The Winding Road from Employee to Complainant: Situational and Psychological Determinants of Wrongful-Termination Claims.
By E. Allan Lind , Jerald Greenberg , Kimberly S. Scott , Thomas D. Welchans
News stories in recent years paint an unsettling picture of the costs of wrongful-termination lawsuits to business organizations (e.g., Boutrous, 1993; John, 1996; Lyncheski, 1996). Although multi-million-dollar legal judgments make for eye-catching headlines, the sums involved in most cases are considerably lower: median award levels of $151,800 for men and $75,000 for women were reported in a study of 1,700 verdicts rendered between 1988 and 1995 (John, 1996). Still, it is undeniable that wrongful-termination lawsuits are very costly to organizations, even for employers found not liable, especially when one takes into account the high cost of litigation, which even in 1988 averaged $80,000 per case (Dertouzos, Holland, and Ebener, 1988). These figures are particularly alarming when coupled with the dual realities that the trend toward filing wrongful-termination suits is on the rise (Bureau of National Affairs, 1990) and that plaintiffs frequently prevail in many such actions--64 percent of the time when the plaintiffs are executives and 42 percent of the time when they are general laborers (John, 1996).
Despite the obvious importance of termination litigation to organizational policies and actions, remarkably little is known about why people choose to file wrongful-termination claims. It is tempting to assume that the decision to initiate these lawsuits depends primarily on the validity of plaintiffs' allegations that their employers engaged in some wrongful action in dismissing them. In reality, however, the objective validity of a claim is not the only, or even the major determinant of filing. If employment termination claims follow the patterns observed in other types of civil litigation, it is likely that many valid claims are never initiated and that many claims that are made are unfounded (Hensler et al., 1991). If the validity of claims does not account completely for claiming behavior, then what other factors are involved? This is the question on which we focus in this paper. There are both practical and theoretical reasons for investigating the antecedents of wrongful-termination claims. In practical l terms, these claims are very costly. In addition to the direct costs involved in defending litigated termination cases, there are indirect costs stemming from inefficiencies and lost opportunities that result when organizations retain poorly performing employees for fear of being sued (Lind, 1997). And because widespread misconceptions exist in organizations as to the true nature of the threat posed by this sort of litigation (Edelman, Abraham, and Erlanger, 1992), there may be a general reluctance to terminate poor performers, which may even make the indirect costs greater than the direct costs.
On the plaintiffs' side of wrongful-termination lawsuits, the economic costs of inappropriate claims are in effect amortized across successful claimants because plaintiffs' attorneys are usually paid on a contingency fee basis, but plaintiffs also suffer emotional costs associated with litigation. Research on litigation in accidental injury cases has shown that the further a case proceeds legally, the more distasteful the experience becomes for plaintiffs (Hensler et al., 1991). The investigation we report here of the antecedents of wrongful-termination claims promises to help both organizations and their former employees by identifying the types of managerial behaviors that promote lawsuits, an important first step in changing offending behaviors that are likely to take their toll both on companies' bottom lines and on former employees' emotional well-being.
From a scholarly perspective, understanding the variables that affect people's willingness to bring suit against their former employers can contribute to theories of organizational behavior especially those focusing on the relationships between individuals and organizations. If we can understand how some employees and organizations manage to sever the employment relationship peacefully whereas others end up embroiled in litigation, we stand to learn something fundamental about the nature of employer-employee relations (Sitkin and Bies, 1994). Thus, investigating the antecedents of wrongful-termination claims not only addresses an organizational phenomenon of considerable importance in its own right (i.e., claiming), but it also allows us to study in a particularly stressful context the workings of psychological processes that have broader implications for our understanding of organizational behavior.
WRONGFUL-TERMINATION CLAIMS
An Organizational Justice Perspective
There is good reason to believe that experiences of unfair treatment, either on the job or in the course of being terminated, will be powerful determinants of claiming wrongful termination. In the decades since early justice theorists (e.g., Homans, 1961; Blau, 1964; Adams, 1965) introduced the idea that feelings of inequity in the workplace can affect work-related attitudes and behavior (for a review, see Greenberg, 1982), a substantial body of research and theory has developed concerning the antecedents and consequences of employees' perceptions of organizational justice (for reviews, see Greenberg, 1996; Greenberg and Lind, 2000). This line of investigation has highlighted the importance of three types of organizational justice: distributive justice, or the perceived fairness of outcomes (Homans, 1961; Adams, 1965), procedural justice, or the perceived fairness of the procedures by which outcomes are determined (Thibaut and Walker, 1975; Lind and Tyler, 1988), and interactional justice, the perceived fairness ess of the nuances of interpersonal treatment (Bies and Moag, 1986; Bies, 2001).
Investigations of people's perceptions of organizational justice have revealed that justice perceptions have profound effects on a wide variety of organizational attitudes and behaviors (Greenberg, 1990c, 1996). Perceptions of organizational injustice have been linked to the occurrence of several forms of uncooperative or antagonistic organizational behavior (Giacalone and Greenberg, 1997), such as stealing from the organization (Greenberg, 1990a, 1993a; Greenberg and Scott, 1996), sabotaging organizational projects (Giacalone, Riordan, and Rosenfeld, 1997), and rejecting organizational policies (Greenberg, 1994). Favorable perceptions of organizational justice have been associated with positive organizational attitudes and behavior, such as organizational commitment (Folger and Konovsky, 1989; McFarlin and Sweeney, 1992; Korsgaard, Schweiger, and Sapienza, 1995), organizational citizenship behavior (Moorman, 1991; Konovsky and Pugh, 1994), performance improvements (Lind, Kanfer, and Earley, 1990), and accept acceptance of organizational authorities and policies (Greenberg, 1994; Huo et al., 1996).
Two previous studies have demonstrated the importance of organizational justice variables on people's propensities to sue their employers. Bies and Tyler (1993) asked employed residents of Chicago who reported negative experiences with supervisors whether they had considered suing their employers. They found that thinking about claiming showed strong correlations with judgments that the process used by the supervisor was unfair. Likewise, in a content analysis of complainants' stated reasons for initiating wrongful-termination lawsuits, Youngblood, Trevino, and Favia (1992) found evidence that violations of procedural justice were the most commonly cited reasons given for claiming but that perceived violations of equity and distributive justice and violations of interactional justice also were mentioned frequently. Other studies have shown that survivors' attitudes toward their organization are strongly associated with their beliefs about the fairness of the manner in which their companies laid off other work workers (for a review, see Brockner and Greenberg, 1990). On the basis of these various literatures, we hypothesize a negative relationship between fairness judgments and claiming, particularly with respect to fair treatment and pay during the course of employment:
Hypothesis 1a (H1a): Claiming is directly and negatively related to judgments of air treatment during the course of employment.
Hypothesis 1b (H1b): Claiming is directly and negatively related to judgments of fair pay during the course of employment.
Treatment during employment versus treatment at termination. Recent advances in organizational justice theories highlight several interesting but as yet unanswered questions about precisely how fairness effects manifest themselves and which aspects of unfair treatment are most important. Early organizational justice theories (e.g., Adams, 1965; Thibaut and Walker, 1975; Greenberg, 1987; Lind and Tyler, 1988) assumed that justice-relevant information is processed as it is encountered and that it is continuously integrated into general impressions of distributive or procedural fairness. In contrast, recent organizational justice theories focus more precisely on both the cognitive processes by which fairness judgments are generated and the conditions under which justice judgments change. Fairness heuristic theorists, for example (Lind et al., 1993; Lind, 1999, 2001), have argued that fairness judgments are likely to be reprocessed and updated whenever there is a change, or an expectation of change, in a relation ship. At other times, justice judgments tend to be resistant to change. During relatively stable periods of relationships, the theory suggests, fairness judgments are used to decide how much one should invest in a relationship, and the judgments themselves are used in a "mindless" manner to interpret events without reassessing the judgment in light of ongoing experiences. It is only when the fundamental nature of the relationship appears to be changing that new fairness-relevant information is processed with an eye toward revising one's fairness judgment. This prediction is based on a functionalist analysis, founded on the assumption that fairness judgments are heuristics people use to guide their acceptance of organizational decisions, actions, and policies. According to the theory, if people use fairness judgments as decision shortcuts, their judgments will be generated quickly in new relationships and then simply be accessed, rather than revised, unless there is some clear and substantial indication of change nge in the relationship. The cognitive economy associated with the use of fairness judgments as heuristics would be minimal if the judgments were constantly being revised, so it is reasonable to assume that, without some provocation, well-instantiated fairness judgments will be less sensitive to experiences that otherwise would alter such judgments. Research by Lind, Kray, and Thompson (2000) demonstrated that fairness-relevant information has especially strong effects on fairness judgments when change is occurring. Extending this theory and research, it may be assumed that people's fairness judgments are sensitive to outcome, procedure, and treatment effects only at certain times, such as when organizational change is anticipated.
Greenberg (1993b) has made a similar argument, noting that some outcomes, especially those that are socially charged, not only have hedonic impact but also affect recipients' interpretations of their relationships with the person or organization allocating the outcome. Termination of employment is certainly both a socially charged outcome and an indicator of substantial change in the employee-employer relationship, and it is likely to prompt a strong reevaluation of fairness perceptions. This line of reasoning suggests that the link between claiming and treatment received at the time of termination will be substantially stronger than the link between claiming and the general quality of treatment received over the course of employment. [1] Thus, we hypothesized:
Hypothesis 2a (H2a): Claiming is directly and positively related to fair treatment at the time of termination.
Hypothesis 2b (H2b): Treatment at termination is a more powerful antecedent of claiming than is treatment during the course of employment.
In this study, we focus on dimensions of treatment at termination that have figured prominently in the literature on organizational justice, including employees' perceptions of fair treatment at the time of termination and their perceptions that they received a full and honest explanation of the reason for the termination (Bies and Moag, 1986; Greenberg, 1990a, 1993a, 1994) and that they had been treated with dignity and respect at the time of termination (Tyler and Lind, 1992; Lind, 1997).
The vendetta effect. Recent theoretical work in organizational justice has suggested some additional factors that determine reactions to fairness judgments. For example, Bies (Bies, Tripp, and Kramer, 1997; Bies, 2001) has noted that unfair treatment sometimes can provoke revenge-seeking behavior. Not all unfair treatment provokes revenge, however, suggesting that we need to identify the conditions under which people are likely to engage in revenge. We suspect that revenge-seeking behavior would be most likely to occur when unfair treatment at termination is extreme. Our logic follows from relational theories of organizational justice (e.g., Lind and Tyler, 1988; Lind, 1995), which suggest that much of the sting of unfair experiences comes from the feeling that unfair treatment carries a message of social exclusion, a message that can threaten a person's social identity. Supporting this notion, studies have shown that exposure to unfair procedures does, in fact, lead to decreased self-esteem (e.g., Koper et a l., 1993; Vermunt et al., 1996). We made the additional assumption that at some point there is a qualitative shift in the potency of the exclusion message. As one moves from mildly unfair treatment, which carries only a message of lower status, to extremely unfair treatment, which carries a message of outright and vigorous rejection, a line is crossed, and the threat that unfair treatment poses for self-esteem becomes much more serious.
When treatment crosses that boundary into the area of implying vigorous rejection, we reasoned, the threat to self-esteem might provoke a vendetta response, as the target of the unfair treatment seeks to counter the threat by attacking its source (see also Lind, 1999). In the context of employment termination, the vendetta response can manifest itself in an attempt to reestablish one's social identity through claiming. The former employee who feels very badly treated finds that he or she can use litigation as a mechanism for instituting a new, negative relationship with the former employer. Empirically, we expect this process to produce stronger justice effects as one moves from mildly unfair to very unfair treatment at termination, appearing as an accelerating, and therefore nonlinear, negative relationship between fair treatment at termination and claiming:
Hypothesis 3 (H3): The relationship between perceptions of unfair treatment at termination and claiming cognitions and actions will accelerate as a function of the extremity of the perceived unfairness of the treatment.
Hardship and justice effects. Several authors (e.g., Greenberg, 1994; Brockner and Wiesenfeld, 1996) have suggested that the strength of procedural justice effects will vary depending on whether the outcome of the process is positive or negative. Brockner and Wiesenfeld (1996) argued that procedural fairness effects are stronger when outcomes are negative than when they are positive. Given that all of the respondents in the present study had lost their jobs, the outcomes experienced by all clearly were negative, but depending on the level of hardship associated with their termination, some respondents may have experienced more negative outcomes than others. Extending the effects noted by Brockner and Wiesenfeld (1996) to the present context, we predict that the greater the hardship associated with the loss of a job, the greater the impact of fairness judgments will be on claiming:
Hypothesis 4 (H4): The greater the hardship associated with job loss, the stronger is the link between claiming and perceptions of fair treatment.
Employers' actions associated with claiming. Research on factors affecting the ease of finding new employment (e.g., Warr, 1987) suggests that two factors will affect feelings of good or poor treatment at termination: the length of notice of the impending termination and the amount of help offered in finding a new job. These actions on the part of employers should have substantial effects on claiming cognitions and behavior for both instrumental and symbolic reasons (see Brockner et al., 1984, 1987). From an instrumental perspective, lengthier notice and reemployment assistance enable prospective layoff victims to prepare better for the inevitable changes in their lives, thereby reducing the hardship they experience. From a symbolic perspective, employers who give assistance or lengthy notice of impending termination send the message that they are concerned about their employees' well-being. Thus, we hypothesized:
Hypothesis 5a (H5a): Longer notice of impending termination of employment will decrease claiming thoughts and claiming actions.
Hypothesis 5b (H5b): Help in finding new employment will decrease claiming thoughts and claiming actions.
Sociolegal Perspective
Our investigation would be incomplete if we failed to consider the role of potential antecedents suggested by the cross-disciplinary field of sociolegal studies (Tapp, 1977). There has been little empirical or theoretical work on the specific topic of what prompts people to sue their present or former employers (for exceptions, see Bies and Tyler, 1993; Young-blood, Trevino, and Favia, 1992). There is, however, a substantial literature on why people sue over injuries or in response to interpersonal or contractual disputes (e.g., Felstiner, 1974, 1975; Felstiner, Abel, and Sarat, 1981; Harris et al., 1984; Hensler et al., 1991; Kritzer, Bogart, and Vidmar, 1991; Kritzer, Vidmar, and Bogart, 1991). In contrast to organizational researchers, who generally regard law as an absolute constraint or a purely normative system, sociolegal researchers, basing their approach on the legal realist tradition in law (of. Felsteiner, 1974), view claiming and other law-related behavior as part of a dynamic social system amenable le to study using the methods of social and behavioral science (e.g., Hensler et al., 1991). The sociolegal literature looks at such fundamental issues as how claiming is affected by judgments of blame and how claiming is affected by the social dynamics of legal remedy. This same literature also should be applicable to the question of why fired or laid-off workers sue their former employers (Lind, 1997).
The claiming process. Sociolegal scholars (e.g., Felstiner, Abel, and Sarat, 1981) have conceived of claiming as a multistage process. In the development of a tort (i.e., injury) claim, for example, the process begins when people perceive that the event in question is, in fact, injurious. For the claim to progress, potential claimants must then blame someone other than themselves for the injury. Finally, potential claimants must possess the will, the means, and the know-how to pursue their claims. In Felstiner, Abel, and Sarat's (1981) terminology, there first must be naming, followed by blaming, and, only then, claiming. In sociolegal writings, one often sees reference to a claiming pyramid, with many potential claimants never even considering litigation, a smaller proportion considering but not acting on the consideration, and an even smaller proportion actually undertaking some action to sue.
Applied to an employment termination claim, the claiming pyramid implies that the impact of potential antecedents of claiming might have their greatest effects at either or both of two junctures in the legal process: (1) the point at which the initial idea is developed to sue a former employer, referred to in the sociolegal terminology as considering claiming (Hensler et al., 1991), and (2) the point at which this idea is transformed into claiming behavior, termed claiming or claiming actions. We measured both the consideration of claiming and claiming actions and refer to them collectively as claiming. Sociolegal theory points to two general classes of variables associated with claiming: perceptions of fault and respondents' characteristics related to knowledge of the process and the availability of legal remedy.
Claiming and fault. Allegations of fault or wrongdoing are a key part of the liability-based legal system that is activated when a worker makes a claim against his or her former employer. Virtually all sociolegal accounts of claiming assume that the fault-based approach to claiming exists not only in the law but also in the belief structure of potential claimants (see Felstiner, Abel, and Sarat, 1981; Kritzer, Bogart, and Vidmar, 1991). Moreover, this assumption has empirical support. In a study of wrongful injury claims, Hensler et al. (1991) found that at least in some situations blame does seem to drive claiming behavior. Following the traditional sociolegal position, we hypothesize as follows:
Hypothesis 6a (H6a): Claiming is directly and positively related to the perception that the termination of employment is the employer's fault.
The picture is not always simple, however. The relationship between blaming and claiming appears to be stronger in some social contexts than in others. Hensler et al. (1991) found that injuries from automobile accidents were much more likely to be accompanied by blaming someone else than were injuries on the job or injuries related to products. Moreover, they found that blame was more strongly correlated with claiming in the context of the automobile accident than in the other injury contexts. They explained these findings by suggesting that the traditional social construction of accounts of automobile accidents focuses attention on blame to an extent not seen in other contexts and that this leads to a stronger relationship between blame and claiming. Because getting fired from a job is a social context that is charged with personal responsibility implications, whereas layoffs usually are interpreted as the result of impersonal forces in the economy, blaming is likely to be a more salient process in the case of firings. Hence, the relationship between blame and claiming should be stronger among those who were fired than those who were laid off:
Hypothesis 6b (H6b): The relationship between blaming and claiming is stronger for former employees who were fired than for those who were laid off.
Some of the sociolegal literature raises an important issue concerning the direction of causality between perceptual variables believed to be antecedents of claiming thoughts and actions. Some scholars (e.g., Harris et al., 1984) have argued that blaming one's employer for job loss might be caused by, rather than being a cause of, claiming. The argument is that once an employee starts a claiming process, it is to his or her legal advantage to attribute improper motives to the employer, so blame is retrospectively generated to justify the claim. Similar arguments could be advanced concerning claiming actions and their potential effects on fairness judgments. That is, the decision to claim could result in retrospective downward evaluation of the fairness of treatment. The question of direction of causality has important theoretical and policy implications. For example, if blaming attributions (or fairness judgments) do, in fact, cause claiming, then an employer can lower the probability of a claim by acting in a way that lessens the likelihood that he or she will be blamed (or judged unfair). But if claims are, in fact, motivated by other factors--if the perceptions are consequences rather than causes of the claiming process--then blame-reducing or fairness-enhancing actions would have little effect. We test the direction of causality issue with the following hypothesis:
Hypothesis 7 (H7): Blaming and perceived fairness are causes, not merely consequences of consideration of claiming or claiming actions.
Characteristics of the respondent or job. Sociolegal analyses of claiming suggest that various characteristics of the respondent and of the employment context can affect claims in two ways. First, because the law gives special protection to certain classes of people (e.g., minorities, women, older workers) and because discrimination against these classes has been a feature of American work life in the past, potential claimants in protected groups may be predisposed to think about suing, either because they feel they are more likely to win or because they are more likely to assign blame. But wrongful-termination claims are not restricted to claims of discrimination in firing. A recent trend in wrongful-termination law--the erosion of the employment at will doctrine in case law in favor of doctrines involving implied contracts (Dertouzos, Holland, and Ebener, 1988)--broadens the range of potential bases for the legal claims employees may seek. In addition, workers always have been able to sue over violations of formal employment contracts. These bases of claiming are potentially available to non minority employees, making the following hypothesis not a truism, but a legitimate empirical question:
Hypothesis 8 (H8): Members of protected classes--minorities, women, and older workers--will be more likely to claim than individuals who are not members of protected classes.
Sociolegal analyses also suggest the possibility of links between claiming and other characteristics of respondents or jobs. Insofar as access to lawyers and knowledge of legal process and options (including knowledge that the option of claiming even exists) is not distributed evenly across the population, some groups of people may be more inclined than others to sue. Harris et al. (1984), who investigated the antecedents of claiming for injuries in Great Britain, found that union members filed more claims for injuries than their non unionized counterparts, apparently because of a higher level of claims consciousness (i.e., awareness of the availability of claiming) and easier access to legal counsel among union members (most British unions provide legal assistance to their members). Following this rationale, we hypothesize as follows:
Hypothesis 9 (H9): Claiming is more prevalent among terminated workers who belong to a union than terminated workers who do not belong to a union.
Similarly, sociolegal theories suggest that claiming will be more prevalent among individuals who are more certain of their rights, and an employment contract may help define this certainty in employees' minds (Felstiner, Abel, and Sarat, 1981; Harris and Veljanovski, 1986). Given this reasoning, we hypothesize as follows:
Hypothesis 10 (H 10): Claiming is more prevalent among terminated workers who had employment contracts than terminated workers who did not have employment contracts.
This same argument suggests a connection between claiming and another respondent characteristic variable, education level. Sociolegal theory suggests that people who are better educated are more claims conscious and more at ease invoking the legal system than those who are less well educated (Felstiner, Abel, and Sarat, 1981). Thus, we hypothesize:
Hypothesis 11 (H 11): Claiming is positively associated with the level of education attained.
Economic and Quasi-economic Factors
Much of the literature on claiming is predicated on the rational-economic premise that decisions to claim depend on the expected costs and benefits associated with doing so. This assumption forms the foundation of analyses of claiming ranging from formal economic analyses of tort litigation (e.g., Priest and Klein, 1984; Posner, 1986) to policy debates about whether organizations are deep-pocket defendants that attract litigation because they can afford to pay large awards (MacCoun, 1996). In its most basic form, the argument parallels that made in transaction-cost economics (Williamson and Masten, 1999). Specifically, the likelihood that any given terminated worker will initiate a lawsuit is seen as a direct and positive function of three factors: (1) the amount of money the worker thinks he or she will win if successful, (2) the worker's judgment of the likelihood of winning, and (3) the costs associated with litigation.
Although the organizational justice literature suggests that people are less concerned with monetary outcomes than with nuances of treatment in deciding whether to undertake actions like claiming, it is not at all unlikely that economic and socioeconomic concerns come into play at some point in the claiming process. Lind (1997) has argued that economic factors have an independent effect on actual claiming behavior, above and beyond any effect they have on thoughts about claiming, because actual claiming typically involves not only a prospective claimant's decision to act but also his or her attorney's decision to take the case. Whereas claimants' actions may be driven primarily by affect (since claimants can take action at little or no financial cost to themselves, given the contingency-fee arrangements they typically have with attorneys), their attorneys may be less willing to pursue claims that have a low likelihood of financial payoff because they do so at their own expense. Thus, claiming behavior may be expected to be directly related to the perceived possibility of payoff. Following this reasoning, we hypothesized as follows:
Hypothesis 12a (H12a): The propensity to claim is directly and positively related to the anticipated payoff of the litigation.
Hypothesis 12b (H12b): The anticipated payoff of litigation is directly related to actual claiming behavior over and above any effect mediated by consideration of claiming.
Beyond the rational calculus underlying economic analyses of how people decide whether or not to sue, people also may consider economic variables in less rational ways. For example, terminated employees who are suffering severe hardship might sue without giving much consideration to a careful analysis of the likely costs and benefits. Instead, the severe hardship might prompt the terminated employee to try anything. This rationale leads to the following hypothesis:
Hypothesis 13 (H13): Claiming is directly and positively related to the magnitude of financial hardship perceived to result from the termination of employment.
