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Do you know where your biggest insurance liability is?
April 24, 2008 - From OSBA's Spring 2008 Critical
Issues Newsletter - Fires, floods and earthquakes grab the biggest headlines, but the high cost of employment claims can be a much bigger disaster for school boards.
Like the song says, breaking up is hard to do. In the past 10 years, SDAO/PACE claims for hiring and retention practices topped the list of claim types for expense ($2,287,666), although it was in seventh place by occurrence.
Letting employees go without careful consideration can prompt litigation that takes years and thousands of dollars in attorney fees to resolve. Even when the public entity wins, astounding legal-defense and staff expenses can burn an unforgettably negative image into the memories of public servants.
Geoff Sinclair, SDAO/PACE claims manager, says the cost of employment claims litigation skyrockets because of attorney-fee provisions that in turn lead to higher insurance premiums for everyone.
"Employment claim costs are sometimes based more on the economics of the attorney's fees and less on the facts associated with the case," Sinclair said. "If we lose a portion of these cases, which are usually heard in federal court, the judge can order us to pay the plaintiff's attorney on top of any award given by the jury. That can translate to hundreds of thousands of dollars in fees, even if a jury awards a mere $1,000 to the plaintiff."
While board members should avoid micro-managing the hiring and firing processes in their districts, education service districts and colleges, they must understand - and instill - appropriate employment policies. Those well-documented employment policies are invaluable when employment claims arise.
"Administrators are often named in cases as defendants, so they need to be well-informed," said OSBA Leadership Services associate director Betsy Miller-Jones. She suggests board members be fully informed and supportive of district policies but, beyond that, be cautious about any involvement in specifics regarding employment issues because board members need to be unbiased if and when an employment appeal or grievance comes to the board.
"You'll want superintendents and college presidents to inform you about all HR practices, including hiring, training and evaluation," she said, "but remember that this is in general, not in specific cases."
"The process starts with setting a good example at the top - with how you evaluate your top executive," Miller-Jones said. OSBA offers specialized evaluation expertise to help boards and executives start and maintain "healthy marriages" among boards and top executives.
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When you're stuck in a bad marriage
So how do you dismiss an employee whose performance is unsatisfactory? Sinclair offered two pieces of advice that may initially sound contradictory.
First: Don't wait too long to get outside assistance.
"People are often at their wit's end when they call us," he said. "Don't wait until the situation has spun out of control."
Second: "Slow down!"
Although quick action may seem justified, Sinclair advises districts to wait, build documents and follow the process. "The more you do in advance to build your case," he said, "the quicker you'll resolve the case. Districts should create and follow a plan of assistance that focuses on helping employees succeed. Follow the HR manual, make performance reviews consistent and standardized, and get signatures whenever needed. Give employees every possible opportunity to succeed."
Then, if an employee does not succeed, you'll have the documentation you need to dismiss him or her without fearing a lawsuit.
An angry employee may still take legal action, but you'll know you've done everything possible to shorten the lifespan.
Why dismissal for poor performance causes lawsuits
Sometimes, even bad employees get good reviews or no reviews at all, Sinclair said. "Then, when an employee receives a bad review and the district tries to dismiss him or her, the employee can try to tie that bad review to retaliation. An employee may claim that because of (fill in the blank), you retaliated against him or her. And the blank may be filled by `I filed a Bureau of Labor and Industries complaint' or something similar. A claim of retaliation can make the employee's case."
Retaliation claims, in which employees charge that their rights have been violated, frequently end up in federal court. Like discrimination cases, retaliation cases can be costly. Plaintiffs who win their cases often are awarded all attorney fees. As Sinclair says, "Attorneys own these cases."
PACE offers "pre-loss" services to help districts guard against expensive employment litigation and guide them through the tough legal issues and decisions that come with those cases.
When difficult employment issues arise, members with PACE property/casualty insurance can contact a PACE attorney and receive up to $1,000 worth of free legal consultation. PACE attorneys can help with termination, employee misconduct, retaliation or other employment issues.