Protecting Executive Compensation and Careers with Circumstantial Evidence

Even the savviest executive may be stymied when unfairly criticised or wrongfully accused. Compensation and careers are on the line, and, although the executive may know that something is not right, he or she may not know how to prove it.

That fear is often based on the lack of direct evidence – the proverbial “smoking gun” that would exonerate the executive and protect his or her compensation and career. However, employment lawyers do not need direct evidence to prove a case. Instead, employment lawyers rely on the evidence that is available, which is often circumstantial evidence. Those are the circumstances from which a jury, judge or arbitrator may conclude that the lawful explanation asserted by a company is not the real explanation for the adverse action taken against the executive. Many employment cases may be proven by circumstantial evidence. For example, under an executive employment agreement, an executive terminated “without Cause” is often entitled to enhanced severance payments, forward or continued vesting of equity and other favourable severance benefits. If a company trumps up “Cause” so as to rob the executive of those enhanced benefits, the executive may bring a claim for breach of contract and may use circumstantial evidence to prove that the alleged “Cause” was either factually not true or not the real reason for the termination.

Likewise, an executive may use such evidence to prove that the real motive was to retaliate against the executive for whistleblowing or to get rid of an older executive in order to make room for someone younger.

Read on to learn how employment lawyers prove such claims with circumstantial evidence. Many of the examples are from the field of discrimination law but the concept – using circumstantial evidence to prove elements of an employment claim – applies almost universally in the employment field.

 The Elements of an Employment Claim

As a general rule, almost all employment claims require proof that the reasons given for the adverse employment action are either false or not the real reason. In whistleblowing and discrimination cases, the executive will also have to prove that the real reason was an illegal reason – either to retaliate for legally protected whistleblowing or to unlawfully discriminate based on the executive’s membership in one or more protected categories (age, disability, national origin, race, religion, sex, and so forth, depending on the jurisdiction).

Often times, the reason a company gives for an adverse employment action does not make sense.

By way of example, the four elements of an employment discrimination claim are the following:

  1. That he or she is a member of one or more protected categories, e.g., 40 years old or older;
  2. That he or she has suffered an adverse employment action, e.g., an employment termination;
  3. That the motive was unlawful animus, e.g., bias against a person because they are 40 or older;
  4. That the discriminatory animus caused the adverse action.

The first two elements are usually proven by direct evidence. For example, a CEO in his late 50s (a member of a protected class) is removed from his position (suffers an adverse employment action).

However, there is often no direct evidence of the last two elements. As a general rule, the Board Chair does not say to the CEO, “We think a person your age is too old for the job (age animus) so you are being removed as CEO (causation).” Instead, the Board Chair is more likely to say words to the effect of, “We have been disappointed with you and think it is time for a change.”

Having no direct evidence of unlawful motive and causation, the CEO will have to prove those elements of his case by presenting the jury, judge or arbitrator with what one court called a “convincing mosaic of circumstantial evidence [which] shows that [unlawful conduct] has occurred.”

The Convincing Mosaic

Often times, the reason a company gives for an adverse employment action does not make sense. For example, the Board Chair may tell the CEO that he is being removed because he does not have the experience needed to take the company into certain markets, but the company replaces the CEO with someone who has even less experience. Such “weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer’s…reason for its action” may be used as circumstantial evidence to show that the employer’s stated reason for its decision is not the real reason. Similarly, if a company provides a reason which is simply false, such as saying that the CEO does not have any such market experience, which he or she, in fact, demonstrably has, such falsity can also be used to prove that the real reason must not be the asserted reason.

Reliance on unlawful stereotypes may provide further circumstantial evidence of unlawful motive and causation. For example, if the Board Chair tells a female CEO that she is being removed because she “is too aggressive,” “has a voice that Board members don’t want to hear,” and “needs a course at charm school,” these stereotypical criticisms may be used to demonstrate gender bias.

Sometimes timing can also serve as circumstantial evidence of unlawful motive and causation. For example, a jury may consider as suspect the fact that the Board had no criticisms of the CEO until after he or she was diagnosed with cancer or, in a whistleblower case, until after her whistleblowing conduct became known.

Excessive subjectivity in the reason given for the adverse action can also be circumstantial evidence of unlawful motive and causation. Take, for example, the CEO who has surpassed all of his or her targets but sees his or her bonus reduced for not showing “hustle” or not being “sensitive to the company culture.”

These are just a few examples of the types of circumstantial evidence that may contribute to the “convincing mosaic” from which a jury may deem that the reason given for an adverse employment action is not the real reason. Other examples include, but are not limited to:

  • Shifting rationales, calling veracity into question – Inconsistencies in the reasons given by a company for an adverse action may cause a jury, judge or arbitrator to doubt the veracity of the company’s evidence of, for example, performance deficiencies or misconduct;
  • Deviation from contract terms, practices and/or policies – When, for example, an executive’s employment agreement provides for notice and an opportunity to cure prior to a termination for Cause, the failure to provide adequate notice and a meaningful opportunity to cure may evidence that the reasons given for the termination are not the real reasons;
  • Revelatory remarks – Comments made by the decision-makers of a company may provide a “window into [their] state of mind.” For example, “John is too expensive to get rid of” may evidence the trumping up of Cause for a termination; “the mind slows when a man hits 60” may evidence age bias; and “we value loyalty above all else” may evidence animosity toward a whistleblower;
  • Treatment of others – Differential treatment, such as favouring younger employees or those who did not engage in whistleblowing, may also be circumstantial evidence of a company’s real motive.

In conclusion, although “smoking gun” direct evidence may be hard to find, circumstantial evidence is often abundant; the challenge is knowing where to look and how to put the pieces of evidence together into a “convincing mosaic”. If you believe that you are being subjected to wrongful or illegal treatment, consult an employment attorney as soon as possible and let your lawyer help you prove it.

About the Authors

 David I. Brody is an Associate in Sherin and Lodgen’s Employment Law and Litigation departments. He represents clients in a wide range of matters, including wage and hour issues, wrongful termination, discrimination, retaliation, whistleblowing, and contract negotiation and enforcement. David has represented clients in both federal and state courts in Massachusetts and in Public Hearings before the Massachusetts Commission Against Discrimination (MCAD) and the Civil Service Commission. David can be reached at

 Jaclyn L. McNeely is an Associate in the Employment Law Department at Sherin and Lodgen. She represents clients in a wide range of matters, including wage and hour issues, wrongful termination, discrimination, retaliation, and contract negotiation and enforcement. Her experience includes advising clients on FMLA, FLSA, Massachusetts Wage Act and parental leave. Jaclyn can be reached at


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