In January 2004, Solutions asked Christian Johnston, then Adventist Risk Management Inc. Claims Manager, to address the challenge of minimizing the risk of employment practices liability. Chris now serves as Associate General Counsel at Loma Linda University Health. Solutions has contacted Chris to share his thoughts on how these factors have changed since this article first appeared in the pages of Solutions eleven years ago.January 2004—As long as the Seventh-day Adventist Church requires personnel to carry out its mission, it will face liability exposure for its employment practices.
Increasingly, courts are applying the same standards of the employment relationship to volunteers. In this article, we will explore solutions for church entities to implement when striving to minimize their liability exposure in the employment context, with the caveat that these same solutions should be considered in the volunteer context as well.
Generally, employers bear responsibility for their own negligence, as well as the negligent acts of their employees that occur within the course and scope of employment through the legal doctrine of respondent superior. In escalating numbers, however, plaintiffs are asserting claims against employers for the intentional misconduct of employees that occurs outside the scope of the employees' duties. For example, churches are being sued for the sexual abuse committed by their clergy, even though such acts are clearly beyond the scope of employment.
Because these acts are outside the scope of employment (that is, pastors are not hired to molest children), plaintiffs must assert that the employer's direct negligence was a factor in the intentional misconduct. Specifically, these causes of action are styled as negligent hiring, retention, supervision and training claims. Additionally, church entities continue to face liability exposure whenever it becomes necessary to terminate an employment relationship.
NEGLIGENT HIRINGNegligent hiring claims present the preeminent pre-employment liability exposure for employers. Specifically, according to the Restatement (Second) Agency, section 213, comment [d] (1958), "[i]f a principal , without executing due care in selection employs a vicious person to do an act that necessarily brings him in contact with others while in the performance of a duty, he is subject to liability for harm caused by the vicious propensity." Plaintiffs necessarily argue that the employer knew or should have known of the vicious propensity of the employee and is, therefore, liable for any resulting injuries or damages. To combat such claims, employers should implement certain solutions to minimize their liability exposure for negligent hiring claims.
Prospective employees should be required to complete an employment application. A good application requires the applicant to list references and chronicle previous employment history. All verification of the application should be carefully documented by the employer, including attempts to contact references and prior employers, as well as the information received. Any gaps or discrepancies in the employment history should be explored in greater detail. For example, periods of incarceration will often show up as a gap on a resume or application. Effective use of the application process will ensure that all applicants are screened, checked and verified before they are hired.
The employment interview affords the employer an excellent opportunity to review any problem areas or uncertainties highlighted by the application. At this stage of the hiring process it is important for the employer to learn as much about the applicant as possible and follow up on any concerns.
3. Background Checks
An increasing number of employment applications require potential employees to authorize a full background check. These should be used only when the employer, in consultation with legal counsel, has developed a clear policy and practice regarding the scope of the pre-employment background check that is adhered to in all cases. Legal counsel is required because certain state and federal discrimination laws limit both the type of information that employers can permissibly gather, as well as what the employer can do with the information once it is learned. For example, Title VII prohibits employers from seeking an applicant's prior arrest record, and the Americans with Disabilities Act and certain state civil rights laws prohibit employers from discriminating against or refusing to hire a qualified applicant with a physical or mental disability.
NEGLIGENT RETENTION, SUPERVISION AND TRAININGOften, information comes to light throughout the course of employment that may put the employer on notice that the employee has certain "vicious propensities." If the employer fails to take appropriate corrective action following the discovery of this new information, the employer may subject itself to increased liability exposure for a negligent retention claim.
Appropriate corrective action might include additional investigation, discharge, or reassignment, where necessary, for the safety of other employees or third parties. Employers may also expose themselves to liability if they fail to adequately supervise and train employees. For these reasons, employers should consider the following solutions to minimize risks for negligent retention, supervision, and training claims.
1. Performance Evaluations
An employer 's duty to monitor the fitness of employees does not cease with the hiring process; the employer must affirmatively monitor the employee through periodic performance evaluations. Church policy mandates as much: "The effectiveness of all employees is to be reviewed periodically. Where employees are found to be ineffective, counsel should be given them and, if necessary, they should be given other lines of work or be advised to seek employment outside of the denomination" (NAD Working Policy D 60 10).
2. Investigation of Complaints
It is crucial that employers promptly investigate complaints regarding their employees. The investigation should be thorough, and corrective measures should be taken relative to the outcome of the investigation . Where the employer fails to adequately address disciplinary problems, exposure to claims of negligent retention and supervision are greatly increased.
The prudent employer not only develops policies to govern the workplace but also educates all employees about the policies. For example, every church employer should discuss its sexual harassment policy with employees for the policy to be effective and enforceable. See NAD Working Policy D 70. Further, seminars and training regarding the employer's policies as well as job-specific duties and skills aid in the defense of a negligent supervision or training claim.
WRONGFUL TERMINATIONAn unfortunate reality in any employment venue involves the need to terminate employees, which may be caused by a number of reasons, not limited solely to discipline. Contrary to popular opinion, termination is not wrongful merely because it is inconsiderate or unfair. The termination must be illegal in order to support a cause of action for wrongful termination.
Some of the most common wrongful termination claims assert that the termination was illegal because it was discriminatory, in retaliation for protected conduct, or in breach of a contract. In very general terms, employers cannot terminate an employee solely on the basis of gender, race, creed, disability and a variety of other discriminatory reasons as delineated in various state and federal statutes. Also, employers cannot rightfully terminate an employee for reporting the employer's illegal actions to the proper authorities (whistle-blowing); nor can employers terminate an employee in retaliation for refusing to commit an illegal act.
Finally, employers must abide by the terms of a contract for employment when terminating an employee if the employment relationship is governed by such a contract. It is worth noting that some states consider, in the absence of explicit contracts, employers' policy manuals, employee handbooks, employee agreements and similar documents as implied contracts of continued employment. Further, some jurisdictions also consider an employee's chain of promotions, raises, positive reviews and verbal assurances of job security as an implied contract.
As every human resources professional knows, even when everything is done "right" when terminating an employee, the employer may still face a lawsuit for wrongful termination. Still, there are certain solutions that can effectively minimize employers' liability exposure for wrongful termination claims and assist with the defense of such claims that are eventually pursued in court.
1. Implementation of Policy
Every employer should have a policy in place for terminating an employment relationship, and the policy must be followed. Of course, employers who ignore their own policies increase their liability exposure. These policies should be explained to all employees, and the employees should each acknowledge receipt of the policies. Additionally, legal counsel should be consulted prior to the termination.
Once an employer has reason to believe that an employee has violated a rule, policy, guideline, or procedure, the employer should immediately initiate an investigation. In instances where the suspected violation is particularly egregious, it is often advisable to place the employee on administrative leave pending the outcome of the investigation.
As with any area of employment, actions pertinent to the termination of an employment relationship must be carefully documented. The documentation must also be consistent. For example, an employee with continued substandard performance should not have fifteen years worth of positive performance evaluations. Also, documentation of progressive discipline should be maintained in all employees' personnel files, including verbal warnings or counseling sessions memorialized by a memorandum to the file. Where termination is the result of an investigation, the employee's personnel file should contain the fruits of the investigation.
CONCLUSIONUnfortunately, there is no bulletproof way to shield the church from liability exposure for employment practices claims. Nevertheless, careful planning and implementation of policies in the hiring, employment and termination phases of the employment relationship can significantly minimize the church's risks.
2015 UPDATE FROM THE AUTHORJuly 2015—Additional pitfalls that will entangle the unwary church administrator in employment practices liability relate to causes and documentation for termination. Often to their detriment, many administrators rely on perceived "easy outs" when making decisions regarding separation of employment. Two misperceived "easy outs" arise in the at-will employment context or in assuming that discrimination laws do not apply to religious employers.
In the at-will employment context, either the employer or the employee can terminate the employment relationship at any time, with or without notice and with or without cause. This leads some employers to terminate a troublesome employee "without cause" because no cause is required, and unfortunately, the employee file often does not reflect the reason for the termination.
The better course of action is to always include the reason for termination in the employee file, even if the cause of termination is not related to a performance issue, such as downsizing or outsourcing. In this way, in the event that the employee later asserts that the termination was for an unlawful reason (e.g. based on disability, race, gender, national origin, etc.), the employer will be in a much better position to defend the action based on the documentation in the employee file.
Some employers over-rely on exemptions to discrimination laws. It is presumptuous to assume that certain discrimination laws do not apply to church entities because of religious exemptions in the particular law. Although there may be an applicable exemption, the prudent church administrator should obtain legal advice before relying on such an exemption. Litigating a case through a lengthy appeal lasting a number of years to prove that the exemption applies to a specific situation may not be the best use of the organization's resources. Evaluation of the applicability of discrimination laws to a particular employee at a particular religious employer should be carefully reviewed with employment counsel prior to relying on any exemptions when making employment decisions.
Finally, although many employer discipline policies have moved away from requiring "progressive discipline" prior to termination, this does not excuse the employer's documentation responsibilities. Juries in wrongful termination cases expect to see appropriate documentation, regardless of the employer's policy. That is, even where "progressive discipline" is not required, "progressive documentation" is necessary.
This year, ARM celebrates 20 years of the weekly e-newsletter, Solutions, with the series Solutions Classic. Once a month we will publish a throwback piece from the Solutions archives and share the difference between risk management then and risk management now.