A little over a year ago, the Washington State Supreme Court ruled that small employers may be sued for discrimination in state court for “wrongful discharge in violation of public policy.”

This decision came as quite a shock to many small employers who, with good reason, had previously believed that they were insulated from such litigation. After all, the Washington Law Against Discrimination (WLAD) specifically exempts employers with fewer than eight employees. How then did the Washington Supreme Court rule in Roberts v. Dudley that the owner of a small professional practice could be subjected to a lawsuit for sex discrimination?

An employee who worked for this professional practice that employed fewer than eight employees took an unpaid maternity leave. Three months into the leave, the owner of the practice terminated her employment, claiming that he was eliminating the position due to a business slowdown. One year later, he advertised to fill the position. The former employee applied for the job but was rejected. She then sued the owner for sex discrimination, claiming that she had been fired because she got pregnant.

Her lawsuit contained two claims. First, she alleged that the owner’s actions violated the WLAD statute. Second, she asserted a claim of “wrongful discharge in violation of public policy,” a non-statutory claim.

The court ruled in favor of the owner on the statutory claim because the WLAD clearly exempts employers who have fewer than eight employees. Nevertheless, the Court ruled that the former employee could pursue the “public policy” claim.

In an example of “interesting” reasoning, the court said that the WLAD established a “public policy” against sex discrimination in employment on which the former employee could base her non-statutory “public policy” claim. Naturally, the owner argued that the WLAD explicitly created a public policy in favor of protecting small employers from the potentially ruinous expense of defending employment-related lawsuits. He also argued that the law’s protection for small employers is meaningless if, through an “end run,” small employers can be sued under the “public policy” theory. The court rejected these defenses and ruled that small employers may be sued for discrimination under the “public policy” theory.

What this means to small employers:

The WLAD protection for small employers has been gutted. Small employers can now be sued for employment discrimination in state court even if they employ fewer than eight employees. The cost of defending such lawsuits can be enormous, win or lose, innocent or guilty. It is not enough simply to not discriminate; small employers must now engage in the types of “formal” employment practices that larger employers do to protect themselves: have a written policy against discrimination and harassment in an Employee Handbook; respond promptly to employee complaints or concerns about discrimination; document employee discipline and other employment decisions; effectively and thoughtfully use the tool of performance evaluations; before firing an employee, review a “checklist” of issues that need to be considered with a professional knowledgeable about the legal requirements in this area ; consider whether it is advisable to enter into a written severance agreement containing a release with the employee; and consider purchasing appropriate employment practices insurance coverage.

(Editor’s Note: Louis Falcone, a Kitsap County resident, is an attorney who advises and represents management on employment law and human resources management issues. He can be reached at: (206) 382-1766.).