Can a workplace bully create true legal liability for an employer? Based on a recent decision of the Indiana Supreme Court, it would seem that the plain answer is 'yes.'

This April, the Indiana Supreme Court decided what appears to be the first workplace bullying litigation of its kind. The Court reinstated a verdict of $325,000 in favor of an employee who was assaulted by a surgeon during a verbal altercation at the hospital. While the surgeon attempted to argue that the damages were excessive and that the ultimate finding of assault was based on insufficient evidence, the high court rejected these arguments, and also allowed into evidence the surgeon’s prior aggressive acts in order to prove that he was a workplace bully. As importantly, the supreme court supported the trial court’s refusal to give jury instructions that there was no basis in law for a “workplace bullying” claim. (See Raess v Doescher, IndSupCt, April 8, 2008).

The Raess case is a reminder to employers to get a handle on their workplace bullies. Just because behavior does not appear to involve serious physical harm, or to rise to the level of unlawful harassment and discrimination, does not mean that a workplace bully is not causing irreparable damage to the workplace, as well as creating serious legal liability.

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No two people are alike – and that holds true for our prejudices. But there are some interesting trends that have found certain prejudices expressed more clearly among defined gender and ethnic groups.

Several studies have found that men are more tolerant of discrimination than women, but a study released this month goes one step further to find that both genders tend to more readily accept prejudice against some immigrants and Arab-Americans.

The study also found that:

• Men and women differed the least in regard to discriminating against Arab-American airplane passengers, and most in regard to African-American motorists.
• The highest percentage of respondents accepted discrimination against "poorly educated immigrants," followed second by acceptance of discrimination against Arab-Americans.
• Respondents were least likely to accept discrimination against the genetically disadvantaged, or people who are genetically at high risk for diseases that require expensive medical care.
• Men were 19.6 percent more likely than women to tolerate discrimination against obese people and 17.4 percent more likely to accept racial profiling.

The results, just released this month, come from surveys of more than 3,300 people conducted in 2002 by University of Southern California researchers.

It appears as though implicit bias (often subconscious) is driving the bulk of the problem. Edward J. McCaffery, a USC law professor, who co-authored the study, concludes that an individual who sees nothing wrong with certain kinds of biases will often find others objectionable.

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Whether the economy is … dare I say it … in a recession or not, employers and employees are feeling the pinch. Bad news in the housing market and the financial sector has made us all a bit skittish. And rest assured, you can count your employees among the nervous masses. What’s on their minds? A heady mix of stress that includes job security, threatened retirement savings, personal debt load, and future career prospects.

If your organization is tightening its belt or considering how to weather this period, it’s critical to steer senior leaders away from making one big mistake – cutting back on essential employment law training. Employment law training budgets should never be considered “discretionary spending,” especially in a downturn.

Employment law claims don’t dwindle along with a poor economy – they actually increase. This isn’t just speculative theory – it’s supported by a formal analysis of case filings.

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Thirty percent of employee learning in 2007 occurred online, a significant jump from 7 percent in 2005, according to two independent reports on the U.S. training market by the American Society for Training & Development (ASTD) and Bersin & Associates. As importantly, the reports find that “one of every three hours of training is now being delivered via some form of technology, and that ratio is expected to climb in coming years.”

The reason for the switch is that e-learning is more “flexible and efficient…[and] a more fluid model of training delivery” than the traditional classroom model, according to the reports. Instructor-led classes are also generally more expensive per learner, and organizations are growing reluctant to pull employees from their work in order to attend training sessions – not to mention tighter budgets during our slowing economy.

“It’s become pretty clear that companies simply cannot do corporate training without using technology,” said company president Josh Bersin. Even companies that were late adopting virtual training, such as St. Louis-based Anheuser-Busch Cos., have “reached a point where they [have] no choice.”

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There’s never a dull moment in the life of an HR or corporate legal professional. Just when you survived landmines for bad behavior at the holiday party and Valentine’s Day shenanigans, there is a new and hazardous workplace situation brewing – the 2008 presidential election.

The contest between Hillary Clinton and Barack Obama is one of the most talked about elections in years. And as the first female and first African American candidates engage in a highly televised debate season, the number of debates among coworkers is on the rise as well. And in a lot of cases, these discussions can center on topics not appropriate for the workplace, including ethnicity, gender, sexual orientation, religion, and even morality.

And while it’s exciting to see our nation so engaged in the race for our next president, the current frenzy can also create challenges for organizations when it comes to maintaining a discrimination-free workplace. The very topics of the debates – healthcare, abortion, the environment, economics, immigration, and the war on terror, are ones that people are passionate about, and may cause resentment and tense working relationships among employees.

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The U.S. Supreme Court has been busy this week, passing down two major employment law decisions. A brief summary of each case is below, along with its compliance training impact:

Admissibility of "Me Too" Evidence, is a Case-by-Case Analysis

A closely watched Supreme Court case, Sprint/United Management Co. v. Mendelsohn was decided yesterday. Mendelsohn was a laid-off older worker who sued her employer for age bias. At trial Mendelsohn attempted to rely on the testimony of other older workers who also were fired from the same company. The district court refused to allow the testimony indicating that the facts of these co-workers were not relevant, because they had been fired by other supervisors, not the supervisor who laid off Mendelsohn.

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When Sarbanes-Oxley passed in 2002, all of us understood that it represented a complete overhaul of financial controls and reporting in this country. What some of us didn’t understand, however, was that SOX created a whole new theory of employment discrimination – not discrimination related to membership in a protected category defined by Title VII of the Civil Rights Act (like race, gender or religion), but discrimination related to whistleblowing activities – like raising a concern about the books being cooked.

The key provisions of the whistleblower protection under Article 8 of SOX are as follows:

• Employees who provide information about acts they reasonably believe to be a violation of securities laws, rules of the SEC, or laws relating to fraud against shareholders, are protected from retaliation by their employer.
  
  
• Protected employees cannot be discharged, demoted, suspended, harassed, or otherwise discriminated against.

SOX retaliation claims have been steadily on the rise since 2002. What’s even more interesting is that the average recovery in a SOX whistleblower discrimination claim ($270,000) significantly exceeds the average recovery in a classic Title VII retaliation claim ($187,583). (Employment Practice Liability: Jury Awards Trends & Statistics, 2005, Jury Verdict Research, Horsham, PA.)

So we know these types of claims are prevalent – which is why a robust ethics and compliance training program will include appropriate coverage of whistleblower protections and the rule against retaliation. What some of us may not realize, however, is that SOX whistleblower protections could apply outside the U.S. At least that’s what a recent case out of the Southern District of New York is suggesting.

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When it comes to ethics and compliance training, I constantly find myself talking with in-house counsel about how to allocate the corporate legal budget. Where should the money be spent, and how can those decisions be justified? Sobering up to the current economic conditions (which are only going to get worse) makes the pressure around those budget allocation decisions even more extreme.

Plenty of organizations get bogged down in the smoke and mirrors of intricate compliance risk assessments and the infamous “training needs analysis” (usually run by a vendor who conveniently, also sells training). But when it comes to the baseline training that should drive the foundation of spend decisions, it’s really not that complicated. The core curriculum should be comprised of those areas where: (1) training is legally mandated, and (2) there is the greatest exposure based on actual litigation trends.

The first driver is pretty simple – frankly, because there aren’t that many true mandatory training laws. Most are concentrated in the areas of harassment and discrimination. (For a detailed overview, check out ELT’s mandatory compliance training summary.)

The second is a bit more complicated, and of course more fluid. You have to look at the actual litigation data from recent years. Luckily, we lawyers love to research this stuff, and write about the data at length – so the information is easy to come by. Take the recently released fourth Annual Workplace Class Action Litigation Report from Seyfarth Shaw LLP. It analyzes rulings and decisions in 507 leading class-action and collective-action cases against employers in all 50 states, along with key settlements. The report’s chief conclusions are that the rapid pace of wage-and-hour litigation is likely to continue this year, and that workplace litigation, especially class action and multi-plaintiff lawsuits – “continues as the chief exposure driving corporate legal budget expenditures.”

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Employers are desperately searching for wage and hour solutions. In the past few years, an astonishing number of organizations have been beaten down by litigation and expensive settlements, along with a daunting array of state and federal laws. To give you a sense of the scope of the problem, wage and hour class action claims now outnumber all federal discrimination class actions claims, combined.

Just yesterday, IBM announced plans to change the base pay and status of 7,600 workers. IBM will lower base salaries for these employees (6% of its workforce) and make them all overtime eligible. At the end of the day, employees shouldn’t see a significant change in their take-home pay – it will just be paid on slightly different terms, and workers will need to be diligent about properly recording their hours.

What motivated IBM to make this decision? A $65 Million settlement in 2006 for unpaid overtime (OT). IBM was hit with the kind of wage and hour case employers are terrified of facing – a class action claim that workers who are classified as exempt from OT are actually OT eligible. It’s typically a no-win situation for the employer, because when workers have been classified as exempt, detailed records of the hours they’ve worked simply don’t exist. That makes the job of plaintiffs’ counsel easy – and mighty lucrative. The burden of proof rests on the employer to prove employees did not work overtime, and without extensive documentation, that’s a tough row to hoe. Add in the ease of class certification with these types of cases, and you see why employers are facing a tidal wave of wage and hour litigation.

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What?
Amendments to the Federal Acquisition Regulations (FAR) now affirmatively require most companies doing business directly or indirectly with the federal government to: (1) adopt a code of business ethics and conduct (“Code”), and (2) educate all employees on its provisions.

Who?
FAR 3.10, FAR 52.203-13 and FAR 52.203-14 apply to government contracts of at least $5,000,000, and which require at least 120 days to perform.

How?
The new regulations require both an employee awareness program, as well as a robust internal audit program.

When?
Effective December 24, 2007.

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