United States: Recent Court Decisions Emphasize The Importance of Putting All Employment Policies in Writing And Properly Training Employees on Their Application

Employers frequently adopt exhaustive written personnel policies that govern relationships with current employees because they know that a written policy can be an effective tool for defending against lawsuits alleging discriminatory or other wrongful termination. Recent decisions from the U.S. Supreme Court and a federal court of appeals suggest that policies governing hiring and application screening practices might be just as effective in defending against claims of wrongful refusal to hire - but only if the policies are written and uniformly applied.

In Hernandez v. Hughes Missile Systems Company, an employee repeatedly violated his employer's written drug and alcohol policies, which resulted in termination of his employment. After his discharge, the employee voluntarily participated in drug and alcohol rehabilitation programs and, several years after his termination, reapplied for employment with his former employer ("the Company"). Along with his application, the employee submitted supportive letters from his pastor and his Alcoholics Anonymous sponsor/counselor.

The Company had an unwritten policy barring the rehire of employees who were terminated for violating company rules. When the Company realized that the employee had been previously terminated for violating workplace conduct rules, it rejected his application based on the unwritten no rehire policy.

The employee filed an EEOC charge and eventually a lawsuit alleging that the Company violated the Americans with Disabilities Act ("ADA") by refusing to rehire him because of his record of substance abuse. Unfortunately, the Company's EEOC position statement did not specifically reference or rely on the unwritten policy barring rehire of employees who were terminated for violating company rules. Rather, the position statement focused on the employee's status as a drug user at the time of his discharge and the supposed lack of evidence that the employee had completed a rehabilitation program.

During the lawsuit, the Company moved for summary judgment on the grounds that its no rehire policy established a non-discriminatory reason for refusing to hire the plaintiff. The Company also produced evidence that the person who rejected the plaintiff's application was unaware that the work rule violation that resulted in the plaintiff's earlier discharge was related to substance abuse. Therefore, according to the Company, the rejection of the plaintiff's application could not have been motivated by plaintiff's former substance abuse.

Both the Supreme Court and the circuit court of appeals acknowledged that a uniformly applied policy prohibiting the rehire of employees who were discharged for violating company rules could constitute a legitimate reason for refusing to rehire an employee, which would place the burden on the employee of proving that an employer's stated reliance on the policy was a pretext for discrimination. Unless an employee could produce evidence of pretext, the employer would be entitled to summary judgment.

In the Hernandez case, the court found abundant evidence to establish pretext, including evidence that the no rehire policy was not in writing, was not formally communicated by the Company to its employees, and none of the Company's witnesses could describe the origin or scope of the policy. The court ruled that, based on this evidence, a jury could determine that the policy "either did not exist or was not consistently applied." According to the court, the jury also could have determined that the Company's clear and specific written drug use policies, which, in some respects, were favorable to the plaintiff's position, governed the present dispute, rather than the questionable unwritten policy. Finally, the absence of any reference to the unwritten policy in the Company's EEOC position statement, combined with the Company's assertion in its position statement that the plaintiff's former drug use was the reason he was not hired, suggested that the reason relied upon in court for not hiring the plaintiff (i.e., the unwritten no rehire policy) was pretextual.

Employers can learn several lessons from the Hernandez litigation. First, hiring policies can be an effective tool in the defense of lawsuits alleging wrongful refusal to hire. Second, if an employer has a hiring practice, such as not hiring former employees who were discharged for misconduct, the practice should be expressly stated in a written policy, the policy should be uniformly applied and well publicized, and employees with hiring authority or responsibility for screening applications should be trained on application of the policy. Third, employers faced with an EEOC or similar charge of discrimination should be extremely careful when investigating the charge and putting together a written response describing the reasons an employee was not hired (or was subjected to another adverse action). Inconsistencies between reasons stated prior to litigation for an adverse action and those stated during litigation typically will be treated as evidence of pretext and grounds for denying an employer's motion for summary judgment. Furthermore, as in the Hernandez case, an inadequate investigation and poorly worded position statement could effectively eliminate a strong defense to a discrimination claim. Consequently, an employer could be exposed to a lengthy jury trial with an uncertain outcome as opposed to being dismissed early and relatively inexpensively through a dispositive motion.