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EMPLOYEE MISCONDUCT: Employee's misconduct defeats claims

08.01.2010

Employers often have to impose discipline on more than one employee for similar misconduct. If employees are at different levels in the corporate hierarchy, imposing the same discipline isn't always appropriate. The Kentucky Court of Appeals recently addressed such a situation, approving the employer’s response. 

Background 

Joseph Flock began working for Brown-Forman, a Louisville-based distiller and marketer, in 1969. He held many positions over the years, eventually becoming vice president of the company’s Latin American and Caribbean markets, including Puerto Rico. He was supervised by Donald Berg. 

In May 2005, Berg's assistant, Becky Maier, received invoices totaling $485,000 from Puerto Rico. Maier determined that $313,000 of the amount could be attributed to broker commissions, leaving $172,000 in invoices to account for in the company's accounting system. When she asked what to do about the balance, Flock replied that she should classify it as "cost of goods sold" to avoid a budget overrun. Although he later admitted that his advice was improper, he apparently did so to avoid a confrontation with Berg about cost overruns in his division. 

The division controller, Lynn Wilkerson, made an official accounting entry correctly listing the $172,000 in invoices attributable to broker commissions and special promotions. However, at Maier's direction, she later changed the entry to inaccurately reflect the amount as cost of goods sold. Maier and Wilkerson both admitted they knew the classification was wrong. 

Later that year, Brown-Forman conducted an investigation and concluded that Flock, Maier, and Wilkerson had violated the company's code of conduct concerning false or misleading accounting records. Flock was demoted, his pay and bonus levels were reduced, and his evaluation was lowered. Maier and Wilkerson were punished less severely. 

Flock took issue with the punishment, eventually filing a lawsuit in which he alleged age discrimination, reverse gender discrimination, and retaliation. He continued to work for Brown-Forman for nearly two more years while the lawsuit proceeded. The trial court dismissed all of his claims, and Flock appealed. 

Court of Appeals' decision 

The Kentucky Court of Appeals rejected Flock's arguments based on his concession that his actions amounted to misconduct under the company's code of conduct, meaning the company had a legitimate reason for demoting him. The court also rejected his criticism of the demotion, concluding that he couldn't prevail by "merely questioning the soundness of Brown-Forman's business judgment or practices."  Flock simply had no proof that age was a motivating factor in the demotion decision. 

Next, the court disposed of Flock's reverse gender discrimination claim, concluding that he couldn't establish that the company was the "unusual employer who discriminates against men, and that he was treated differently than employees who were similarly situated." First, most members of senior management, including those who made the demotion decision, were men. Second, Maier and Wilkerson weren't similarly situated to Flock; they were in lower pay grades and weren't part of senior management. 

Finally, the court rejected Flock's retaliation claim alleging that the company treated him adversely after he filed his lawsuit. The court concluded that most of the adverse consequences he suffered were the result of his demotion, which occurred several months before he filed suit. Any subsequent actions weren't significant enough to constitute retaliation. Flock v. Brown-Forman Corp., Case No. 2009-CA-001184 (Ky. App., 2010). 

Bottom line 

This case shows the significance of an employee's supervisory status in assessing culpability and meting out discipline. Because Flock was a high-level employee, the company was justified in punishing him more severely for his actions. ✤


 If you have any questions or need help, please contact any member of the Greenebaum Doll & McDonald Labor and Employment Department.

Copyright 2010 M. Lee Smith Publishers LLC 
KENTUCKY EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Kentucky employment law.  Questions about individual problems should be addressed to the employment law attorney of your choice.

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