You made the tough decision to let an employee go when their performance just wasn’t up to par. But what will your nonprofit do if they file a lawsuit claiming that their poor performance reviews and eventual termination were motivated by retaliation?
Nonprofits have the same responsibilities to their employees as any other employer, and that means allegations of retaliation — punishment, termination, or other negative action against an employee for protected activities — are something that no nonprofit can afford to risk.
So, protecting your organization and your mission means ensuring that your employment practices comply with all applicable employment laws, that your documentation is consistent and thorough, that your supervisors are appropriately trained, and that you have policies and procedures in place to ensure that any adverse employment action is supported by non-discriminatory or retaliatory motivation.
Let’s look at a scenario where a nonprofit faced allegations of retaliation by a former employee, review the actions that followed, and explore some ways your nonprofit might avoid finding itself in a similar situation.
The Nonprofit:
A nonprofit operated a museum and “living history” program at a popular historic site, employing approximately 25 costumed actors/docents to give visitors a period-accurate glimpse into the daily lives of people’s past. Additionally, the nonprofit also employed 14 non-acting staff, including supervisors and support personnel.
The Incident:
One of the actors/docents was in a relationship with a supervisor. Management and HR were not aware of the relationship until after it had ended contentiously — at which point the employee reported the supervisor for sexual harassment.
Later, according to the nonprofit, the employee’s job performance allegedly began to drop off, and after several attempts to correct the performance issues were not successful, the employee was terminated.
Soon after, an attorney representing the employee filed a lawsuit against the nonprofit, alleging that the poor performance reviews and eventual termination had been due to retaliation related to the employee reporting a sexual harassment incident with the supervisor.
The Coverage:
When the nonprofit learned about the lawsuit, they immediately notified their insurance broker, who began the process of making a claim on the nonprofit’s Board & Executive policy with Nonprofits Insurance Alliance (NIA), which included both Directors & Officers (D&O) and Employment Practices Liability (EPLI) coverage.
The Result:
NIA’s claims examiners reviewed the nonprofit’s records, as well as their practices and policies around hiring, addressing performance issues, handling terminations, and workplace relationships.
During their review, they discovered that, although the nonprofit had noted the reporting of the relationship in the employee’s personnel file and the sexual harassment that the employee had reported, the nonprofit had not kept detailed documentation of the alleged performance issues or any steps that had been taken to address them before they’d moved to termination.
Because of the nonprofit’s spotty, inadequate documentation, it was determined that the nonprofit would be unlikely to make the case to a jury that it hadn’t acted in retaliation against the employee.
As a result, an NIA-appointed counsel worked with the employee’s representatives to
resolve with a settlement prior to litigation.
What Did the Nonprofit Do Right?
Other than notifying their broker and activating their insurance coverage as soon as they became aware of the lawsuit against them, the nonprofit did little to protect itself — to its detriment.
In this situation, even if the employee’s termination had legitimately been the result of poor performance and a repeated failure to correct them, the nonprofit’s inconsistent documentation and lackadaisical HR practices and procedures ensured that there would not be sufficient evidence to prove it in court.
As a result, the nonprofit was then stuck with the unenviable choice of going in front of a jury with only their word against that of the employee — a very weak position — or settling the suit, which ended up being the outcome.
This left the nonprofit with a tarnished reputation as an employer, a depleted budget, and their insurance provider re-evaluating the risks of continuing to insure them.
How Can Your Nonprofit Protect Itself?
When it comes to managing your employees, protecting your nonprofit against allegations of retaliation means you’ve got to be able to do two things:
- Don’t retaliate: Understand what constitutes retaliation, train your supervisors to recognize it, create a workplace culture that doesn’t tolerate it, and ensure that your employment policies and procedures are designed to prevent it.
- Prove that you didn’t retaliate: Keep thorough, consistent, and detailed records of all employment actions that can be presented as proof of your good-faith actions and adherence to state and federal laws in the event you are accused of retaliation.
What is Retaliation?
According to the U.S. Equal Employment Opportunity Commission, retaliation is when employers punish their employees for participating in “protected activity” such as:
- Taking part in an investigation of employment discrimination, including harassment
- Filing or being a witness in a charge, complaint, or lawsuit alleging discrimination
- Communicating with a supervisor or manager about employment discrimination, including harassment
- Answering questions during an employer investigation of alleged harassment
- Refusing to follow orders that would result in discrimination
- Resisting sexual advances, or intervening to protect others
- Reporting an instance of harassment to a supervisor
- Requesting accommodation of a disability or for a religious practice
- Asking managers or coworkers about salary information to uncover potentially discriminatory wages
If an employer takes adverse action against an employee, volunteer, or applicant as punishment for any of those actions, it could be considered retaliation.
Note: In California, “Equal Pay and Anti-Retaliation Protection Act” (SB 497) became effective on January 1, 2024, which created a rebuttable presumption of retaliation if an employee faces adverse action within 90 days of engaging in protected activity.
This law amends labor code sections to make it easier for employees to prove retaliation for exercising labor rights. Employers have always had to be prepared to demonstrate actions as nondiscriminatory and non-retaliatory, but now the burden lies on them to prove this. The law simply shifted the burden.
What is “Adverse Action?”
Adverse action against employees can include, but is not limited to:
- Termination: Being fired, demoted to a lower position, or being laid off
- Reduction in hours/duties
- Compensation changes: A reduction in salary, wages, or benefits
- Job changes: Being transferred to a less desirable location, shift, or position with reduced responsibilities
- Loss of opportunities: Refusal to promote, denial of training, or exclusion from projects
- Workplace environment: Unjustified discipline, negative performance evaluations, increased scrutiny, or creation of a hostile work environment
- Constructive discharge: Making working conditions so intolerable that the employee feels forced to resign
Compliance
You don’t want to break the law, so it’s important that you design all of your nonprofit’s practices and procedures — including employment — to comply with applicable employment laws.
When developing your procedures, you might consider consulting with an expert in employment-related law to ensure that they adhere to all applicable laws — and be sure to have regular reviews and updates, as laws can change from year to year.
Finally, once you have your legally compliant policies and procedures in place, be sure you consistently adhere to them.
Documentation
If you have to take an adverse action against an employee and it results in your nonprofit being accused of retaliation, your documentation and recordkeeping practices can either save you or sink you.
For all your meetings with an employee, make sure to document everything that happens — all your steps, all actions taken, any feedback received, and have procedures in place to make sure you keep all that information organized and accessible.
This way, if you are later accused of retaliation, you’ll have detailed records that can help your nonprofit’s defense counsel present a clear timeline of events, proving that:
- Your nonprofit had appropriate and legally compliant procedures in place
- All “protected activity” was noted and acknowledged
- The employee had performance issues noted and acknowledged in their record
- The supervisors had attempted to work with the employee to remedy the performance issues
- Reasonable accommodations were provided (if necessary) in a timely manner
- The employee had received ample warnings
- Your team handled all processes in compliance with state and federal laws
- There was no connection between addressing performance concerns/policy violations and any protected activity
Having consistent, thorough records can help you prove in court that you made good-faith efforts to adhere to the law, that you treated your employees fairly, and that you fulfilled your duties and obligations as an employer.
Training
Training is key for preventing accusations of retaliation — your employees should know their rights, and your supervisors should understand their duties and responsibilities.
This can help you create a culture free from discrimination and retaliation at your nonprofit and ideally prevent miscommunications and incidents that could be actual or perceived retaliation.
NIA Resources:
- NIA’s Labor & Employment Risk Managers can provide guidance around many employment-related issues — including compliance. This service is available at no cost to all NIA-insured nonprofits with a current EPLI policy.
- NIA-insured nonprofits get discounted access to workplace and business compliance training, online courses that can help train your teams in conflict resolution, performance management, communication strategies, and more.
- Nonprofits with a current EPLI policy from NIA can get free access to harassment prevention training for supervisors, which can help your organization meet state-mandated training and compliance requirements.
- Your NIA insurance gets you free access to webinars on a wide variety of nonprofit-specific topics, including risk management, NIA resources, employment risks related to retaliation, documentation, disciplines/terminations, and much more.
Conclusion
Although your nonprofit’s mission is very important, you have a great responsibility to your people — after all, without your team, there is no mission.
Whether they work for a nonprofit or not, all employees have rights guaranteed by law. As an employer, it’s your responsibility to understand those rights and do everything in your power to not infringe upon them.
Your employees have a right to be treated fairly and to not be singled out, harassed, or discriminated against — especially as retaliation for legally protected actions.
When you can ensure that your workplace culture does not tolerate retaliation, and that your training and procedures around your employment practices are consistently applied, legally compliant, and properly documented, you’ll have a much better chance of protecting yourself against allegations of retaliation.
This will hopefully allow you to concentrate on your mission, confident that you are treating your people fairly. Read more: What You Need to Know About Retaliation Claims
From the Claims Files stories like the one above are intended to be informational in nature. Coverage will vary depending on language specific to your policy and your specific facts and circumstances.
Please contact your insurance broker and/or agent for your specific coverage implications based on your specific situation and follow any claims reporting procedures from your policy with your broker if there might be a claim.
Nothing in this story should be considered as legal advice or opinion and you should seek independent advice or legal counsel.
