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Recognizing Liability for Employee Recognition Programs

Employers frequently utilize recognition programs as a way of rewarding employees for a job well done and boosting office morale.  “Employee of the Month” programs (“EMP”), however, can sometimes have the opposite effect and can actually become liability traps for employers if not run fairly.

Although competition can sometimes drive performance, it can also create unnecessary hostility.  As a practical matter, most workers fall into one of three categories: the good, the average, and, the barely-making-the-cut. Assuming the EMP is truly based on performance, then the employer’s “good” employees will always win.  This reality will likely only dishearten the “average” employees and will do nothing to encourage those barely making the cut.  On the other hand, if the award is simply passed from one person to the next so as not to leave anyone out, is it really even a reward? What if no one performed particularly well in a given month? In that case, is giving an award encouraging mediocre performance? For these reasons, many HR professionals question the effectiveness of EMPs altogether.

Another common problem with EMPs is that those who receive the honor often do not understand what they did to earn it.  Whether the award is for having the highest sales in a given month or for a good deed to a fellow employee, without set criteria, the award may appear arbitrary.  In the workplace, arbitrary can often be mistaken for discrimination.

Consider this situation: Lisa has been working at X-Company for ten years and almost exclusively works with males. There is no criterion for X-Company’s EMP award. Instead, the manager takes into consideration any given number of things each month and makes his own decision as to who should receive it. Lisa has never once received the EMP award, while some of her male colleagues have received it numerous times. Although the manager has never purposely excluded Lisa from winning; he simply has never given her the award. The same manager considers EMP awards when making promotions, however, and Lisa has not been promoted in years, despite her satisfactory work.

Lisa files a discrimination claim against X-Company and her manager, citing gender discrimination.  She uses the EMP as an example of how she has been unfairly treated compared to her male counterparts. Even though the EMP at Lisa’s work is not intentionally discriminatory, the lack of established and publicly-known criteria, opens the door for it to be interpreted that way.

To avoid this, employers should always explain what the EMP recognizes. Winning an EMP should be an attainable goal for everyone, and the criteria should never make it difficult or impossible for those in a protected class, such as gender or race, to earn. In short, give credit where credit is due, but never do so in a way that only works to the advantage of a few.

Special thanks to Maegan Pirtle and Shawn Beloin, Law Clerks for McBrayer, for contributions to this blog post. If you have any questions regarding the content found in this blog post please contact McBrayer.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

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