Connecticut Employment Law Blog : Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Returning from the ABA Meeting today, there were two stories over the last couple of days that have received some press. Taken together, they show the difficulties that companies and individuals have in predicting both the outcome of lawsuits and the costs of them.

First, the stories:

• The Financial Accounting Standards Board (FASB) is proposing new rules that would require companies to disclose the estimated cost of all continuing litigation.  Currently, companies only need to disclose estimated costs when they believe it's probable that they will lose the case.  On Tuesday, the WSJ reported several companies, including Connecticut-based Pfizer, told FASB that that estimating the costs of continuing litigation is “highly subjective, subject to huge swings as underlying assumptions change, and unlikely to provide financial statement users with meaningful or reliable information.”
   
• On Monday,the New York Times reported on a new study that showed that most Plaintiffs who reject settlement do worse at trial.  And while Defendants were wrong in just 24 percent of the cases, the cost of the decision was much more.  The ABA Journal has a brief recap:

The gamble of going to trial doesn’t pay off for most plaintiffs, according to a study of more than 2,000 civil suits from 2002 to 2005.

Sixty-one percent of plaintiffs who turned down settlement offers ended up faring worse at trial, according to a New York Times story on the study. The average settlement offer was $48,700 and the average award at trial was $43,000, a difference of $5,700.

Defendants were wrong in just 24 percent of the cases, but for them the cost of a bad gamble was must larger. The average plaintiff’s settlement demand in those cases was $770,900 and the average verdict was $1.9 million, a difference of more than $1.1 million.

The conclusion to draw from both these stories is that litigation is tough.  It's tough on plaintiffs and tough on defendants as well. Each side may have difficulty understanding the value of a case and have difficulty predicting what will happen. 

I'm sometimes asked at the very beginning of a case to present a "budget" and a estimated settlement value.  While it's not an impossible task, the fact is there are so many variables to a typical employment case. Will discovery be intensive? Will witnesses be cooperative? Will there be lots of motions filed? And is the Plaintiff a "rational" player? In other words, will the plaintiff actually take a reasonable settlement offer? Each of these factors play an important rule in predicting the outcome and determining the best settlement "value".

Quite simply: Employment litigation is unpredictable.  And for both employees and companies, settling a case on their own terms may be the best way to avoid uncertain costs and guarantee the best outcome.

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The concept of names is getting a great deal of press in Connecticut -- no doubt over the story of some Yale Law students who are naming names of individuals who allegedly posted comments about them on an internet board. 

Of course, you can always change your name (though not that easily), but typically the name you're born with, is the name your stuck with. 

And if you get confused with another person of the same name, well, that's life.

But a recent post by George's Employment Blawg asks the provocative question:

Is a hiring manager named “David” more likely to give an edge to a job candidate also named “David”?

Recent academic research suggests that the answer is “yes,” even for other names with similar sounds, like “Dan” or “Dustin.”

George points to a study by a University of Buffalo Associate Professor who concludes:

some of the biggest decisions of our life — where we live, what we do, and who we marry — are influenced by our first name.

[His] summary of his research states that people are disproportionately likely to:

* live in states or cities resembling their names (e.g., people named Louis are especially likely to live in St. Louis);

* have careers that resemble their names (e.g., people named Dennis, Denis, Denise and Dena are all especially likely to be dentists);

* marry other people whose last names begin with the same letter as their own. A similar, but weaker, matching effect also occurs for people’s first names.

The lengthy post goes on to discuss "blind" hiring and whether that concept will work.  Ultimately, studies like these show that the decisions we make can be influenced by factors we may not be aware of.  By continuing to focus on job-related aspects for decision-making, we can reduce the influence that these other factors may play.

And on a less serious note speaking of the Name Game, there is the classic song by Shirley Ellis which you can view below:

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I have often said that whether an employee is viewed as being treated "fairly" may predict whether an employment decision will later be upheld by a judge or jury. 

A recent study, however, shows that issues of "fairness" relating to employment decision may also affect a worker's outlook on life.  A Washington Post article has the details:

A pair of psychologists recently evaluated hundreds of employees at a large North American university that was in the grip of painful change. The researchers wanted to find out whether there were factors that explained why some employees successfully weathered the transition and reengaged with their jobs, while others spiraled into cynicism and exhaustion -- the classic signs of burnout.

Burnout has been long associated with being overworked and underpaid, but psychologists Christina Maslach and Michael Leiter found that these were not the crucial factors. The single biggest difference between employees who suffered burnout and those who did not was the whether they thought that they were being treated unfairly or fairly.

"These fairness issues can be huge," said Maslach, a social psychologist at the University of California at Berkeley. "Issues around fairness are highly linked to the anger and cynicism that are linked to burnout."

When a worker suffers burnout, she added: "You feel you have been treated with disrespect. It generates enormous personal anger for small things because of what it implies."

Although not the subject of their study, I have seen several instances of laid-off employees who sue -- not necessarily because they were discriminated against -- but because they did not believe the decision was "fair".  A lawsuit is seen as a way to right a wrong, in their view.  Anger and cyncism about the future are certainly common in such cases.

I am not implying that all cases are brought for this reason (nor am I saying that all cases that are brought are without merit).  But certainly the "fairness" of the employment decision plays a major role in how employees and others view the decision.

So what's the takeaway for employers from this study? While it's easy to make business decisions in a vacuum, explaining the reasons for those decisions and ensuring that employees understand the "fairness" of them, may play a major role in reducing exposure to lawsuits in the future.  In addition, keeping employee morale up -- even in tough times -- may not be an impossible task, but only if employees are made to understand that the decisions may not be ones they "like" but they are fair.

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Conventional wisdom is that healthy and happy employees lead to better results for the workplace.  As a result, many employers offer Employee Assistance Programs (EAP) for their employees, including the U.S. government. Now, there is additional scientific evidence of that theory in a study involving depression.  

A medical study published in this week's Journal of the American Medical Association determined that a systematic approach to identifying and treating depression not only improves the employee's health but also results in higher job retention, decreased sickness, lower work-absence and increased work productivity.

According to the authors, "this study suggests that enhanced care for depressed workers can have benefits for employers that go beyond improved health and diminished suffering in their workforces and extend to increased work productivity."

What this study also suggests is that is for all the thought that EAP programs are simply a "workplace cost", the programs may actually provide significant value to the workplace.  In other words, investing in an EAP may -- at least according to this study -- result in additional dividends to the employer in the future. 

For human resources personnel looking to provide benefits to employees that are of true value, this study would bolster the case for employee assistance programs.  Certainly, as employers evaluate the cost of attrition of employees and training new employees, investing in an EAP or similar program may provide a means to reduce turnover and improve productivity. 

As the authors are quick to note, further study in the area is necessary to explore fully the benefits of various EAPs or other intervention programs, but the study, at a minimum, provides an additional scientific basis for considering such programs, particularly in assisting employees with mental health issues.  

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