Discrimination: Even an open-and-shut case can cost you money!
When Wal-Mart decided to fire one of its managers for alleged misconduct, it probably thought it was an open-and-shut case. But as we all know, every termination carries risks.
Kenneth Cooper, who is African American, started working as the manager of a Wal-Mart store in Silver City, New Mexico, in 1998. In 2005, the company received an anonymous call on its ethics hot line. The caller alleged misconduct by Cooper. After Wal-Mart investigators interviewed more than 20 employees and examined dozens of pages of documents, they gave Senior Vice President Michael Moore a written report reflecting their findings. In turn, Moore ordered Cooper’s direct supervisor, Andrade, to fire him.
The investigation found that Cooper violated the company’s conflict-of-interest policy by traveling as the only management employee with an otherwise all-female group of hourly employees on an overnight trip to a Wal-Mart distribution center in Arizona. To make matters worse, when some of the group returned to Silver City, Cooper and several others went shopping in Tucson and spent another night “on the company’s dollar.” Apparently, not only did Cooper charge Wal-Mart for the meals and hotel rooms for the extra night, but he also let the employees who participated in the shopping junket claim eight hours on their time sheets for that day.
And there was more. The investigation also found evidence that Cooper was showing favoritism toward a particular female subordinate. Among other things, he awarded her a $250 gift card, put items on layaway for her in his name, and increased her pay substantially more than others in her position. According to the investigation report, another employee observed him visiting her home several times for up to 30 minutes each time. He then offered to remove a disciplinary action from the file of the employee who saw him if she agreed not to tell anyone he was seen leaving the favored woman’s neighborhood.
The investigation revealed a host of other transgressions, including accusations that Cooper:
- threatened employees with retaliation if they reported any of his transgressions to his boss or to the company’s loss prevention department;
- made sexually suggestive comments during store meetings;
- demoted an employee without following the standard disciplinary procedure;
- gave $25 gift cards to employees who danced with him at a company party; and
- directly billed Wal-Mart for his wife’s hotel room.
Cooper’s exit interview form stated that his termination was based on “Gross Misconduct — Integrity Issue,” which was defined on the form to include misappropriation of company assets. In addition to writing a response disagreeing with the reasons given for his discharge, Cooper reported allegations of misconduct against other Wal-Mart employees. Again, there was an investigation — this time into Cooper’s allegations — and again, Moore was given a written report of the findings. Based on the report, Moore decided who would be disciplined and to what extent. Even though it seemed as if Wal-Mart had the goods on him, Cooper filed a race discrimination lawsuit.
So what were the potential problems in what looked like an open-and-shut case for Wal-Mart?
First, Cooper complained there was evidence disputing the findings in the investigative report regarding his misconduct. For example, he presented evidence showing that the remarks he made (or supposedly made) at store meetings were not intended to be (or taken as) sexually suggestive. Since no complaints were ever made to his supervisor about the remarks, he was able to show that employees were not offended by the comments.
Cooper presented evidence disproving the accusation that he exceeded his authority as store manager by raising the salary of his purported “favorite” and showing that the $250 gift card he gave her was approved by Andrade. In addition, he showed that he hadn’t directly billed Wal-Mart for his wife’s hotel room but that he had given cash to another Wal-Mart employee to pay the bill. Cooper argued that the factual inaccuracies were so “fishy and suspicious,” they cast doubt on all the other reasons for his termination. Evidence that Wal-Mart’s stated reasons for his termination were false could show that the stated reasons for the discharge were actually a pretext for race discrimination.
Next, Cooper argued that Wal-Mart’s reasons for his termination were a pretext for race discrimination because he was treated differently than other non-African American employees who also violated company policy. In comparing the decisions Moore made in Cooper’s investigation to the decisions he made in the investigation of other store managers, Cooper alleged disparate treatment. None of the other store managers was fired, as Cooper had been, although Moore did demote at least one manager in connection with his investigation.
Finally, Cooper argued there were procedural irregularities in the investigation and the way his termination was handled that could convince a jury he was terminated because of his race. He specifically relied on Wal-Mart’s progressive discipline policy, its “Respect for the Individual” policy, and its “Open Door” policy to argue that the firing was tainted, mainly because he wasn’t asked for his side of the story before Moore made the decision to let him go.
The federal appeals court wrestled with Cooper’s position. Factual errors in an investigation can, in some cases, point to discrimination. The court was also troubled to learn that other employees who violated policies received less severe discipline. Finally, Wal-Mart’s departure from its own investigation and disciplinary policies caused the appeals court to scrutinize the situation. Ultimately, the trial court’s decision in favor of the employer was upheld — but not without some close calls. Cooper v. Wal-Mart Stores, Inc., Case No. 07-2290 (10th Cir., 10/16/08).
In the end, Wal-Mart prevailed. But Moore — and all employers — can take the following lessons from this experience for future employee terminations:
- Be sure that investigators don’t overstate their findings and that the information relied on by the decisionmaker is accurate. If there are doubts about some of the allegations, don’t use them as part of the reason for termination.
- Know the details of how other employees who have had similar policy violations have been treated. If they weren’t terminated, confirm that their offenses were less serious or that they were not similarly situated to the employee in question for other reasons.
- Before making any decision, review your policies and past practices. If your policies have mandatory procedures, follow them to the letter. Even if your policies are discretionary but you have always handled investigations and separations in a certain way, don’t change what you have done in the past without good — and documented — business reasons.
Consider this case a cautionary tale: There is no such thing as an open-and-shut case when it comes to firing an employee.