Why HR Executives are Beginning to go on the Offensive to Confront Compliance Risks

Traditionally, “risk management” in the Human Resources sector has been largely defensive in nature. Businesses have historically allocated their resources toward defending litigation and preparing professionals for battle if an employee were to sue the company. With EEOC statistics showing that human resources related-charges are still at historically high levels, and federal litigation statistics confirming that employees follow through on their threats to sue, the old methods of gearing up for battle are no longer working.

In addition to hefty litigation costs associated with the defense of lawsuits (and resulting verdicts and settlements), there is a “downward stream” of impact within the business when non-compliant human resources practices are allowed to persist within a workplace. In addition to reputation damage within the community, when companies have been hit with high-profile human resources-related lawsuits there can be a “trickle-down” effect of difficulty recruiting and retaining high-end talent; customer and client engagement backlash; and government agency scrutiny that can put a damper on production, no matter what type of business the company engages in.

Risk Management is Becoming Proactive

“Going on the offensive” in the year 2014 means training management and employees. You may be thinking “we already train managers on how to deal with ‘problem’ employees.” Your training may include what to do in the event the company has been sued. However, these old ways of thinking are not enough. Indeed, the new method of HR risk management is training managers in compliance with state and federal employment laws and other business ethics necessities in order to ensure that they are educated as to the laws and how to apply them in the workplace.

Because lawsuits and the threat thereof impact so many businesses in today’s society, those companies that choose to allocate their resources towards wide-scale human resources training are spending less money up front to save it down the road. Additionally, company cultures change from the top down as management learns the proper methods of avoiding discrimination, harassment, bullying, retaliation, wrongful termination, and other illegal workplace actions that can get the company in hot water. When managers know what to look for, they take a more cautious approach with employees, which leads to increased morale and greater productivity across the board.

Training Does Not Have to Take a Great Amount of Time

With the advent of online training courses covering a broad scope of potential workplace issues, managers can learn about topics one at a time at designated times during the day, week, month, or year. Indeed, there is no longer the need to spend significant resources to bring an attorney in house to conduct trainings that take large groups of employees away from their workstations. Instead, managers and employees can now attend courses online at their convenience. This creates a cost-effective means of tackling human resources risks head on, which is why modern companies are taking a preventative approach to human resources risks through compliance training.

Syntrio, Inc. specializes in providing Ethics and HR compliance training. Contact us today at 888-289-6670 to discuss your compliance efforts and any issues that may be arising within your company.

 

Most Pressing Human Resources Risks for 2014 and Beyond

Synthesis of the federal litigation statistics, EEOC charge data, ethics hotline statistics, and employer surveys shows that the following areas are the greatest employer litigation fears in 2014 and going forward:

  • Discrimination and harassment (including retaliation)
  • Wage and hour issues
  • Wrongful termination claims
  • Leaves of absence
  • Accommodation of disabilities

Lawsuits and administrative charges often contain allegations of varying types, which add up to an expensive and time consuming mess for employers. Again, risk reduction is possible through the implementation of a proper compliance program including training for managers and employees.

As bad as the statistics in the federal courts and EEOC are, they only tell half the story. This is because many states have enacted employee-friendly laws with respect to discrimination and harassment, wrongful termination, and wage and hour issues. These state laws reach far beyond the umbrella of the corresponding federal laws, and can be troubling for employers.

As you will see, certain states are greater hotbeds for employment-related litigation and therefore require even further specific management training to reduce the likelihood that your company will be sued.

Top Five Riskiest US Geographic Territories for Employee Litigation

Hiscox Insurance recently conducted a study into the states with the largest number of employment litigation related insurance claims. While some of the locales were somewhat obvious, other locations in the traditionally employer-friendly south have become litigation hotbeds.

The following states rank well above average in terms of employer claims against Employment Practices Liability Insurance Policies:

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According to the Hiscox study, on average, a U.S.-based business with at least 10 employees has a 12.5 percent chance of having an employment liability charge filed against it. This is an incredibly high number that is only growing, and is significantly larger in the states enumerated above. For example, California employers are 42 percent more likely to be sued for an employment-related charge. What it means is that at some point in the future your business is very likely to get sued, even if it is located outside one of the five “hot zones.”

State laws have a significant impact on risk. Simply stated, some states have laws that are more favorable to employees than others. For example, the employee-friendly nature of California law in the area employment discrimination may contribute to the high charge frequency in the state. Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA), which covers any company with five employees, versus a 15-employee minimum for cases brought under Title VII of the Civil Rights Act of 1964.

Damages Can Be Higher in State Court

Compensatory and punitive damages under federal law have statutory caps in many circumstances. Conversely, many state employment laws impose no damage ceilings, which makes an adverse verdict a potentially catastrophic situation for a business. Moreover, plaintiff’s attorneys are well schooled in damages laws, and will use them to their advantage when negotiating a settlement. Therefore, employers in high-risk states must pay even greater attention to the compliance training practices implemented within their workforces to ensure that managers and employees are adequately trained regarding discrimination, harassment and retaliation. Employers also must formulate and implement policies to prevent unlawful workplace practices.

Syntrio, Inc. specializes in providing Ethics and HR compliance training. Contact us today at 888-289-6670 for a discussion on how we can help you and your business.

 

California Govenor Signs Bill Requiring Education on Abusive Conduct in the Workplace

As many in the Human Resources field are undoubtedly aware, California Governor Jerry Brown recently signed into law Assembly Bill 2053, which adds a new educational requirement to the existing training required by Assembly Bill 1825 (commonly known as California’s Harassment Training Law).

Under existing California Law, employers with 50 or more employees must provide at least two hours of sexual harassment training to supervisors, and the requirements of the law are set forth in Government Code section 12950.1.

Assembly Bill 2053, which takes effect January 1, 2015, amends Government Code section 12950.1, and requires employers who are subject to the sexual harassment law to continue complying with the requirements of the law, but also “include prevention of abusive conduct as a component of the training and education . . .”

What is “abusive” conduct according to AB 2053?

AB 2053 defines “abusive conduct” as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.”

Abusive Conduct may include the following:

  • Verbally abusing someone by yelling or screaming at them
  • Repeated demeaning and degrading verbal remarks that "put down" or make employees feel subhuman
  • Humiliating others through public criticism, gossip or ridicule
  • Denigrating the work standards or achievements of others
  •  Intentionally destroying an employee’s work product such that the individual receives punishment or reprimand
  •  Work sabotage through misinformation or by giving impossible deadlines
  •  Not giving credit
  •  Isolation from opportunities, information, and interaction with others
  •  Physical contact with a co-worker such as pushing, blocking, or hitting, etc.
  •  Throwing books, chairs, stacks of paper, or other “conduct” that a reasonable person would find intimidating
  •  Stealing files, personal affects, or office supplies

Importantly, the definition specifically states that unless the conduct is especially severe and egregious, a single act does not usually constitute abusive conduct.

Does the New Law Create a Cause of Action for Abusive Conduct?

No. While allowing abusive conduct to persist within the workplace may be a poor management strategy or bad for business, nothing in the new law makes this type of conduct illegal at this time. We cannot predict whether there will be a law in the coming years that will indeed create a cause of action for abusive conduct (and the language in the law certainly would allow one to speculate that this is the case) For the time being, employers subject to AB 1825 must merely educate their supervisors as to what abusive conduct is (and ideally to prevent it).

From a practical perspective it will be difficult (albeit not impossible given the nature of some judges within the state and federal courts) for a court to draw the line between what is and is not abusive conduct. However, what is likely is that those businesses who choose not to implement the educational requirement of AB 2053 could be subject to a cause of action similar to a California “failure to prevent” harassment claim. We stress that at this time there is nothing on the books creating this sort of action against the employer, but it is not a stretch to see how the plaintiff’s bar will use this sort of statute to their advantage.

Finally, although the new law is unclear as to whether employers who are current on their mandated California sexual harassment training must re-train to include information about abusive conduct in the workplace, it is clear that any employers planning on conducting sexual harassment training going forward should be sure to include this information just to remain on the safe side.

Syntrio, Inc. specializes in providing Ethics and HR compliance training. Contact us today at 888-289-6670 for a discussion on how we can help you and your business.