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Thinking of Terminating an Employee in Hawai‘i? Proceed with Caution!

On Behalf of | May 1, 2018 | Labor And Employment Law

  • Employers should expect the Hawai’i Supreme Court to put the decision under a microscope.
  • Employee’s “uncorroborated” and “self-serving” side of the story must be elicited and addressed before the decision is made.
  • Employer’s documented reasons for termination “should leave no room for controversy”.
  • Evidence of leaders making comments about discriminatory hiring should not exist.

Employer decisions under a microscope.  In recent years the Hawai’i Supreme Court has made clear that employers’ hiring decisions are subject to close scrutiny.  In a 2015 ruling the Hawai’i Supreme Court considered the decision of a company that claimed to have refused to hire an older applicant due to her lack of recent sales experience.  Because the company advertised that sales experiences was “preferred” (not required) and advertised that extensive training would be provided, the Hawai’i Supreme Court concluded the employer’s reason was illegitimate.  Adams v. CDM Media, USA, Inc. Also in 2015, the Hawai’i Supreme Court held that Hilo Medical Center, in refusing to hire a Radiologic Technician applicant with a conviction for possession with intent to distribute crystal methamphetamine, had failed to demonstrate the conviction was rationally related to the duties the position because it failed to show the job allowed access to controlled substances.  Shimose v. Haw. Health Sys. Corp.  In both of those cases, lower courts granted the employers’ motions for summary judgement on claims of discrimination – age discrimination in Adams and arrest and court record discrimination in Shimose.  Then the Hawai’i Intermediate Court of Appeals (“ICA”) affirmed summary judgment in both cases.  But when the decisions were further appealed the Hawai’i Supreme Court reversed, effectively saying, “No, the employer must do more.”

The trend continues and applies equally to termination decisions.  The Hawai’i Supreme Court’s April 24, 2018 opinion in Nozawa v. Operating Engineers Local Union No. 3 reversed a trial court decision to grant summary judgment after that decision was affirmed by the ICA.  Plaintiff Arley Nozawa claims she was terminated as a dispatcher in the Local 3 hiring hall because she was a woman.  She had worked in that position since 2006.  In February 2011 a new district representative started and two days later Local 3 terminated Nozawa by letter informing her the reason was “reorganization and restructuring”:

“I regret to inform you that due to a reorganization and restructuring of the Hawai’i district office operations, your employment with Operating Engineers Local Union No. 3 will be terminated as of February 3, 2011.”

Local 3 replaced Nozawa with a male employee.  In the ensuing lawsuit, Local 3 moved for summary judgment, submitting declarations claiming Nozawa was terminated because of performance problems.  Local 3 claimed that in 2010 Nozawa made a serious dispatching error by failing to restore an employee to his proper place on the out-of-work list per Local 3 job placement regulations.  Local 3 said that caused the member to file a complaint that Local 3 settled by agreeing to pay the employee $19,866.40 in lost wages and benefits and $5,500 in legal fees.  Local 3 said no other dispatcher had ever made such a mistake.  Local 3 said it was prepared to terminate Nozawa then, but Nozawa’s supervisor intervened and Local 3 gave her a Final Written Warning instead.  Local 3 also claimed Nozawa had made other errors before this incident and continued to make errors after.  Local 3 claimed that when it decided to reorganize, it decided to replace Nozawa with an experienced dispatcher with no history of work problems.  Nozawa claimed this was a pretextual or false reason.  Nozawa claimed she’d been falsely accused of making the error that resulted in her final warning and that her supervisor had stopped the termination because she had not made a mistake and he had not informed her of other performance problems.  The Hawai’i Supreme Court looked closely at these competing claims and concluded the employer had not done enough to demonstrate its reasons for the termination were the only explanation a reasonable factfinder could believe – the case will need to go to a jury.

Self-serving and uncorroborated employee statements.  Local 3 described Nozawa’s declaration as “uncorroborated” and “self-serving.”  The Hawai’i Supreme Court held that, even so, her declaration must be considered by the Court and if her assertions are based on her personal knowledge, they may prevent the Court from ruling the claim is barred as a matter of law and that the dispute must be resolved by a jury.  The takeaway for Hawai’i employers should be that failing to thoroughly explore, investigate and make reasoned conclusions about the employee’s version of events that lead to discipline, at the time of the discipline, can ultimately taint the employer’s ability to obtain summary judgment when that disciplinary incident is relied upon at summary judgment.  Also, even after a final warning, an employer intending to rely on further performance problems to terminate should bring those to the employee’s attention, get their response, conduct any additional investigation warranted and document the basis for concluding there have been further problems warranting taking the next step.

Leave no room for controversy.  Properly documenting employment decisions is all about creating the record that will allow a judge to say there is no room for a factual controversy that a jury must decide.  In Nozawa, the Hawai’i Supreme Court reiterated that this is a high bar for employers:

“[S]ummary judgment should not be granted unless the entire record shows a right to judgment with such clarity as to leave no room for controversy and establishes affirmatively that the adverse party cannot prevail under any circumstances.”

Any policies or expectations violated must have been clearly disclosed to the employee beforehand.  This means clear policy statements acknowledged by the employee, prior counseling or discipline and opportunities to correct in most instances.  The employee should have opportunities to document their response and should sign counseling or disciplinary documentation to confirm receipt.  Potential evidence or witnesses that might undermine the reasons for discipline or discharge must be explored and reasons why they do not support the employee explained if that is the case.  Performance based termination letters should summarize the current and prior incidents, corrective efforts, the inadequacy of any explanation by the employee and the harm of the employee’s actions.  Failing to give a reason or giving an alternative reason such as reorganization without documenting and explaining the selection was based on similarly established performance reasons or other non-discriminatory criteria will “leave room for controversy.”

Officers’ discriminatory comments.  Finally, the Nozawa case included a declaration by the Local 3 treasurer that he attended meetings in 2009 and 2010 at which Local 3 officers discussed replacing women dispatchers with men, and that the decisionmakers in Nozawa’s case were present.  Whether true or not, when that sort of evidence appears in the record an employer’s request for summary judgment is generally doomed.  The best protection is a workplace culture where such attitudes and comments are essentially unthinkable.  All levels of management should be trained that employment decisions should be based on the ability to perform the job and not on impermissible discrimination.  If an officer or manager hears a concern about discriminatory comments or discrimination, they need to understand the employer has an obligation to investigate and correct that if it exists.  This is especially true (and particularly difficult) when the discriminatory comments are coming from leadership.  If the employer is aware such evidence may taint an employment decision, the employer must take extra steps to isolate the decision from any expressions of bias.  This means employers must have reporting avenues employees are comfortable relying upon without fear of retaliation – so expressions of bias are brought to the attention of HR or others involved in reviewing decisions before they are acted upon and before the matter is in court.

This article was prepared by John S. Mackey

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