Why Consistent and Accurate Explanations for Firing are Crucial

A decision out of New York last week illustrates why employers should provide consistent and accurate explanations for their decisions.

Cornell University taught industrial and labor relations to working practitioners at various locations around New York State. One of the instructors was Margaret Leibowitz, who was hired on a contract basis. When the University refused to renew her contract, she sued for age and sex discrimination (and several other claims which I will ignore).

Ms. Leibowitz's job required her to travel from New York City to Ithaca regularly and the funds the University paid her for travel were a regular source of friction. The Dean described Leibowitz requests as "forceful," "demanding," and "pushy." (There was also some hint that male employees also regularly asked for increases in their travel expenses without having problems or being fired.) The Dean also asserted that Leibowitz had "burned bridges" and had "bad blood" with other University personnel, though there was some question about whether these personality conflicts were too old and whether similar conflicts with male employees had been overlooked.

So when it came down to whether to renew Leibowitz contract, the University decided it could not afford her. Ms. Leibowitz was not fired immediately but was told she would not be back after the end of the following school year.

Perhaps the University could have built a case for refusing to renew her contract because of the friction she seemed to generate, but instead, the University defended the non-renewal by saying that their budget couldn't afford her and her travel expense demans. Having made that decision, the University then refused to permit her to move into another position, going so far, the court said, as to fire a Director who made a "not valid" offer of employment to Ms. Leibowitz.

Several things sunk the University's decision. Overall, however, the University's fundamental problem seems to have been that it tried to shoe-horn what could and perhaps should have been a justifiable "termination" into a reduction-in-force mold.

First, while the University demonstrated that it non-renewed Leibowitz due to real "budgetary issues" the evidence also showed that the budget concerns significantly diminished during her final school year and that the University had funding to hire 12 new employees during this time. When I do talks about reductions in force, one of the first things I tell folks is to accurately and consistently explain the reason why a reduction is needed. (I also caution employers about hiring into positions that impacted employees could perform.) Of course, courts don't ordinarily question why a RIF is necessary but the court will examine evidence showing that the employer's actions were not really consistent with budgetary issues.

Second, unwise statements in an e-mail didn't help the University's case. Shortly before the University told Leibowitz it was not renewing her contract, she met with an associate dean about the travel expenses issue. After the meeting, the associate dean sent an e-mail which said "Other than my mention of budget problems, I did not offer any inklings of what is yet to come! Good luck on that one; will be a tough meeting, but will be a good investment." The problem was that the Dean maintained he was still evaluating whether the university could afford to retain Leibowitz. So, the e-mail, which was unwise to begin with, became concrete evidence of inconsistencies that the plaintiff could exploit in getting the appeals court to reverse summary judgment.

The final (major) problem was that while the University characterized its decision as a layoff, it then prevented Leibowitz from finding other work within the University system (at other satellite locations). Firing the director who made a "not valid" offer of a job to Leibowitz was pretty heavy handed, but it was not all that smart to justify refusing to transfer Leibowitz because of perceived personality conflicts that were arguably stale and did not seem to matter when male employees were transferred.

Of course, it is well settled that an employer has no duty to transfer an employee to another position in a reduction in force. But it is not smart for an employer to take action to prevent an impacted employee from obtaining another available position.

There was no real doubt that the University had real budget issues. Its problem was that it used those real budget issues to fire an employee it perceived as a problem rather than relying upon a methodical selection process that accurately evaluated which employees should be laid-off. In short, if an employee is truly a problem, deal with the problem. Don't seize upon "budget issues" as a shortcut to getting rid of a headache.