Sexual Harassment Training : ELT, Inc. : AB 1825, Employment Law, Online Harassment, Compliance, and Harassment Training

It’s that time of year again – when we vow to make a difference and start the New Year off on the right foot. When it comes to personal resolutions, some of us have decided not to make them. I know some of my “good ideas” at the start of the year quickly turn into “what was I thinking? …” Like the year I tried to go cold turkey on not purchasing new (non-essential) consumer goods for a couple months – a challenge that proved extremely difficult and virtually impossible.

When it comes to the workplace though, making a couple of solid resolutions is a very good idea. The process of selecting your top initiatives and then working out a plan to achieve them can help you focus your time and attention on what really matters.

So … for those of us in the compliance training world, and those of us who manage employment law risks, what should be on the list? At ELT, we’ve boiled it down to 5 simple items:

1. Resolve to Avoid Crippling Fines and PR Nightmares: If we’ve learned anything from 2007, it’s that mandatory ethics and compliance training is a must for all employers. Training not only gets the right message out to your employees, but it can also help protect your organization from huge fines and criminal sanctions, not to mention a lot of bad publicity. Unfortunately, some employers learn this lesson the hard way. The most recent victim – the Tribune. They got caught inflating circulation numbers, lying to advertisers, and overcharging for ad placement. The Tribune just settled a criminal case with the feds to the tune of $15 Million. They now require ethics training for all their employees. If only they’d made a commitment to train employees sooner… they may have avoided this mess entirely.
   
   
2. Resolve to Send a Consistent Message to All Employees: When it comes to harassment training, one consistent, nationwide message is best for all employees. This includes everyone from entry level workers to your senior leaders (let’s not forget the recent Red Cross romance debacle). And don’t think that just because your state doesn’t mandate harassment training that it isn’t essential. If your organization is sued under federal law (and most claims today include both federal and state actions) sexual harassment training can mean the difference between winning and losing the case.
   
   
3. Resolve to Tackle New Ground with Wage and Hour Education: In the last few years, wage and hour litigation has slapped US employers squarely across the face. Employers of all sizes are reeling from costly and time-consuming litigation that’s resulting in staggering damage awards and settlements. Did you know that wage hour class actions now outnumber all discrimination class action cases, combined? 2008 is the year to do something about it, and to change your organization’s risk profile. Start (or enhance) your wage and hour compliance program with effective and carefully designed wage and hour training for all of your employees.  Training needs to address both supervisory and nonsupervisory employees, and accommodate state law issues. Wage and hour education can actually help your organization establish critical good faith defenses to federal and state wage and hour claims. And another side benefit, your employees will know how to do things right from the start. Most violations in this area result from a basic misunderstanding of the laws and your policies.
   
   
4. Resolve to Go Beyond Harassment: Harassment training alone may not be enough to protect your organization in the event of a discrimination lawsuit. For example, if you get sued for national origin disparate impact discrimination, trotting out your sexual harassment training program won’t get you very far, especially if punitive damages are on the table. Discrimination training for supervisors across all of the protected categories is a critical part of establishing the Kolstad defense. Remember, harassment is just one form of discrimination. Your managers need to be trained on discrimination basics across the employment lifecycle (hiring, performance management, terminations), in addition to harassment.
   
   
5. Resolve to Train More Efficiently & Effectively: Nothing is more frustrating than purchasing an entire library of compliance courses only to discover that you have way more content than you need or could possibly consume. When it comes to compliance training, the best approach is to stay focused. Most employers do not need a massive course library – they need 4 cornerstone courses (ethics and code of conduct, harassment, discrimination, and wage and hour). A narrow focus will help ensure that your annual training initiatives are a big success rather than a massive flop – and that they carry true ROI in terms of reduced claims, and assertable defenses.

Adopting these simple but effective compliance training resolutions will help your New Year get off on the right foot, and finish strong.

From all of us at ELT, all the best for 2008!

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.

Government Contractors Face Substantial Requirements

The new FAR rules are noteworthy for requiring both an employee awareness program and a robust internal audit program.  Specifically, the regulations provide that an employee training program should extend to all employees, and represent an “ongoing” effort to ensure that employees both know and understand their obligations under their employer’s Code. 

Likewise, the regulations require affected contractors to institute internal controls, including suggested “periodic reviews of company business practices, procedures, policies and internal controls.”  This make a robust ethics and code of conduct program an absolute essential for employers doing even modest business with the federal government. 

The new FAR requirements will sound very familiar to those in the private sector.  Most organizations adopted Codes of Conduct and ancillary ethics training programs following the passage of the Sarbanes-Oxley Act in 2002, and amendments to the Federal Sentencing Guidelines in 2004.   The FAR rules emphasize the need for an ongoing program, as well as the requirement to reach out to all employees.  These requirements codify what we view as best practices for all organizations – whether doing business with the government or not.

The complete text of the new FAR requirements can be found at http://acquisition.gov/far/current/html/Subpart%203_10.html and http://acquisition.gov/far/current/html/52_200_206.html.

A summary of the key rules follows:

Which Government Contractors Are Affected?

The new FAR requirements generally apply to any government contract worth at least $5,000,000 and which requires at least 120 days to perform.  They also apply with minor exceptions to subcontractors providing services under the affected contracts.

How Does the Timing Work?

• Within 30 days* of entering into a government contract, contractors must:
  
  
• Adopt a written code of business ethics and conduct;
   
  
• Provide a copy of the Code to each employee engaged in the performance of the government contract; and
   
• Promote compliance with the adopted Code.
  
  *This time may be extended by the contacting officer and the requirement does not apply to existing contracts that were awarded before December 24, 2007, or to task orders awarded under those contracts.
  
  
• Within 90 days of entering into a government contract, contractors must:
  
  
• Establish an “ongoing business ethics and business conduct awareness program; and
   
• Establish an internal control program aimed at:
  
  
• The timely discovery of improper conduct; and
  
  
• Ensuring corrective measures are taken.

What Kind of Employee Training and Audit Programs Are Required?

In general, the regulations provide that government contractors must adopt (1) employee business ethics and compliance training, and (2) internal audit programs:

• That are suitable to the size of the company and extent of its involvement in Government contracting.
• That facilitate the timely discovery and disclosure of improper conduct in connection with Government contracts 
• That ensure corrective measures are taken.

For details on available online training and awareness programs, go to ELT’s ethics training resources.

Do We Also Need to Display Hotline Posters?

Probably not.

Under FAR 52.203-14, if a contractor has implemented a business ethics and conduct awareness program, including a reporting mechanism (such as a hotline), then the contractor does not need to display any agency fraud hotline posters, other than any required DHS posters.

If a contractor has not implemented a business ethics and conduct awareness program, it must display a government agency or Department of Homeland Security-approved fraud hotline poster (available from the official Contracting Officer).  This requirement will most likely apply to small businesses that are not required to follow the training and internal control rules.  (See exceptions below.)

What Happens if We Don’t Comply?

Contractors that fail to comply with these new requirements could face withheld payments, loss of fee award, or even debarment, suspension or other disciplinary action. 

Are There Any Exceptions to the New FAR Requirements?

Yes.

The regulations do not apply when the contracts are awarded under the FAR Part 12 commercial item contracts clause, or when the contract will be performed outside of the United States, the District of Columbia, and outlying areas.

In terms of a partial exception, contractors that have represented themselves as small business concerns during the contracting process are excluded from the formal training program and internal control requirements. 

These exceptions also flow through to subcontractors.

Could There Be Additional Changes to the new FAR Requirements?

Yes.

At the request of the DOJ, a supplement to the Code is under consideration. The proposed additional rule was published on November 14, 2007 and the deadline for comments was January 14, 2008.

This Proposed Rule imposes additional requirements regarding codes of business ethics and conduct, including notification requirements for contractors upon becoming aware of violations of federal law.  The Proposed Rule appears to be consistent with the contractor compliance requirements in U.S. Sentencing Commission Guidelines Manual, which provide specific guidance on what the FAR Councils consider to be an effective ethics and compliance program. 

It is anticipated that these additional requirements will be approved.  Stay tuned to ELT’s website and blog for more updates. 

What Should We Do Now?

If your organization does business with the federal government, you need to immediately determine whether you have current or prospective contracts valued over $5,000,000. 

If you meet the threshold, it’s imperative to create a robust and easy-to-understand Code.  If you already have a Code, you should consider reviewing and updating it.   The new regulations require “periodic reviews of company business practices, procedures, policies and internal controls.” A Code should be a living document that reflects the ongoing needs and challenges of your business, as well as changes in the law.

The Code then needs to be widely distributed to your employees.  The distribution requirement dovetails nicely with the requirement to establish “ongoing business ethics and business conduct awareness program.”  The most effective way to communicate the Code, and to bring it to life, is to include it as part of your enterprise-wide training program.  With online education, the Code can be seamlessly delivered and tracked, along with the training.

Finally, you need to establish an “internal control program.”  Don’t let this sound more complicated than it needs to be.  The intent of the new FAR requirements is for companies to be able to discover improper conduct, and to take corrective action when they do.  In short, you need to have an effective complaint and investigation procedure.  This is likely something already well established at your organization.  The key is for employees to know about it – in other words, make sure that it’s well publicized through your training programs and other forms of internal communications (intranet, periodic e-mail announcements etc.)

Now here’s a reality check for those of you hoping to fit the exceptions.  Even if you’re not technically covered by the new FAR requirements, it is still highly advisable to follow these new rules.  Not only do they reflect the key components of the Federal Sentencing Guidelines (which almost every employer needs to follow), they represent basic best practices when it comes to risk management, and fostering a culture of compliance. 

The trend of Code adoption and ethics training is only continuing to build momentum.  In the coming months and years, we’re likely to see more of these types of regulations -- impacting employers of all sizes and types, and across all industries. 

For more information about online training and awareness programs, go to ELT’s ethics training resources.

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.

A Solution That Begs For Training

Reclassification is an interesting solution to an OT problem like IBM’s  -- and one that could help some employers get a handle on a piece of the wage and hour risk puzzle. However, reclassification also brings some new challenges and issues. In this case, do IBM’s newly classified employees really understand the rules of the road when it comes to their hours and pay?   With wage and hour law, the life of an exempt employee is very different from that of a non-exempt one. 

Non-exempt (a.k.a. OT eligible) employees need to keep meticulous records of hours worked, and must pay close attention to employer rules about everything from properly recording time, to reporting errors, to taking meals and breaks, to avoiding off-the-clock work. Then add in the need for supervisors to understand how to manage hourly employees – especially ones that were previously considered OT exempt.  Managers have special responsibilities when it comes to record keeping, errors and reporting, and handling employee complaints. Get any of the complex rules and requirements wrong, and IBM may find itself facing yet another expensive lawsuit.

That’s where wage and hour training comes in. Employers who chose to reclassify employees must also remember to educate them about key wage and hour rules. You should never just assume your workers know what to do – no matter how sophisticated or professional they may be. The requirements are complex and don’t always make sense. (In fact in many cases, they’re counter intuitive.) And while a well written and widely distributed policy is a good idea, we all know that policies are very unlikely to change employee behavior (let alone be read by your workers).  Policies need to be brought to life, and put into context, by companion education programs. 

Beyond educating your workforce about how to avoid wage and hour mistakes, training in this area has another huge benefit – the ability to establish affirmative defenses in the event of litigation.  While most HR and legal professionals are aware of this concept in the harassment and discrimination context, few truly understand the extent of damage mitigation that a training and compliance program can offer in the wage and hour arena.  To find out more, check out ELT’s whitepaper on training ROI.