Massachusetts Employment Law Letter

Tainted performance reviews put employer on trial

In a recent Massachusetts state court case, a Boston employer learned that even a seemingly objective, consensus-driven employment decision can leave the door open for a claim of discrimination.  A business consultant who was fired after a poor performance review was allowed to proceed with her case after the court decided that her manager’s personal bias might have improperly influenced the “group” decision to let her go.  This reversal is a cautionary tale for employers whose performance review processes rely too much on one or two individuals’ opinions about the employee under review.

Unfair termination?

Rachel Rochat began working at LEK Consulting, LLC, a business consulting firm with an office in Boston, in 2004.  LEK’s consultants manage teams of associates on various business consulting projects, and each project is supervised by a manager and a couple of partners.  At the end of each project, the manager writes an evaluation of the consultant’s performance managing the team.  Consultants also receive general performance reviews every six months, which include input from all managers and partners who worked with the consultant on projects during the six months.

In Rochat’s first year, she received positive marks, both on her project evaluations and on her six-month performance reviews, consistently rating as “at” or “exceeds” expectations.  In her second year, she received similarly favorable evaluations and reviews for the first four projects she oversaw.  Rochat then took a leave of absence to play hockey in the 2006 Winter Olympics for Switzerland.  After returning from her leave, Rochat oversaw four more projects and began receiving less favorable evaluations.  She received “at expectations” ratings for two of the projects but was rated “below expectations” on the other two projects.  Rochat’s management skills were questioned on both negative project reviews, even though she had previously received positive notes on her management skills during the previous year and on another project in the same period.  Significantly, Rochat claimed that her manager, Thilo Henkes, made an inappropriate comment about her, stating “Oh, that’s a typical female thing to do,” which Rochat perceived as an attempt to get a rise out of her in front of male colleagues.

Rochat’s next six-month review in September 2006 was spear-headed by the two managers who had given her recent “below expectations” ratings.  Although their presentation at the review meeting presented both positive and negative aspects of her performance, Henkes and the other manager did most of the talking and reinforced their negative opinions about Rochat to the rest of the group.  Although the group considered putting Rochat on a ninety-day performance improvement plan, it ultimately decided to terminate her employment.  Rochat was informed of this decision on October 9, 2006, and given seven weeks’ severance, but LEK did not offer her the use of a head-hunter service, even though that was a standard part of their termination package.  Rochat rejected the severance and filed a charge of gender discrimination and later a lawsuit against LEK in Massachusetts Superior Court.

Appeals Court says “not so fast”

To defend against the lawsuit, LEK asked the trial court to dismiss Rochat’s case, arguing that even if everything she claimed was true, LEK still had had legitimate, non-discriminatory reasons for terminating her employment and, therefore, could not be found to have discriminated against her:  LEK highlighted the comprehensive nature of its performance evaluation process and, specifically, the fact that the decision was reached by a consensus of all parties involved.  The process, LEK argued, was based on objective evaluations of Rochat’s work performance on consulting projects, and, therefore, the decision to terminate her employment was valid.  The trial court agreed with LEK, noting that Henkes’ gender-insensitive remark was not enough to interfere with the objectivity of the performance review process.

Rochat appealed the trial court’s decision, and the Massachusetts Appeals Court reviewed the case.  The Appeals Court decided that there were several potential jury questions that should have prevented the judge from ruling in LEK’s favor.  The Appeals Court essentially said that there was a possibility that Henkes had a discriminatory bias that influenced his reviews of Rochat’s performance.  Because Henkes played an important role in building the consensus to terminate Rochat’s employment, the factual issues should be determined by a jury.

Where did LEK go wrong?

The Appeals Court pointed out several areas where a jury could find that gender bias played a role in LEK’s decision to terminate Rochat’s employment.  First, it noted that there was a glaring lack of gender diversity at LEK – there was only one female partner and hardly any female managers – and that a jury could take that into account when deciding whether gender discrimination occurred.  Second, and most importantly, the court noted that even though LEK’s semi-annual review process was objective on paper, the fact that it allowed individual managers to have significant influence on the final decision left the door open for allegations that a single manager’s personal bias could have tainted the entire process.  Henkes’ apparent domination of the review presentation could lead a jury to find that his personal opinion affected the final decision.  Therefore, if he had a gender-biased attitude, the final decision could have been a result of that attitude.  Finally, the court acknowledged that Rochat had some evidence that other male consultants were treated better than she was, and, therefore, it would be up to a jury to weigh each side’s explanation for any differences in treatment.  The case is Rochat v. L.E.K. Consulting, LLC (Mass. App. Ct. 2013).

Takeaways

The reversal of the win for LEK is a cautionary tale for other employers that handle performance evaluations and employment decisions by consensus:  a seemingly objective decision might be tainted if an individual involved had a discriminatory bias.  Thankfully, there are ways to help insulate the final decision from any perceived or actual bias.  LEK’s lack of gender diversity hurt them by creating a perception that the firm is a “boy’s club.”  To combat that kind of perception, it is important to have as diverse a group of decision-makers as possible; it is hard for an employee to argue gender discrimination if all genders are represented, or to argue age discrimination if one of the decision-makers is the same age as the employee.  Henkes’ involvement in all stages of the review process might also have hurt LEK’s argument that his opinion did not “overly influence” the final consensus decision.  An employer can avoid this type of problem by mandating that all of an employee’s supervisors contribute equally to the decision-making process, with the final determination reviewed by another member of management who can be objective about the process.  Finally, LEK’s decision not to allow Rochat to use the head-hunter service to find another job supported her allegation that male employees were treated better when they were terminated.  Making sure that all employees are treated equally under the same circumstances is crucial to avoiding allegations of discrimination by disparate treatment.

Article By: David W. McBride
Reprinted from the May 2014 issue of the  Massachusetts Employment Law Letter.