Wrongful Discharge Case Summary

16 08 2010

When terminating an employee, even with just cause, it is critical to have documented policies and even then, there is a risk of a lawsuit.  “Terminating an employee is akin to walking through a minefield.  One wrong step and it can blow up in your face.” says Walter S. White, president of W.S. White Computer Enterprises, Newark NJ (Lee).  Ann Kiernan, an employment attorney, suggests ensuring that your company’s employee handbook clearly defines how discipline of employees will be handled and making certain that there is a documented procedure for terminations (Lee).  “The importance of documentation cannot be overemphasized…having a paper trail that documents your efforts and your willingness to work with the employee shows jurors you have been fair” says Ms. Kiernan (Lee).  Termination should be the final step following a series of attempts to improve an employee’s behaviour and the business should be able to summon proof that every opportunity was given for the employee and that termination was the only option left.  If the company fails to do this, they may find themselves in court, as provided in the following example of a wrongful termination lawsuit.

United Parcel Service (UPS) held a special training course for their California employees about the importance and significance of properly completing time cards in January 2002 (Kristof).  And yet, Michael Gnesda, an employee with over fifteen years with the company, disregarded the training and altered the time card of a subordinate (Kralowec Law Group).  Mr. Gnesda altered the hours worked to make it appear that he was not on the clock at the same time as an employee, apparently so that he wouldn’t be included in a report  “that would reflect poorly” on his oversight of his subordinates’ work hours, said Heather Robinson of UPS (Kristof).  While the minutes altered were less than five, the issue wasn’t how many minutes were altered on the time card, but rather that a trusted employee would falsify documents.  “It all comes down to honesty and integrity,” said Ms. Robinson (Kristof).  “Mr. Gnesda’s time card change occurred less than three months after he had participated in special training on the importance of time card accuracy,” explained Ms. Robinson, and as a result, UPS chose to terminate Mr. Gnesda, which wasn’t simply to make an example of him as, per Ms. Robinson, “there have been numerous terminations in the past for falsifying time cards” (Kristof).

Mr. Gnesda had indeed worked for UPS for over sixteen years, working his way up from pre-loader to management in the UPS Business Development Group (Kralowec Law Group).  The group created a program designed to generate better profits on shipments in 1998, and this program realigned the rates for parcels and assigned excessive surcharges for irregularly shaped packages (Kristof).  If customers followed specific steps, they could avoid the surcharge, however Mr. Gnesda discovered “serious internal problems involving overcharging of customers,” despite customers following the steps and he brought this issue to the attention of his supervisors (Kristof).  “These overcharges resulted…in tens of millions of dollars [profit] per year to UPS,” attested Mr. Gnesda (HR.BLR).  Yet, by 2000, nothing had changed, and thus, Mr. Gnesda helped a customer pen a complaint letter to bring light to the situation (HR.BLR).  Within a month, Mr. Gnesda was transferred from his managerial position to janitorial warehouse work (Kristof).  UPS levied punitive actions against him and forced him to participate in what they termed “Self-Improvement Tasks”, harassed and demeaned him, for two years (Kralowec Law Group).  When scheduling him to clean the floors of the warehouse in the middle of the night for two years couldn’t force him to quit his job, UPS discharged Mr. Gnesda (Kristof).

Mr. Gnesda hired an attorney, David Wiechert, claiming he had been wrongfully terminated after blowing the whistle on fraudulent activity by UPS (HR.BLR).  The terms of Mr. Gnesda’s employment stated that he would only be terminated with good cause (GoogleScholar) and yet “the true motivation was a desire to retaliate against Mr. Gnesda,” said Mr. Wiechert (HR.BLR).  Mr. Gnesda sued on the grounds that not only had he been wrongly discharged, but that under the Unfair Competition Law he was protected as a “person acting for the interests of itself, its members, or the general public” by helping uphold the law that prohibited “unfair, dishonest, deceptive…fraudulent…practices” (Kralowec Law Group).  A jury trial commenced to determine why Mr. Gnesda was terminated and whether it was sound.  Mr. Gnesda showed a letter he received from the chairman of UPS, prior to his whistle-blowing, which offered gratitude to Mr. Gnesda for his efforts in making the company profitable and documented how through the company’s fraudulent activities with the surcharges, they were able to amass over $200 million in one year (GoogleSholar).  Even his former supervisor, Stanley Jones, attested to the profits, saying that the Southern California district of UPS alone earned around $40 billion in revenue from their program from 2000 to 2002 (GoogleScholar).

It took three weeks for both sides to present their stories, with Mr. Gnesda showing how he had climbed from laborer to manager to be reduced to laborer and finally unemployed, and UPS showing how after even providing a specialized training program their employee, who they had rewarded with bonuses and promotions over a sixteen year period, could not adhere to policy and committed fraudulent activity to alter time cards of his subordinates.  The jurors listened to the witnesses from former UPS employees, Mr. Gnesda’s former supervisor, current employees and spokespersons for UPS and “at the end of the trial, the jury found that Gnesda’s termination was motivated by his efforts on behalf of customers,” said Mr. Wiechert (HR.BLR). The jury awarded him $20 million in punitive damages against UPS, which was 1% of their documented profit from their fraudulent billing activities, and $748,600 in compensatory damages (GoogleScholar).

In retrospect, it appears to me that UPS failed to provide significant documentation that they were working to correct the behaviour of a long-term employee, Michael Gnesda.  Ms. Robinson, for UPS, was asked by the court to elaborate on her claim that Mr. Gnesda had altered the time card to avoid being included in a report that would have made him be seen in a negative light had it appeared he was on the clock at that time (Kristof).  She couldn’t produce the report or demonstrate the impact of the change of an employees’ time card, nor could she provide any proof that immediate termination had been used in the past for similar activities by other employees (Kristof).  As a result of not having a demonstrative standard, it is difficult to see how Mr. Gnesda was terminated fairly and in line with the policies of the company.  UPS also failed to explain why an employee, who had been rewarded with promotions, salary increases and bonuses over the course of sixteen years – promoted from warehouse laborer to a manager in their offices – would be suddenly reduced to working as a janitor during graveyard shift hours, yet suffer no change to his salary.  I believe had UPS given proof that Mr. Gnesda was treated in the same manner as other employees, the jury may have found for the employer.  If UPS had explained why Mr. Gnesda was reduced in duties so suddenly after he brought attention to activities that appeared fraudulent on the part of UPS, the jury may have responded differently.  Without sound documentation and without a written policy to justify their termination practices, UPS lost the lawsuit.

 

 

 

Works Cited

California Courts – Appellate Court Case Information. Web. 16 Aug. 2010. <http://appellatecases.courtinfo.ca.gov/search/case/mainCaseScreen.cfm?dist=0&doc_id=1893332&doc_no=S161654&gt;.

California Courts – Appellate Court Case Information. Web. 16 Aug. 2010. <http://appellatecases.courtinfo.ca.gov/search/case/mainCaseScreen.cfm?dist=2&doc_id=1126280&gt;.

Falk, Donald M. “United Parcel Service v. Superior Court, No. S130914.” Letter to Chief Justice Ronald George and Associate Judges. 25 Feb. 2005. AACCLA. Web. 16 Aug. 2010. <http://www.aaccla.org/NR/rdonlyres/eykku6qrvaewycgfosfc7gc7bl2ktkjwi5hjfzlm4n76nuak2pbt66zblbswfuqtqvov75lgndujrn4yesbkkyvmi5g/UnitedParcelServiceofAmericavGnesda.pdf&gt;.

“GNESDA v. United Parcel Service, Inc., Cal: Court of Appeals, 2nd Appellate Dist., Div. 1 2008.”Google Scholar. 30 Jan. 2008. Web. 16 Aug. 2010. <http://scholar.google.com/scholar_case?case=1083706385262414953&hl=en&as_sdt=2&as_vis=1&oi=scholarr&gt;.

“Gnesda v. UPS—California Court of Appeal Vacates Punitive Damages Award in Unpublished Opinion.” California Punitive Damages. Horvitz & Levy, LLP, 1 Feb. 2008. Web. 16 Aug. 2010. <http://calpunitives.blogspot.com/2008/01/gnesda-v-ups-california-court-of-appeal.html&gt;.

“UPS Manager Wins $21M in Wrongful Termination Suit.” Human Resources Management Website – HR.BLR.com. 23 Aug. 2005. Web. 16 Aug. 2010. <http://hr.blr.com/HR-news/Performance-Termination/Employee-Termination-with-Discharge/UPS-Manager-Wins-21M-in-Wrongful-Termination-Suit/&gt;.

“Michael Gnesda v. United Parcel Service, Inc.” The Kralowec Law Group. 16 Aug. 2006. Web. 16 Aug. 2010. <http://www.17200blog.com/briefs/GnesdaWritPetn.pdf&gt;.

Kristof, Kathy M. “Fired UPS Worker Is Awarded $21 Million.” The Los Angeles Times. 20 Aug. 2005. Web. 16 Aug. 2010. <http://articles.latimes.com/2005/aug/20/business/fi-ups20&gt;.

Lee, Timothy. “Terminating Employees without Getting Burned.” The New Jersey Small Business Journal – Online. 2001. Web. 16 Aug. 2010. <http://www.leadtrac.com/terminating_employees_without_getting_burned.htm&gt;.

 

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2 responses

12 06 2011
Rauschenbach

hello, love from finland. your post looks great. Mind if i quote it in my blog?

1 07 2011
Tag

I used alot of your informartion on doing my school research paper. You have some great points.
Thanks for this.

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