It looked like a stalemate — which is generally good for a defendant employer — until the the court heard testimony that one manager remarked that the company needed “to get rid of some of these old farts.” And another manager had told the two laid-off employees that company needed more  “young blood.”

Those remarks ended up being the tipping point in a ruling for the employees — that the company had “willfully” discriminated.

Case: Blount v. Stroud

Total damages paid by employer: $3.3 million

The details: During an investigation of workplace discrimination, an African-American female employee who had no involvement in the case stepped forward to present her observation as a witness to the alleged discrimination. After that case was settled, the woman who spoke up was fired.

She charged her firing was part of a pattern of discrimination and retaliation by the employer. The employer pointed to documented, less-than-stellar performance and behavior by the employee as the basis for letting her go. Normally, such documentation is a game-saver for an employer.

And it might have been for this employer, until the fired employee pointed to remarks by her managers after she spoke up during the investigation of the other case. Examples: One manager told the woman, “You don’t know what you’re up against.” Another said the company could “cause you not to exist.”

Hearing those remarks, the court ignored the documentation and found in favor of the fired employee.

No one’s suggesting that HR managers wake up every day saying, “I think I’ll refuse to hire someone today because of his name.” If there is a problem, it’s a lot more subtle and subconscious than that.

Consider: One Web site, BehindTheName.com, asked people their reactions to the names “John” and “Juan.” A large majority thought someone named John was “wholesome” while someone named Juan was “strange.” Remember, this was a site-unseen question, without meeting the person.

Then there’s the famous study by MIT and the University of Chicago. Researchers sent out 5,000 fake resumes, and it turned out that resumes with names such as Tyrone and Tamika were less likely to get calls from HR managers than did their Anglo-sounding counterparts — even when the  qualifications were almost identical.

Warning: If managers in your company encourage you to seek out applicants with “American-sounding” names because “that’s what customers want,” don’t do it. Several court cases have involved discrimination suits against companies that used customer preference as a reason for refusing to hire employees with foreign-sounding or common African-American names. In almost all the cases, the employers lost. The courts’ reasoning: An employer cannot adopt a customer’s bias as an excuse for discrimination.

Consider the details of the federal appeals court case, Halpert v. Manhattan Apartments, Inc.:

Plaintiff Michael Halpert interviewed with Robert Brooks for a position to show rental apartments. Brooks was an independent contractor, not an employee, of realtor Manhattan Apartments, Inc. Halpert alleged he was told by Brooks that he was “too old” for the position. Halpert then sued Manhattan Apartments — not the independent contractor Brooks — for age discrimination.

In an earlier decision, Robinson v. Overseas Military Sales Corp., a court ruled that such claims don’t apply to employers who hire independent contractors.

But the appeals court in the Halpert case said, in effect, “We’re changing the rules.”

To quote the writings of the court: “[Manhattan Apartments] can potentially be held liable for discrimination by an independent contractor (Brooks) who acts for the employer … The prohibition [on discrimination] applies regardless of whether an employer uses its employees to interview applicants for open positions, or whether it uses intermediaries, such as independent contractors, to fill that role.”

That’s legalese for: If the contractor is acting on your behalf, and the contractor discriminates, you’re on the hook.

The take-away: Be careful about the duties that you hand over to an IC, especially responsibilities for hiring and firing. If the IC blunders and violates anti-discrimination statutes, the victim could come your company’s wallet.

In a recent opinion letter, the EEOC tried to clear up some confusion over the wording of help wanted ads.

The question: Does including a phrase such as “women and minorities encouraged to apply” break the law?

The answer: No, according to the EEOC.

Encouraging certain groups to apply doesn’t mean you’re biased against or in favor of any type of person.

However, the letter points out that some companies make the mistake of using similar — but discriminatory — phrasing. For example: “We are seeking women … ”

“Seeking” implies a preference for that group. Therefore, a court would likely consider it to be illegal bias.

Read the entire Opinion Letter here.

When IT finds someone’s been browsing offensive Web sites on a work computer, you’d normally fire the employee. But what happens when it’s a computer several employees share?

That’s what happened in this recent case:

All employees in one department of a hospital shared a computer. Employees each had their own username and password, and company policy required them to log in under their own name and log out when they were finished.

But in practice, the first employee to use the computer would normally stay logged in all day, with all employees working under that name.

During one shift, an employee noticed pornographic sites in the computer’s Web browsing history. She complained to HR, who brought the matter to IT for an investigation.

It turned out that the only male employee in the department was logged in to the computer at the time the porn sites were visited. He denied going to the sites, citing the common practice of all employees sharing one login ID.

A further investigation showed the man was the only department employee scheduled to work on a day when some some of the sites were browsed. He was fired.

Still, he said he didn’t do it — and he sued the hospital for gender discrimination, claiming they assumed he viewed the pornography because he was the only male employee.

The company asked a judge to toss the case, arguing it conducted a thorough investigation before the employee was fired.

The court agreed. First, since the man was logged in to the computer at the time, it was reasonable to start the investigation with him. And the list of possible perpetrators was narrowed down even further by comparing employees’ schedules with the times the sites were accessed, giving the company good cause to fire the employee.

Lesson: When multiple employees share one computer, it’s smart to create a policy requiring individuals to log in and out. But to track activity, the company still has to enforce the policy. If the hospital had done that in this case, it may have avoided the lawsuit altogether.

Cite: Farr v. St. Francis Hospital and Health Centers

The scene:

Warren Bridges looked at the copies of the e-mails handed to him by HR manager Susanna Diaz. “Yes, I wrote both of those,” he said. “So what?”

Susanna looked over her copies as she replied: “Well, you sent them to Lori a couple of weeks before you fired her. The first one says her performance is a problem ‘and could result in your termination.’ The second one thanks her for her service and says you had to let her go ‘as part of a companywide reduction in force.’”

“Right,” Warren nodded. “I was trying to let Lori down easy and say she got caught in a RIF.”

“Here’s the problem,” Susanna explained. “You replaced her with a man.”

“And …” Warren said.

“You gave her conflicting reasons for letting her go — poor performance and a RIF,” she said. “First, we never had a RIF. Second, with all the confusion about the real reason for firing her, you replace her with a man. That looks fishy.

Warren sighed. “I still don’t see the big deal.”

But Lori did. She sued the company for sex discrimination, saying there was no clear reason for the firing, and Warren — a man — replaced her with another man. The company said Warren was just trying to go easy on her, and the hiring of a male replacement was a coincidence.

Did the company win?

The judgment
No the company lost.

Even though the supervisor had good documentation backing his performance-based reasons for the firing, the judge still ruled in favor of the employee.

The judge’s reason: You can have good documentation, but that doesn’t mean there are grounds for throwing out other evidence that might show mixed reasons or bias.

In this case, the conflicting e-mails and the hiring of a male replacement were enough to overshadow the performance documentation. A lack of consistency in documentation and actions always calls into question the motives of the supervisor and the company, the judge said.

Ruling: Employee wins because of the doubt behind the company’s decision.

When there’s a charge of bias, conflicting information from the supervisor tends to set off alarm bells — and questions — in a judge’s mind:
• Why would they say one thing and then another?
• Were they trying to cover up something?

Combine those with the outward appearance of discrimination – a male supervisor replacing a female with a male – and you have the ingredients for a company loss in the courtroom.

[Based on: Parks v. Lebhar-Friedman, Inc.]