The Legal Drivers for Mandatory Harassment, Discrimination and Ethics Training

Over the past decade, several key legal developments have compelled employers to embrace mandatory harassment, discrimination and ethics training for the entire workforce. This chart details each of the requirements and their significance in the current legal landscape.

Supreme Court Decisions

• 1998 – Faragher and Ellerth
  • The U.S. Supreme Court establishes its first "mandatory training guideline"
  • All employers should train on workplace harassment (not just sexual harassment.)
    • Training should cover other protected categories such as race, disability, age and national origin.
  • Train everyone (employees and managers)
  • Train "periodically," not just once
  • Employers can have an "affirmative defense" to either absolve liability, or to reduce damages, especially punitive damages. To obtain the defense, employers must be able to show that they have:
  • A good harassment policy
  • Education about the policy, provided to everyone periodically
• 1999 – Kolstad
  • The second U.S. Supreme Court "mandatory training guideline"
  • Supervisors should get additional workplace discrimination training (not just sexual harassment training)
    • Harassment is only one form of discrimination. Supervisors, who are in a position of power, can engage in discrimination throughout the employment lifecycle – hiring, performance management and terminations.
    • Policies are not enough
  • Employers can have a punitive damage defense (a "Kolstad Defense") if they can show:
    • Good faith efforts to educate all managers about basic anti-discrimination principles (Title VII)

EEOC Guidelines

• 1999 – EEOC Guidelines
  • The third federal "mandatory guideline" for discrimination and harassment training
  • Promote harassment training for ALL employees:
    • "[T]he employer should provide training to all employees to ensure they understand their rights and responsibilities [concerning workplace harassment]…
  • Reinforce a "periodic" training requirement:
    • "An employer should ensure that its supervisors and managers understand their responsibilities under the organization's anti-harassment policy and complaint procedures. Periodic training of those individuals can help achieve that result."
  • The Impact of the Federal "Mandatory Guidelines"
    • Failure to train exposes the organization to increased liability and damages.
    • Since 1998, the Federal Circuit Courts have taken the US Supreme Court and EEOC training guidelines very seriously:
    • [L]eaving managers with hiring authority in ignorance of the basic features of discrimination laws is an extraordinary mistake for a company to make, and a jury can find that such an extraordinary mistake amounts to reckless indifference." (Mathis v. Phillips Chevrolet, Inc., 269 F.3d 771 (7th Cir. 2001))

SOX

• 2002 – Sarbanes-Oxley
  • Publicly traded companies must disclose if they have a Code of Conduct for senior leader, or explain why not.
  • SOX creates a cause of action for whistleblowers who suffer discrimination because they complained of ethical violations. SOX discrimination claims now trump "classic" discrimination claims:
    • $270,000 – Average Recovery in SOX Whistleblower Discrimination Lawsuit
    • $187,583 – Average Recovery in Title VII Discrimination lawsuit (Source: Employment Practice Liability: Jury Awards Trends & Statistics, 2005, Jury Verdict Research, Horsham, PA.)
  • Training is not expressly required under SOX, but:
    • Section 301 of SOX requires clear communication of reporting channels and protocols.
    • Audit Committees must establish a procedure for the confidential, anonymous reporting of complaints. (Section 301(4)).
    • Such "procedures" naturally involve training.

Federal Sentencing Guidelines

• 2004 – Federal Sentencing Guidelines
  • What are the FSGs?:
    • Rules that set out a uniform sentencing policy for defendants – including employers.
  • Mandate effective and "periodic" ethics and legal compliance training
    • For all organizations, whether privately held, publicly held, government, non profit etc.
    • To all employees. Employers must train "members of the governing authority, high-level personnel, substantial authority personnel, the organization's employees, and, as appropriate, the organization's agents."
    • Training must be formal and "effective" - quality matters. Distributing a Code is not enough.
    • Training must be ongoing – "periodic."
  • Reduces potential fines up to 95%
    • "The potential fine range … can be significantly reduced – in some cases up to 95% – if an organization can demonstrate that it had put in place an effective compliance and ethics program."

State Laws and AB 1825

• 1991 – Maine
  • Employers with 15 or more employees must conduct sexual harassment training for all new employees within 1 year of commencement of employment.
• 1993 – Connecticut
  • Employers with 50 or more employees must provide 2 hours of sexual harassment training to all supervisory employees within 6 months of the assumption of a supervisory position.
  • Encourages (not requires) re-training every 3 years. (Conn. Agency Regs. 46a-54-204)
• 2004 – California's AB 1825
  • Employers with 50 or more employees must provide 2 hours of sexual harassment training to all California-based supervisors, every 2 years.
  • New hires / promotions to be trained within 6 months of assuming a supervisory position.
  • The first sexual harassment training law to define "periodic." (Federal harassment and ethics training laws all use the term "periodic.")
  • The first sexual harassment training law to specifically define what constitutes "effective" training.
    • Programs must be highly "interactive" with mandatory exercises, Q&A and hypotheticals.
    • Expertise Threshold – Trainers must be:
      • Employment attorneys admitted to the bar for two or more years
      • HR professionals with two or more years of practical experience in workplace harassment advising, training, complaint handling and/or investigations.
      • Law school or university professor with a post-graduate degree and either two years or 20 instruction hours teaching about employment law.
    • Training content should not be limited to sexual harassment
    • For e-learning, "two hours" is a program that takes "no less than two hours to complete."
      • E-learning programs need paced timers, or mandatory audio files of no less than 2 hours.
    • Online, live, and webinar solutions approved. Must have:
      • Ability to ask questions
      • Harassment Policy distribution
      • Track and archive (for two years) individual training records
    • There will be a lobby inside California to extend the sexual harassment training mandate to employees (not just supervisors)
    • Several other states are considering similar laws

Littler Mendelson's 2007/2008 National Law of Training