EEOC: Revenge Is Best Served Never At All

EEOC: Revenge Is Best Served Never At All

Late in the last Presidential Administration, the EEOC issued an “Enforcement Guidance” on retaliation. Out of all the potential workplace fouls that an EEOC charge can allege, retaliation is by far the most common. The sheer volume of retaliation claims has doubled since 1998.  EEOC enforcers will look to the Guidance when they dig into a retaliation charge. And, I bet, so will plaintiff’s counsel – and sometimes even courts.

Should employers care? Probably so.

Blowin' The Whistle Dodd-Frank Style


The Dodd-Frank Act protects security law whistleblowers against retaliation.  And they've got some nasty remedies.  Double back wages, immediate lawsuits and longer limitations claim windows come to mind.

What makes an employee a Dodd-Frank "whistleblower"?  Does he have to go to the g-men over at the Securities Exchange Commission (SEC)?  Or is an internal report, say to a supervisor or compliance officer, enough?

The Fifth Circuit just said that a "whistleblower" must go to the SEC.  You can read the court's opinion in Asadi v. G.E. Energy (USA), LLC here.

The difference matters.  Big time.

An employee who blows the whistle internally may still have protection, but only under the Sarbanes-Oxley Act (SOX).  Employee-side counsel, however, may see SOX as a redheaded stepchild to Dodd-Frank when it comes to remedies.  SOX forces the employee to quickly pursue a long administrative process before filing suit.  Even less attractive to would-be plaintiffs, the SOX damages pot is smaller.

Some employees and their counsel might pull the trigger faster on bypassing internal ethics reporting mechanisms – and directly tip off the SEC.  They'd buy Dodd-Frank's nastier remedies.

That ups the ante for compliance counsel.  Ethics reporting policies might be drawn to encourage employees to resolve ethics concerns with the company first.  For example, the policy might have a:

  • Robust reporting and investigatory mechanism that gets outside the normal chain of command; and
  • Strict prohibition on retaliation for reporting a concern in good faith.

A culture of compliance is also critical.  An employee won't trust a paper policy if he doesn't believe the company cares about compliance.  Yet, a comfortable employee may never lawyer up.

Punitive Damages Are Preventable

Six-figures.  That's what a rogue manager can cost you in punitive damages if he accidentally blows a call that HR would have caught.  It's surprisingly easy for an untrained manager to step in it.  We've written about a couple examples.

Don't add zeros to an employment claim.

Train your folks on your EEO and anti-harassment policy.  Training, plus a solid EEO and anti-harassment policy, may give you a strong defense against punitive damages.

Never training your employees on your EEO policy strips your defense.  In EEOC v. Service Temps, the company had never trained its folks.  The EEOC latched onto that.  At trial, the EEOC secured $68,000 in punitive damages and an injunction that imposed mandatory training.  The Fifth Circuit refused to overturn the award.

Punitive damages are no stranger to the Texas Supreme Court too.  In Safeshred v. Martinez, the Court expanded punitive damages to Sabine Pilot wrongful discharge claims.  Some commentators say the opinion lets Texas state discrimination law plaintiffs collect punitive damages more easily.

Over the past couple years, your company may have pushed training to the backburner.  The Fifth Circuit and Texas Supreme Court may have just sent you a friendly reminder to put training back on the agenda.

Texas Lawyer — Behind Enemy Lines: Employee-Side Lawyer Tactics

Texas Lawyer — Behind Enemy Lines: Employee-Side Lawyer Tactics

Texas Lawyer has signed up Alan Bush as a freelance contributor.  His latest article, "Behind Enemy Lines: Employee-Side Lawyer Tactics," appeared on May 14 in the In-House Texas pullout.

Here's what Alan had to say about how he stays one step ahead of employee-side opposing counsel:

How Independent Are Your HR Investigations?

Discrimination and retaliation claims can be eliminated with independent HR investigations.  That is, they can if your investigation is independent enough.

In Staub v. Proctor Hospital, the US Supreme Court ruled an HR investigation wasn't deep enough.  The ex-employee's allegedly biased supervisor went to HR looking for a termination approval.  The HR manager looked at the ex-employee's file which had several prior written warnings, then terminated the ex-employee.

The Court faulted the HR manager for relying on information supplied by the supervisor.  Had HR gone back and interviewed everyone herself, the Court would have dumped the ex-employee's claim.  That's what an independent investigation takes—face time with folks who know what happened.

Gold standard is for your HR to do a truly independent investigation on all significant employment decisions, like a termination.  But that can be time-consuming and expensive.  Imagine going back to interview the employee, supervisor and maybe even co-workers on all terminations.  You might not need to go that far.

Also, consider doing an independent investigation on high-risk decisions.  Now, you're looking at employees who have reported discrimination, harassment or overtime pay problems.  Don't forget employees who recently had an on-the-job injury or filed for workers' comp.

Even if your HR investigation doesn't entirely cut off liability, it can go a long way in front of a jury.  Jurors like to know that you at least tried to do the right thing.  And other fundamental HR practices can still help you put the claim in the wastebasket.

Sidekick Retaliation Claims: You and Your Little Dog Too

Your employee tells your HR department that she thinks she's being sexually harassed by her boss's supervisor.  Old news: How you treat her now could risk a retaliation claim.  But what if you had to fire her boss?  What if the boss was her mentor who had helped promote her several times?  According to the U.S. Supreme Court, the boss just might have a retaliation claim now.

Title VII's retaliation provision used to be pretty simple.  Don't retaliate against someone who has done certain protected activities to resist discrimination.  Only the person who actually resisted discrimination was entitled to legal protection.

Now, you've got to watch your step around other folks.  In Thompson, one employee filed a charge of discrimination against his company.  Three weeks after learning of the charge, the company fired the employee's fiancé.  The Supreme Court refused to dump the lawsuit simply because the company fired the fiancé instead of the employee who had filed the charge.  That relationship, said the Court, was close enough to warrant a retaliation claim.

How close of a relationship is too close?  The Court explained a company steps across the line when it takes an action against another employee that would "dissuade a reasonable worker" from resisting discrimination.  Obviously, firing the employee's fiancé is too close.  But how about the employee's girlfriend?  Or a close friend?  Or a trusted co-worker?

The Court couldn't say where to draw the line.  That leaves you to think carefully when taking action against an employee connected to another employee who has resisted discrimination.  And it makes it even more critical that your decisions are backed up by solid documentation.  You never know where a retaliation claim may pop up.

It's just like the Wicked Witch of the West said: "I'll get you, my pretty, and your little dog too."  Be careful.  Toto can sue you too.

Sweet New Deal for Whistleblowers on Foreign Corrupt Practices

On July 21, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank").  I believe that Dodd-Frank will encourage both legitimate and baseless reports on foreign corrupt practices.

The Foreign Corrupt Practices Act ("FCPA") deems some overseas activities, like bribing foreign officials, anticompetitive and prohibits them. Dodd-Frank offers substantial financial rewards for qualified FCPA whistleblowers, while strengthening their protection against retaliation on the job.

Dodd-Frank promises a bounty to FCPA whistleblowers who provide "original information" to the SEC.  If the SEC imposes sanctions over $1 million after the tip, a qualified whistleblower will get between 10% and 30% of the sanction imposed.  That's a guaranteed 10% commission if the SEC catches a big fish.  An employee who is disenchanted with your company might happily tip off the SEC hoping to score a piece of the action.

Here's the real kicker—Dodd-Frank might protect whistleblowers from on-the-job retaliation no matter how ridiculous the complaint.  Imagine this scenario that could arguably happen with Dodd-Frank.  Your employee fabricates an FCPA complaint, hands it to the SEC and your HR department, and wins a federal lawsuit against you for later firing him for blowing the whistle.  Disgruntled and poorly performing employees of the world rejoice.

Even before Dodd-Frank, Sarbanes-Oxley protected whistleblowers against retaliation for reporting an alleged FCPA violation.  Sarbanes-Oxley, however, required the whistleblower to have a "reasonable belief" that your company had violated the FCPA.  Companies used this requirement to defeat retaliation claims based on fabricated and marginal FCPA complaints.  Dodd-Frank drops the words "reasonable belief."

Your company can push back:

  • Train your employees about their obligations under the FCPA;
  • Make sure your employee manual outlines a channel to report FCPA violations and prohibits retaliation for making a report; and
  • Vigilantly document all your employees' performance, so that you can point to prior poor performance as a basis for terminating an employee who fabricates an FCPA violation to save his job.