Pink-Slip Panther

updated 08/11/1997 at 01:00 AM EDT

originally published 08/11/1997 01:00AM

Employers used to have two magic words for making disruptive or incompetent employees disappear: "You're fired." Today it's not that simple, as disgruntled ex-workers take former bosses to court—and to the cleaners—in record numbers.

In his new book The Excuse Factory: How Employment Law Is Paralyzing the American Workplace (Free Press), Walter Olson, 42, argues that lawmakers, while trying to shield employees from discrimination and sexual harassment, have unintentionally created a system that damages morale and enshrines mediocrity in the workplace. Olson, whose previous book was The Litigation Explosion (Dutton/Plume, 1991), blames the vagueness of legislation like the Americans with Disabilities Act and the 1991 Civil Rights Act for unleashing a torrent of divisive and costly lawsuits.

Take the case of Jerold Mackenzie. A former executive at Miller Brewing in Milwaukee, Mackenzie was released from his $95,000-a-year job in 1993 after a female coworker complained that he had harassed her by recounting parts of a risqué Seinfeld episode. On July 15, a jury ruled that Mackenzie had been wrongly discharged—and awarded him $26.6 million. "You wonder," says Olson, "why the jury just didn't hand him the whole company."

Olson, who has a B.A. in economics from Yale and is a fellow with the Manhattan Institute, a conservative think tank supported by private donations, recommends that society review the logic behind these laws and consider turning back the clock on employer-employee relations. Correspondent Ron Arias spoke with the author at his picturesque 150-year-old home in Wilton, Conn., which he shares with magazine executive Steve Pippin and three cats.

What do you mean by "excuse factory"?

There are so many ways employers can get sued in the workplace under current employment law that it has become a factory for producing excuses. An employee at GTE Data Services Inc. in Tampa actually admitted to stealing thousands of dollars from purses and desks at his Florida office. His lawyer defended him by claiming his client had been suffering from a mental disability brought on by a chemical imbalance in his brain. The law requires reasonable accommodation of such infirmities. Eventually, after winning the first legal round, his claim lost in court. But it shows how far the law goes in protecting employees who are detrimental to their coworkers and employers.

How did this problem develop?

It started out with employment laws regarding race, religion and sex. Then they added disability. When these laws were first brought forward, one by one, it seemed they would be good for some groups who might need help in the workplace. It might reduce unfairness. Now the public is realizing that "disability" can mean a huge number of things. For example, being obese or having a contagious disease or an uncontrollable temper. Not too long ago these were not considered disabilities and were not conditions that put you in a specially protected class on the job. Now, in some places, you can even sue over being discriminated against because you're not as good-looking as someone else. And we keep increasing the amount of money people can sue for, which adds incentive to sue.

Some might accuse you of bias against women and minorities.

This is the kind of misimpression that drives me up the wall. We have let too many of the advocates of these laws charge that being skeptical about their actual results means that we're against the groups the laws are supposed to be protecting.

What's wrong with suing if you feel you're being treated unfairly?

The only way we get anything done is by cooperating. And here we encourage this adversarial way of dealing with one another, which is destructive. The employer begins to see everyone as a potential adversary in court.

What are the unintended consequences?

In one case, a woman was aggrieved at not being made partner at a big law firm in Philadelphia. So she sued them, and she said seven or eight men did make partner. So the next thing, her lawyer was going through a complete file on all of those men, looking for everything negative he could throw at them—and they weren't charged with anything. They were just the "comparison people" needed to help prove her case.

But isn't everybody ultimately after job security?

You can't get the safeguards for job security without getting the downside too. For example, in sexual harassment cases, when the law prevents the employer from removing a man for bothering a female coworker without a lawsuit, then he often stays and continues to misbehave.

Don't these laws aim at making the workplace more fair?

Advocates for the new laws believe that if you let people sue over everything they think is unfair, you'll get a more fair system. Well, that's not true. In effect, suing becomes a weapon. The person with sharp elbows who, let's say, wants that promotion and is willing to threaten the company with a lawsuit if he doesn't get it, can outmaneuver a person who is better qualified but would never threaten a lawsuit.

How does management react to these hazards?

Nowadays, rather than letting someone go—even for good cause—you buy them out. You get them a settlement. In one sense, companies are making a rational calculation. It may be in their long-term interest to take a stand against the cases they see as blackmail. But often it's just easier, quicker and cheaper to settle and move on. So nothing changes.

Who wins the most in this game?

Managers and supervisors are among the chief beneficiaries. They're smart, they're highly paid. Lawyers love to take them as clients because they're good cases to sue over. So firing managers is much more dangerous than firing rank-and-file workers. That means that a lot of problem managers who are making life miserable for those below them stay on.

How are hiring practices affected?

Employers are getting advice from their lawyers to treat job applicants with kid gloves and never ask them any personal or sensitive questions. Never tell job applicants why they didn't get the job. Anything you say could be used against you in court. And yet it should be very good for applicants to hear a candid answer about why they didn't get the job.

What's your reaction to the verdict and award in the Seinfeld case?

I don't approve, but I'm not surprised at all. What this highlights is the way we have set companies up so that they are sued if they do and sued if they don't. They can lose it all if they allow too much of this kind of joking—and now we learn they can lose it all by not allowing this kind of joking!

What do you propose as a remedy?

We need to back up and ask ourselves, "Do we really want to change the nature of the working relationship from one where a job was considered basically a voluntary choice?" That is, if it wasn't working out, it ended; the worker quit or was encouraged to leave. The new idea we're headed toward is some sort of tenure. Unless the employer can show the court good reason why someone was fired, they had better keep them on.

Are you implying that employees, not bosses, are more likely to be at fault in workplace disputes?

In most cases I've studied, both employees and employers have missed chances to do right. The world is full of bad bosses too. I don't claim there will be any great nirvana of fairness any way we change the system. Life goes on, and often the wrong people get promotions, and good people don't work out because of the personality quirks of their supervisors. What I say in my book is that in these disputes we shouldn't hand over so much leverage to people like lawyers and to those who would abuse the system.

What's your most horrific example of employment law gone awry?

I write about the Northwest Airlines pilot who flew the plane while drunk. He was sent to prison. When he got out, Northwest must have spoken to their lawyers, because in 1993, a few years after the initial incident, the airline rehired the pilot. The disability law protects alcoholics who've been through rehab. That one makes most people gasp.

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