Litigious Employee Sues Same Employer Five Times
November, 2008
Introduction
Here’s an employer’s nightmare: an employee sued her employer 5 times! More accurately; therefore, this is about 5 nightmares. Faulty reference check procedures caused the fourth and fifth nightmares. We have seven practice tips to chase the bad dreams away.
Facts
Based upon the following facts, Bernadine Matthews, a former Wisconsin Energy employee, suspected of “gaming the system,” nevertheless was permitted by the Seventh Circuit to proceed to trial.
In 1996, a disgruntled customer attacked Matthews; after the attack, Matthews went on a leave of absence. During the leave, Matthews sued Wisconsin Energy three times – first, as a customer of the company as part of a customer class action; second, in a claim that her pension was shorted; and in a third lawsuit, for alleged discrimination. Matthews’ three lawsuits were all settled in a separation agreement in 1999; she never returned to Wisconsin Energy. Fatefully, the separation agreement contained a “neutral” reference check provision. Ultimately, that provision revealed many flaws in Wisconsin Energy’s reference check policy.
Fourth Lawsuit: As stated, and typical of many separation agreements, the agreement here required Wisconsin Energy to provide a “neutral” job reference. After the separation agreement was signed, Matthews sued Wisconsin Energy for a fourth time, claiming that it had breached the separation agreement when Wisconsin denied that Matthews worked there. Wisconsin Energy’s error was caused by a glitch in its personnel database which occurred after a merger. This fourth lawsuit was settled and, yet another settlement agreement was executed in December of 2003.
Fifth Lawsuit: Not surprisingly, Matthews again sued Wisconsin Energy, this time claiming that it breached the terms of the new settlement agreement by providing negative references. In one of the alleged negative references, Wisconsin Energy received a “reference” request from a consultant who allegedly had been hired by Matthews to help her find a job. (The Seventh Circuit questioned whether the “consultant” actually had been hired to assist in job hunting or just to test Wisconsin Energy’s response to a reference check.)
On summary judgment, the district court ruled in favor of Wisconsin Energy and awarded Wisconsin Energy over $173,000 in attorneys’ fees.
Unfortunately for Wisconsin Energy, the Seventh Circuit reversed on the issue of whether Wisconsin Energy had breached the settlement agreement and vacated the attorneys’ fees award. The Court also remanded the case to the district court, where it is pending currently.
Ask yourself
Q. Does your company currently observe all of the following practice tips?
If so, great! If not, the company could fall victim to the second coming of Matthews. Below are some helpful suggestions.
What an Employer Could Do Better
(i) Make sure that employees are aware of your company’s policy on reference checks and that only proper information is given. (ii) Require that all reference calls be directed to a specific person who is provided a written statement to use when responding. (iii) Consider verifying calls before responding if the former employee is litigious. Keep a log of all calls. (iv) If part of a settlement agreement, consider a provision that requires all requests and responses be in writing. No responses should be permitted to verbal inquiries. (v) Avoid agreeing to pay the employee’s attorneys fees for bad references. (vi) Do not use the term “reference checks”. Do use “from actual potential employers.” (vii) Does the language in your company application forms about providing reference checks follow these practice tips?
In a Nutshell, Practice Tips for Reference Checks:
- Do All Employees Know the Company’s Policy?
- Appoint One Person to Respond.
- Verify Calls Before Responding.
- Keep a Log of All Reference Calls.
- Require Written Requests and Responses.
- Avoid an Employee Attorney’s Fee Provision.
- Avoid Term “Reference Checks.”
- Use the Term “Inquiry from Potential Employee.”
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