Posted on February 8, 2008 11:01 AM by
Shanti Atkins
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.”
Diving into its details, the report’s got some compelling data and conclusions – one that should convince every employer why training dollars in 2008 should be focused on wage hour compliance and discrimination prevention. It’s a sobering look back at last year:
- Collective actions pursued in federal courts under the FLSA produced more rulings in 2007 than did class actions for employment discrimination or under ERISA.
- The Class Action Fairness Act of 2005 continued to have significant effects on case law, primarily in wage-and-hour class actions filed in state courts.
- Plaintiff lawyers resorted to state courts more frequently to pursue employment-related class actions, particularly in the wage-and-hour arena.
- Although the U.S. District Courts for the Southern and Middle Districts of Florida experienced more wage-and-hour filings than any other federal jurisdiction, the most significant growth took place in state courts in California, Florida, Illinois, New Jersey, New York, Pennsylvania and Texas.
- As to discrimination exposure, in 2007, the EEOC “became increasingly activist in its litigation filings.”
- Recoveries secured by the EEOC and the U.S. Department of Labor in 2007 “represented new records in total monetary relief as compared to past years.”
- The financial industry has been bit hard in both arenas – wage-and-hour and discrimination:
- The report highlighted large settlements paid by Morgan Stanley and Merrill Lynch at the end of 2006 to settle wage-and-hour cases over unpaid overtime for highly paid financial analysts – employees many people did not think were likely plaintiffs in a wage-and-hour case.
- Two of the top 10 settlements in the area of private plaintiff employment discrimination class actions again involved Morgan Stanley – $46 million for female financial advisers and trainees who claimed gender discrimination, and $23.5 million for Black and Hispanic financial advisers and trainees who claimed gender and race discrimination.
- In the top 10 settlements of government-initiated lawsuits, Sidley & Austin agreed to pay $27.5 million to settle an EEOC suit alleging age discrimination against partners, Walgreen Co. agreed to pay $24.4 million to settle an EEOC suit alleging race discrimination against Black employees and Woodward Governor Co. agreed to pay $5 million to settle an EEOC suit alleging discrimination against Black employees.
So while you may be agonizing over the details of a complex risk assessment (no doubt supported by some pricey consultants), read the writing on the wall when it comes to your greatest areas of risk. The numbers say it all. Clearly discrimination and wage hour exposure will continue to lead the way – and the trend looks like it’s only going to continue.
Is there really any question where you need to focus your ethics and compliance training efforts?