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Discrimination and the “business judgment” rule

When an employee feels unfairly targeted by an employer’s personnel decision, it sometimes leads to a debate about whether the employee has a legal claim for wrongful discharge, illegal retaliation, etc.  The Courts will not second-guess management decisions unless the employee can prove illegal discrimination.   Pursuant to the “business judgment rule”, an employer can make a personnel decision for any nondiscriminatory reason, even if the business judgment seems objectively unwise. Courts will not act as super personnel departments assessing the merits — or even the rationality — of employers’ nondiscriminatory business decisions. Evidence that discrimination has occurred must consist of something more than questioning the employer’s business judgment.  
The employee can use direct or circumstantial evidence to show that the reason given by the employer for the personnel decision is a pretext for discrimination. Examples of direct evidence are racist, sexist, homophobic comments, or negative comments about a person’s age (if over 40) or disability.
Since discrimination can be subtle, employees can also use circumstantial evidence to prove discriminatory intent.  An employee can use this evidence to show that the employer’s supposed business reason is a pretext for illegal discrimination.  For example, if the employer’s stated reasons are untrue, this creates an allowable inference that discrimination was a factor.  If the employer gives different or inconsistent explanations for the decision to fire the plaintiff may be evidence of a pretext for discrimination.  Deviation from the employer’s established policy or practice may also be considered as evidence of pretext. 

Pamela A. Smith
Law Office of Pamela A. Smith
233 Needham Street, Suite 540
Newton, MA 02464


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