This post discusses the underutilized litigation strategy of extending an unconditional offer of reinstatement to a former employee-plaintiff who has filed (or has threatened to file) suit challenging his or her termination from employment.

How the Rejection of an Unconditional Offer of Reinstatement Impacts Damages

The U.S. Supreme Court has held that a former employee’s rejection of an unconditional offer of reinstatement (i.e., one that does not require the plaintiff to waive or compromise his or her discrimination claim) to a substantially equivalent position tolls the accrual of the employer’s back pay liability:

An unemployed or underemployed claimant, like all other Title VII claimants, is subject to a statutory duty to minimize damages. . . . This duty, rooted in an ancient principle of law, requires the claimant to use reasonable diligence in finding suitable employment. Although the unemployed or underemployed need not go into another line of work, accept a demotion, or take a demeaning position, he forfeits his right to back pay if he refuses a job substantially equivalent to the one he was denied. Consequently, an employer charged with unlawful discrimination often can toll accrual of back pay liability by unconditionally offering the claimant the job he sought, and thereby providing him with an opportunity to minimize damages.

A plaintiff’s rejection of a Ford Motor Offer is measured by an objective standard – namely, whether a reasonable person would refuse the offer of reinstatement. See Feidler v. Indianhead Truck Line, Inc., 670 F.2d 806, 808 (8th Cir. 1982). In analyzing the effect of the plaintiff’s rejection of an unconditional offer of reinstatement, the Court should consider whether the offer was made in good faith and the unreasonableness of the plaintiff’s conduct in rejecting the offer. See, e.g., Giandonato v. Sybron Corp., 804 F.2d 120, 124-25 (10th Cir. 1986).

The Pros and Cons of Making an Unconditional Offer of Reinstatement

Employers generally are reluctant to extend offers of reinstatement to former employees who have sued them, especially since the former employee would not be required to relinquish his or her discrimination claim as a condition of returning to work. This is, of course, a legitimate concern. Managing the performance of a current employee with a pending discrimination claim can be difficult and often spawns additional retaliation claims when a post-reinstatement adverse job action is taken against the employee. However, while there always exists the risk that a plaintiff will accept the offer of reinstatement, they typically do not in this author’s experience. The plaintiff’s attorney (if he or she has one) may not be familiar with Ford Motor Co. and its progeny, and consequently, may not understand the legal effect of rejecting a Ford Motor Offer. Under these circumstances, the plaintiff’s attorney likely would employ the common settlement strategy of rejecting the offer and making a higher counter-demand. In other words, the plaintiff’s attorney may view an early offer of reinstatement as merely an opening offer (and possibly a sign of weakness) to be rejected and negotiated upward. Such rejection would immediately toll the accrual of back pay (and vitiate any front pay liability), and the employer would be under no obligation to continue to negotiate with the plaintiff or place the Ford Motor Offer back on the table at a later date.

A plaintiff also may reject a Ford Motor Offer because they subjectively fear retaliation following reinstatement. However, a plaintiff’s subjective and unsupported fear of future discrimination or retaliation by the defendant-employer generally is insufficient to justify the rejection of a Ford Motor Offer, even when the plaintiff’s claim is premised on the former employer’s alleged severe and pervasive harassment of the employee. See, e.g, Brigalone v. Kona Coast Resort Joint Venture, 866 F. Supp. 1258, 1295-96 (D. Hawaii 1994).

Of course, some employers simply are not willing to risk that the plaintiff will accept a Ford Motor Offer, especially if the plaintiff initially was terminated for indisputable, well-documented, legitimate, and non-discriminatory reasons (e.g., workplace violence caught on videotape, illegal drug use on the employer’s premises, etc.). Under these circumstances, it may not be worth the risk of extending a Ford Motor Offer in the hope that it will be rejected.

Still, there are times when it makes sense to extend a Ford Motor Offer even when there is a strong likelihood that it will be accepted. For instance, it may be a good strategy to extend a Ford Motor Offer to an employee claiming that he or she was constructively discharged (i.e., the alleged discriminatory conditions were so intolerable that any reasonable person would feel compelled to resign). Because the employer’s position is that it never terminated the employee in the first place. As explained in more detail below, the offer can be tailored to address/remedy the alleged intolerable conditions that led to the plaintiff’s resignation.

It also makes sense to extend a Ford Motor Offer if the employer’s defense to the underlying claim is weak (e.g., when the weight of the evidence makes the likelihood of summary judgment remote) or non-existent (e.g., when the employer’s termination of the plaintiff constitutes a technical statutory violation that imposes strict liability on the employer irrespective of the employer’s lack of intent to violate the statute, which may occur, for instance, when an employer fails to adhere to the procedural prescriptions of a state drug testing statute). In this context, extending a Ford Motor Offer significantly decreases damages exposure which, in turn, increases the likelihood of the plaintiff settling a case that the employer has no interest in litigating to verdict.

The Form and Content of a Ford Motor Offer

First and foremost, the Ford Motor Offer should be in writing and expressly state that the offer is unconditional and does not require the plaintiff to waive or in any way compromise any claim that he or she may have against the employer. Second, the offer should make clear that the employee is being offered the same position that he or she formerly held, including the same compensation and other terms and conditions of employment. Third, the offer should reiterate the employer’s non-discrimination/non-retaliation policy and assure the plaintiff that there will be no retaliation against him or her if the offer is accepted. Finally, if the plaintiff is claiming harassment or other discriminatory treatment by a former supervisor, the employer may want to consider offering the plaintiff the opportunity to report to a different supervisor. Of course, the Ford Motor Offer may include other information depending on the circumstances, and outside counsel should be consulted regarding relevant case law in the jurisdiction in question.

In sum, a Ford Motor Offer can substantially reduce an employer’s damages exposure. Although they present some risk, they represent a powerful weapon in the defense attorney’s arsenal and their pros and cons should be discussed with the client in lawsuits challenging a termination decision.

If you have any questions about this requirement or have any other employment issues, do not hesitate to contact Bryan Cave’s Labor and Employment Client Service Group.