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SAN FRANCISCO-Two recent court victories by employees who were fired underscore the need for employer consistency in practice and policy when terminating employees.

A panel of the 9th U.S. Circuit Court of Appeals in San Francisco concluded in RadLee F. Payne vs. Norwest Corp. that because the company had given several different reasons for an employee's dismissal, the case was not subject to summary judgment and should be considered by a jury. The May 15 decision is not being appealed, and the case is scheduled for trial in February.

In a second case, the California Court of Appeals in San Francisco ruled in a 2-1 decision in John Guz vs. Bechtel National Inc. that it was improper for a lower court to grant summary judgment in Bechtel's favor, because the company may not have followed its own personnel policies. Bechtel is asking the California Supreme Court to review the May 9 decision.

In the Norwest case, Mr. Payne, a 44-year old white male who said he was disabled, was fired as a collection manager by Norwest in 1994, several days after he had filed complaints of race, gender, age and disability discrimination with the Montana Human Rights Commission.

At first, Norwest said it had discharged him for taping a voice mail message not intended for him, according to the decision. A week later, he was told he was fired for insubordination, and another eight days after that, he was told he was fired for violating the company's ethics code. Mr. Payne contended the real reason for his firing was in retaliation for his bias complaints.

"Norwest responds that all of the stated reasons for Payne's termination were forms of insubordination," the 9th Circuit decision states in overturning the lower court and ruling this issue was not subject to summary judgment in Norwest's favor. "Yet these are still different reasons stated at different times. . . .one who tells the truth need not recite different versions of the supposedly same events."

Although Norwest's "shifting explanations" may be acceptable when viewed in context, says the decision, "such weighing of the evidence is for a jury, not a judge." The appellate court, however, did agree with the lower court's summary judgment dismissal of discrimination claims that Mr. Payne also had brought within the suit.

"Obviously the appellate court believed that the reasons (for the dismissal) varied, and logically a jury could and may well find that the various reasons were a pretext and. . .there was retaliation by the corporation," said Mr. Payne's attorney, David A. Veeder of Billings, Mont.-based Veeder Law Firm.

Raymond Wheeler, an employer attorney with Morrison & Foerster in Palo Alto, Calif., took issue with the court's decision: "In this case, the court seized upon the way in which an employer labeled the underlying conduct-the different words the employer used-and tried to say the employer was giving inconsistent reasons, when all the employer was doing was describing the same conduct in different ways.

"To say employers have to be absolutely precise in their terms at every point when they talk about why someone is being terminated is completely unrealistic.

"It's quite clear that employees get terminated based upon an accumulation of events that occur, and to require that those events always be described in the same way or else you don't get summary judgment if the case is brought, I think, is expecting the impossible." Mr. Wheeler added, "I don't think it's a realistic decision, and it's particularly disappointing because there doesn't appear to be any dispute about what happened here."

Norwest had no comment on the ruling.

Larry J. Shapiro, an attorney and publisher of the Tiburon, Calif.-based newsletter California Employer Advisor, said, "This case seems to suggest that if you come up with explanations (for a dismissal) later, you might potentially have a problem."

This case exemplifies the necessity "of trying to be organized when you're making the termination decision, and gathering all the facts, your explanations and your reasons, and putting together your plan of what it is you're going to do and why you're doing it," said Mr. Shapiro.

Furthermore, said Mr. Shapiro, employers must be "extremely cautious" in firing an employee after that person has filed a complaint, because at that point everything an employer does is "subject to close scrutiny."

Whether it is someone filing a discrimination complaint, as in this case, or of someone complaining about the company's business practices, "you can end up in hot water by taking action instantly without carefully thinking it through," Mr. Shapiro said. "Juries are receptive to retaliation claims when they think you are wrong and you are trying to punish the employee for exercising their right."

Employers should be honest and consistent in stating the reasons for an employee's dismissal, agreed Andrew Kaplan, an attorney with Silver & Freedman in Los Angeles, who represents employers.

"Many employers attempt to hide the reason for a variety of causes, be it they're afraid to truly state the reasons for fear of angering the employee, or because they fear they can't prove beyond a reasonable doubt the employee's offense," said Mr. Kaplan.

"Many employers will tell an employee that business is slow, rather than face the difficult task of sitting across from an employee and saying, 'You know, you didn't do a very good job.'*"

Problems with failing to be candid and honest emerge when there is litigation, and an employer's conflicting accounts undermine credibility, said Mr. Kaplan.

The Bechtel case involved a different type of termination. John Guz, 49, was fired in 1993 after his department's reorganization. He had been with the company 22 years and received six major promotions, 17 merit raises and a company award.

Discussing whether or not Mr. Guz could be let go "at will," or without cause, the court said Mr. Guz relied on Bechtel personnel policies, including its "Policy 1101," which sets forth a "progressive discipline policy" that provides that unsatisfactory employees are given notice and an opportunity to correct deficiencies before termination. In addition, "Bechtel gives preference to long-term employees during layoffs," says the decision.

Bechtel contended Mr. Guz was an at-will employee.

"In our view, the evidence of long-term employment, consistent promotions, salary increases and recognition for outstanding work, coupled with the personnel policies of Bechtel were sufficient. . .to create a triable issue as (to) whether Guz was an at-will employee," the court said, in overturning the lower court's summary judgment dismissal of the case.

The lower court also was wrong in granting Bechtel summary judgment on Mr. Guz' charge of age discrimination, says the court.

"Whether Guz will be ultimately successful requires clairvoyance. What we are able to clearly see is that Guz is entitled to his day in court," says the decision.

However, Janet Bentley, an attorney with Thelen, Marrin Johnson & Bridges in San Francisco and who represented Bechtel in the litigation, said the progressive discipline policy "had nothing to do with the reason Guz was terminated." Mr. Guz was let go because of a reduction in workforce and the policy was inapplicable, she said. "There's no question he was a good employee. No one ever said he wasn't,"she said.

In addition, pointing to the age discrimination issue, Ms. Bentley said the decision "did not even note that Guz' work was taken over by an older employee" but simply said the issue was not subject to summary judgment. Ms. Bentley also disputed the decision's statement that Bechtel gives preference to long-term employees during layoffs. The decision is "simply wrong on the law," she said.

Ms. Bentley, who noted the dissenting opinion in the case was written by the presiding judge, said she is optimistic the California Supreme Court will grant review of the decision and reverse it.

"If you really take this case at face value, no claim by a long-term employee can ever be subject to summary judgment on the question of whether they are at-will," said Mr. Wheeler, who notes the assumption under California law is that employees are at-will.

"It seems to me the only way an employer can really get around this problem if this remains the law is either to eliminate any progressive discipline policy, which I don't think employers will do" or enter into agreements with employees that "make clear they're at will." Drafting those agreements increases employers' paperwork burden, Mr. Wheeler pointed out.

Mr. Wheeler said he would be reluctant to see the elimination of progressive discipline polices. "I think that employers have a desire to treat their employees fairly," he said. In addition, "there are other laws out there to worry about," such as discrimination laws that make it important to document personnel problems, which is accomplished under progressive discipline policies.

However, Mr. Shapiro said Bechtel's "biggest mistake was having a progressive discipline policy."

"We generally recommend people not have progressive discipline policies at all," he said. "Most employers have at-will policies and as they revise their handbooks and manuals are getting rid of progressive discipline polices" in response to the recent explosion in employment litigation.

While progressive policies do suggest more of a humane, nurturing environment, said Mr. Shapiro, "the legal reality today is such employers can't afford" to have these policies in place.

"If employers want an 'at-will' policy, it's pretty easy under California law to have one, but they have to be consistent, they have to be up front with their employees," said Mr. Guz' attorney, Stephen Murphy of San Francisco-based Bianco & Murphy.

"Many want to play both sides," said Mr. Murphy. To maintain morale, they want to tell their employees they will keep their job as long as they do a good job, "but when they get involved with litigation, they want to say they can terminate without cause."

RadLee F. Payne, plaintiff-appellant vs. Norwest Corp., a Delaware corporation; Norwest Bank Billings, N.A., a Montana corporation; Norwest Bank Great Falls, a Montana corporation, defendants-appellees, 9th U.S. Circuit Court of Appeals, No. 95-36252 D.C. No. CV-95-00035-JTS.

John Guz, plaintiff and appellant, vs. Bechtel National Inc., et al., defendants and respondents. No. A072984, California Court of Appeal, First Appellate District, Division Four.