Are YOU the NEXT Employer on the chopping block?

The case: Juarez vs. AutoZone

The allegation: Juarez, a female employee claims she was discriminated against by her former employer (AutoZone) based on gender.  She claims she was demoted and ultimately fired when AutoZone discovered she was pregnant.

Jury finding: $800,000 in compensatory damage and $185 million in punitive damages.

Result:  The Plaintiff is now one of the wealthiest people in the country based on a lawsuit against an employer.

Rachel M. Janutis, a punitive damages expert at Capital University Law School in Ohio, said,

“The circumstances in the AutoZone case don’t seem to be the type of circumstances that the Supreme Court recognized would justify a larger punitive award.”  

(Translation: WTF?  How could the jury award so much money based on the facts of the case?)

Over a decade ago, the United States Supreme Court said that in general, the ratio between compensatory and punitive damages should not exceed 9-1.

It seems as if juries are now in the business of doing unpredictable things “to teach a company a lesson,” or make a statement based on political correctness, without regard for the unintentional consequences of putting a company with other employees out of business.  

Looking at Rosario Juarez vs. Auto Zone

The details of the case include allegations from Juarez that:

• After her promotion to a parts sales manager position she “hit a glass ceiling.” She was making a statement about her gender limiting her career opportunities.
• When she told her manager in 2005 that she was pregnant, he said he “felt sorry for her” and began to treat her mean.
• To support her claim of being a great manager she told the court that despite meeting or beating sales goals by her team, her manager yelled at her about poor performance publicly.
• Upon returning to work in 2006 following the birth of her child she says she was demoted and sued the company for sexual discrimination. Two years later, she was fired by the company.

AutoZone did fire her, but during the trial said the reason for the termination was justified as $400 in cash went missing from the register during her shift as store manager. Regarding her demotion, AutoZone said that occurred because of a poor performance review and ongoing displays of managerial disloyalty.

With its outrageous verdict, the jury (of whom one member was dismissed after having been seen hugging Juarez in court) deemed the termination as nothing other than retaliation for her complaints.

In March of 2015, AutoZone challenged the November 2014 verdict and at the end of the 31/2-hour hearing, the judge noted the both sides will engage in a hostile battle at the appellate level despite his rulings and suggested that the two sides sit down and negotiate a settlement.

In July 2015, a settlement was reached between the parties for likely much less than the jury award but still in the multiple millions of dollars.  This is just speculation as the agreement details will likely remain secret forever.

Verdicts Are Scary and Can Ruin a Business

Executives all over the United States have grown accustomed to “wrongful” termination suits as they seem to almost always follow on the heels of an employment decision (such as termination) an employee disagrees with.

Some companies simply offer a small settlement that an employee often takes – so much for the dignity and offense of a wrongfully fired worker.

Juries do make outrageous awards resulting in outrageous consequences. Had the $186 million judgment against AutoZone not been lowered through settlement or appeal, the company would have likely filed for bankruptcy causing employee layoffs behind store closures.

THE SYSTEM IS BROKEN:  The lawyer and the plaintiff get rich, many other people lose their jobs or their businesses.

Protect Yourself and Your Company

Lawsuits like the one involving AutoZone are not uncommon, and California is one of the most litigious states for discrimination lawsuits against employers. Big and small, all are vulnerable.

Every year, thousands of employment discrimination cases are filed in California and if the jury finds that a company has discriminated, they often award extraordinary high punitive damages.

The following are tips to help keep you and your small or medium-sized business out of trouble:

Tip 1: Find an Experienced Employment Lawyer That Represents Employers Only

Have an attorney experienced in employment law review your employee handbook and other employment-related policies and procedures.  The laws change regularly and if you are not at least reviewing your procedures annually, you are likely out of compliance. Their are lawyers who specialize and focus on one part of law so you want to find someone who only helps employers. 

Tip 2: Document Everything to do with Every Employee’s Employment

This tip is for documenting employee counseling and disciplinary measures for every meeting you or your HR department has concerning employee job performance and related issues.

Some companies prefer that there be two management people present as two people with supporting documents testifying on behalf of an employer tend to be more credible.

Tip 3: Never Over-evaluate Employee Employment Reviews

Honesty and consistency are what your personnel expect and that is what they deserve. Over-praising or exaggerating an employee’s work performance can hurt you if later your company decides to terminate him or her.

Tip 4: Take Employee Complaints Seriously

When an employee complains about an employment practice that he or she thinks is unfair or related to what may be deemed illegal actions, make sure you investigate and get back to him or her.

Not doing so can lead to an employee lawsuit and the risk of losing lots of money.

Tip 5: Document the Reason for Not Hiring an Applicant

Sometimes, employers are sued for discrimination by a non-employee. This is usually a person who applied for a job and was not hired. If you document the reason for not hiring, such as no college degree, or no experience, you help in defending your decision.

Just remember, it is illegal to refuse employment to anyone based on reasons that are protected such as,

• Race;
• Religion;
• Children;
• Political affiliation; and
• Health status.