Why Employers Should Not Manage out of Fear

Why Employers Should Not Manage Out of Fear

On March 4, 1933, during the depths of the Great Depression, President Franklin D. Roosevelt delivered his first inaugural address.  The President exhorted an impoverished, exhausted, and frightened nation that, "[t]he only thing we have to fear is fear itself".  His famous quotation urged Americans to overcome the paralyzing terror gripping America and to embrace bold action, signifying that fear often hinders progress more than the actual problems causing such terror.   Nearly a century later, there’s an important lesson for employers to draw from Hyde Park’s favorite resident.

In today’s increasingly litigious environment, employers often feel pressured to avoid any actions that could be perceived as discriminatory, fearing the possibility of legal claims or lawsuits. However, managing out of fear of discrimination claims is not only a misguided approach, but it also undermines the effectiveness of your organization and the well-being of staff. Employers should focus on fair, transparent, and ethical management practices rather than operating in dread of potential legal repercussions.

Firstly, managing solely out of fear of legal consequences often leads to poor decision-making. Employers, allowing the potential of a discrimination lawsuit to dictate their actions, often neglect the core values of fairness and merit-based performance. For instance, an employer might avoid disciplining an underperforming employee because they are afraid that the employee will claim that the action is based on age, gender, or race. This hesitance can create an environment where employees are not held accountable for their work, and poor performance is allowed to continue unchecked. In the long run, this can harm your organization’s overall productivity and morale. 

Moreover, employers may manage, supervise, discipline, and even terminate employees for a wide variety of legitimate business reasons.  In the case of Eisenhauer v. Culinary Inst. of Am., the New York trial court observed that courts have recognized many valid reasons for employment actions and decisions, including "considerations of merchandising proficiency, aggressiveness, and experience," "economic necessity of significantly cutting back its work force to survive," "employee's substandard performance," and "employee's inability to cooperate with fellow employees, various acts of insubordination, and refusal to follow instructions."  These examples demonstrate that employers possess substantial latitude in making decisions based on genuine business needs.  It may be helpful to remind supervisors that they possess such latitude as a bulwark against fear-based management decisions.

Employment Liability Practices Insurance (“EPLI”) is another valuable and empowering tool for employers and their supervisors.  Simply put, EPLI coverage defrays the costs of defending, settling, or paying judgments resulting from such claims (after paying your deductible, or course).  Consequently, EPLI helps alleviate the tendency towards fright-focused management while mitigating the financial risks associated with possible discrimination claims.  Having an EPLI policy in place is a crucial and immediate step you can take helping to address the dual-headed monster of anxiety-driven management and the monetary expense of discrimination claims.  

Managing out of “litigation phobia” often results in avoiding necessary conversations and remedial adjustments that may be beneficial to both the employee and employer.  Constructive feedback and performance evaluations, which are crucial to improving individual and team functioning and productivity, may be avoided altogether. An employer might also shy away from making tough decisions, such as terminating employees who are underperforming, undermining the workplace culture and morale, or who are simply not a good fit.  This can prevent both the employer and the employee from moving forward in a way that benefits everyone. The employee may continue struggling, feeling unfulfilled or out of place, while the employer may be suffering from a lack of talent or diminished quantity or quality of work deliverables.

It is important to recall that legitimate discrimination claims serve the valid purpose of addressing violations of important workplace safeguards and protections.  Employers are legally responsible for ensuring that all employees are treated fairly and without bias and are not discriminated against based on their protected characteristics (such as race, gender, ethnicity, sexual preference, etc.).  However, this obligation should not become a reason or excuse to avoid supervising, reviewing the performance of, or disciplining, your staff.  Rather, this responsibility requires implementing clear policies, providing regular training, and maintaining open lines of communication with employees about expectations and standards.  If an employer’s actions are rooted in fairness and consistency, and are contemporaneously documented to each staff’s personnel file, then the possibility of a discrimination claim becomes less likely, and when one rears its head, the employer is better situated to defend itself.

An employer allowing itself to become overly cautious in its management approach risks creating a culture of entitlement or complacency.  Staff may begin to feel that there are no real consequences for poor performance, which ultimately suppresses productivity and morale across your organization.  (As the saying goes, nothing is so damaging to the morale of a good employee as the tolerance of a poor one.)  An organization genuinely valuing its people will make decisions based on merit and performance, not dread.  Indeed, many successful enterprises thrive in no small part because they are not afraid to make the tough calls which are in the best interests of the business and its employees.

In conclusion, while it is crucial for employers to be aware of and comply with anti-discrimination laws, managing out of fear of lawsuits can have negative consequences extending far beyond the legal realm.  Employers should focus on fairness, clarity, and consistency in their management and supervisory practices rather than trying to avoid every potential claim. (And securing EPLI coverage from a reputable insurance carrier will tend to empower managers to focus on the former, rather than excessively worrying about the latter.)  By doing so, you can create a healthier, more productive work environment in which both your enterprise and employees can thrive.

So, while it’s not quite true, as President Roosevelt urged, that the only thing employers have to fear is fear itself (after all, this is still New York, and as Judge Gideon J. Tucker opined in 1866, "[n]o man's life, liberty, or property are safe while the Legislature is in session”), there is no need or upside to being paralyzed by the fear of a discrimination lawsuit.

This article is intended to be used for informational purposes only.  Legal advice is neither implied by the author nor should it be inferred by the reader.  If you have specific legal questions, please consult with your attorney.

Jeffrey Sculley, who may be reached at jsculley@mrmlaw.com, is an attorney and counselor at law focusing his practice on providing backroom human resource and employment support to businesses and not-for-profits; representing commercial and residential landlords; appealing adverse trial-court and administrative decisions; counseling clients on logo and brand development and trademark protection; and representing clients in all types of administrative, regulatory and compliance matters, before governmental agencies and administrative hearing officers and law judges.

Copyright © 2026 Jeffrey Sculley.  All rights reserved.  This article may only be reproduced in full including this copyright reservation.