The Department of Justice’s Gift That Keeps on Giving

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On April 30, the US Department of Justice updated its Evaluation of Corporate Compliance Programs, guidance that it provides to federal prosecutors for their use to assess an organization’s efforts to implement and maintain effective compliance management.

• What are the changes to these evaluation criteria?
• Further, what’s the significance of this guidance in the first place?
• Finally, why should businesses find value in this update?

To provide appropriate context to these questions, first let’s revisit the development of guidance for federal prosecutors and judges regarding evaluation of an organization’s compliance program.

The Federal Sentencing Guidelines 

In 1991, the US Sentencing Commission updated its own guidance to federal judges. The Commission is part of the federal judiciary and charged with providing guidelines to federal judges for sentencing organizations convicted of federal criminal misconduct.

Broadly, these Sentencing Guidelines are intended to help judges determine a sentence for an organization convicted of criminal conduct. (This is related to similar sentencing guidelines for individuals convicted of criminal conduct, which would apply to an organization’s officials and other employees.) These Guidelines provide the judge a framework for making this evaluation and, in doing so, creates consistency among judges across cases and federal districts.

The Guidelines chiefly take into account the significance of the criminal conduct, its duration, and the organization’s complicity in the conduct. But the Guidelines also offer a “carrot and stick” with respect to compliance: an organization’s sentencing can be reduced or exacerbated based on the degree to which the organization maintained an effective compliance program.

This section of the Guidelines, “Criteria for an Effective Compliance Program,” quickly became the de facto framework for how US businesses institute and manage legal compliance. The criteria included seven essential components of compliance management. These have been updated three times since 1991 and today address such criteria as the following:
• Commitment by leadership to ethics and compliance
• Assurance that senior staff are reviewed for a propensity to engage in misconduct
• Assessment of the organization’s compliance risks
• Standards and procedures
• Training and communications
• Compliance monitoring and auditing
• Systems for reporting suspected misconduct confidentially and anonymously
• Procedures to respond to identified misconduct

In the ethics and compliance profession, these criteria are often referenced as the US Sentencing Guidelines or Federal Sentencing Guidelines and have been very influential in similar frameworks developed by other areas of the federal government, including the Department of Health & Human Services’ Office of Inspector General and the Department of Justice.

DOJ Principles for Federal Prosecution

Starting in 1999, the Department of Justice began issuing a series of memoranda to provide federal prosecutors with guidance when pursuing cases against and charging organizations with criminal conduct (Holder, Thompson, McNulty, Filip memos). This guidance became the basis for today’s Principles for Federal Prosecution of Business Organizations. These Principles take their cue from the US Sentencing Guidelines with respect to criteria that prosecutors should consider as to whether an organization has made efforts to institute an effective compliance program. These Principles influence prosecutors:
• Whether to pursue a case against an organization
• Whether to charge an organization with civil or criminal conduct (and separate from whether to charge its employees with this conduct)
• What sentencing to recommend to the judge for organizations found guilty of criminal conduct

In 2015, the Department of Justice began working with Hui Chen, a former federal prosecutor and corporate compliance expert, to help the Department better determine how to aid prosecutors in evaluating organizations’ compliance efforts. This resulted in the first “Evaluation of Corporate Compliance Programs” in 2017. These criteria laid out the following structure:

Two prominent examples of where this framework demonstrated value to businesses follow:
• In 2012, The Department of Justice declined to prosecute Morgan Stanley when one of its executives bribed Asian officials in a real estate deal. Prosecutors signaled that the firm’s efforts to train and communicate compliance requirements to this executive demonstrated the firm’s commitment to compliance. (The executive was charged separately.)
• Earlier this year, the Department declined to charge Cognizant with criminal conduct over a bribery scheme by its CFO and chief compliance officer in securing a location site in India, largely because of the company’s compliance efforts and its quick reporting of a bribery scheme. (see blog)

DOJ Updated Evaluation Criteria

With the April 30 release of the DOJ’s updated Evaluation of Corporate Compliance Programs, the DOJ has evolved how it sees successful organizational compliance. This both sets challenges for and offers gifts to businesses.

The Challenge

As the ethics and compliance field matures, its frameworks will move in tandem, creating a more sophisticated and nuanced way of addressing how organizations should demonstrate responsible conduct. This evolution has moved from a reactive stance to one that is increasing proactive, with expectations that organizations not only maintain hard controls, such as segregation of duties and management sign-offs, but also soft controls, such as communications and management commitment. Companies that don’t want to run afoul of regulators’ focus will need to keep pace with these changes and develop their own compliance efforts in line with regulators’ expectations.

The Gift

The gift is twofold.

First, by developing criteria in the first place, the DOJ provides a helpful roadmap for what businesses should do to demonstrate compliance. They need not ‘read the tea leaves’ of prior criminal cases and sentencing memos to divine what the Department expects; through these criteria, the Department is speaking rather clearly about its intentions.

Second, indirectly, businesses now have an improved means to manage compliance risk. By using the Department’s (or the US Sentencing Commission’s) criteria for effective compliance, businesses benefit themselves by better managing risk: preventing it, detecting it early, taking quick steps to mitigate its damages, and then proactively improving processes to prevent its recurrence.

Part 2 of this series will address the changes in the updated DOJ Criteria versus its earlier criteria.

Part 3 will address the new Criteria’s implications for organizations’ compliance training and communications efforts.

5 Ways Emotionally Intelligent People Handle Conflict

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Workplace Conflict: An Inescapable Reality

It’s no surprise that conflict is a regular and unpleasant reality in many workplaces. When a group of employees from various backgrounds and with different work styles is brought together to achieve a shared business goal, tensions are inevitable. Competing priorities, stressful deadlines, heavy workloads, and poor communication can cause a minor misunderstanding to snowball into a full-out argument or simmering resentment.

A 2008 study by CPP, developers of the Myers-Briggs assessment, found that US employees spend 2.8 hours per week dealing with conflict, equating to approximately $359 billion annually in paid hours. According to another study by the University of North Carolina, HR managers spend 24 to 60 percent of their time dealing with employee disputes. Worse, 53% of employees said they spend time at work worrying about a past or future conflict with a coworker. How to reverse these troubling statistics? Managing conflict at work takes more than patience and good communication. It requires emotional intelligence.

The Relationship Between Emotional Intelligence and Conflict Management

Think of emotional intelligence as a toolkit - an internal resource to draw upon when conflict arises. According to emotional intelligence and negotiation expert Dan Shapiro, “The moment you feel threatened in a conflict, a whole set of emotional forces turn your conflict into an adversarial battle: It becomes you vs. them. Suddenly the problem feels nonnegotiable because you can’t imagine working things out with the other side.” In these moments, emotional intelligence may help transform a destructive argument into a productive learning opportunity. Individuals with high Emotional Intelligence Quotients (EIQs) have an easier time controlling their feelings, display greater self-awareness, and are able to take time to process their thoughts before reacting. These abilities are particularly useful in conflict management and resolution.

The 5 Ways Emotionally Intelligent People Handle Conflict

Consider these actions that individuals with high EIQs demonstrate the next time you find yourself in conflict:

  • They address issues privately. Responding to a frustrating coworker or situation in the moment (especially publicly) can cause lasting damage. Ask the other person if you can speak in private. If you need time to cool down before engaging in a dialogue, it’s completely acceptable to ask for it. Setting boundaries around conflict can preserve professional relationships. For example, consider the following responses:
    – “Let’s not engage in this sort of serious discussion over email.”
    – “Could we talk about this in person either later today or tomorrow morning?”
    – “Can we please talk about this privately after I take a few minutes to process everything?”
  • They ask questions. Asking open-ended questions is a useful technique for employees, managers, or mediators. Some examples of these questions are:
    – “So how did you feel when _____ happened?”
    – “Can you tell me a bit more about why you found the situation so frustrating?”
    – “What do you think the other person might have been feeling/thinking?”
    – “How do you think you could respond or change to resolve this issue and what would you like in return?”
    These questions encourage the parties involved to self-reflect and even arrive upon solutions on their own.
  • They listen. Emotionally intelligent people don’t merely listen to what the other person says, they also restate and clarify to make sure they accurately understood. The action involves saying something like, “So, what I hear you saying is that you were upset because it felt like the manager was taking credit for your idea during the meeting. Am I right?”
  • They pay attention to their words and tone. It’s important to use neutral language and a calm tone when talking about sensitive issues. Avoid accusations such as, “You’re always making me look bad in front of our boss! What’s wrong with you?” This phrasing sounds confrontational and makes the other person feel defensive. Changing the statement to make it about yourself instead of him/her demonstrates another way to change the tone of a conversation: “It makes me feel embarrassed to have errors in my work pointed out publicly, especially in front of our manager. Would you mind sharing that feedback with me privately next time?”
  • They find common ground. Ultimately, the biggest disagreements arise from passion. Most people feel strongly about their work or opinion, sometimes to the point where they’re unable to absorb a different perspective. Reminding yourself that you and your colleague share common goals may help neutralize a disagreement about the best way to achieve those goals.

To Conclude

There’s enough to worry about during the workday. Conflict — between and among coworkers, managers, and their direct reports, and even between and among larger groups or departments — takes time and energy away from achieving shared goals. Any steps you take to make your organization (and yourself) more empathetic and peaceful will bring major payoffs: happier employees, clearer communication, a more positive environment and, ultimately, greater organizational success.

When It Comes to Harassment Training, One Size Does Not Fit All

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As of April 15, 2019, twenty-seven states either have: a. a legislative requirement that some employees receive training on the prevention of unlawful harassment in the workplace or b. proclaimed an administrative or legislative recommendation that harassment training take place among some portion of the jurisdiction’s workforce.

New York, California, Connecticut, Maine, Delaware – and to an extent D.C. – (which require training for state or other public-sector employees) have gone beyond many of their peers by enacting sweeping legislation that is applicable to large portions, if not all, of workforces in these states.

These specific states enacted their training laws to suit the needs of each individual jurisdiction. The needs of employers operating across multiple states were not contemplated by any of the legislatures when these laws were developed.
Enforcement practices are ignorant of the fact that a great many employers operate in more than one state that has a mandatory training law. The increased training requirements have created substantial burdens on multi-state employers, leaving them scratching their heads as to the best approach for training some or all of their workforces so the businesses can comply with the legislative requirements and ensure that the remainder of the workforce is not left behind in this important education.
Now employers are recognizing that a “check-the-box” approach to of getting training “out of the way” is not only ineffective, but also potentially damaging to workplace culture. Further, it has become crystal clear among harassment training experts that a “one-size-fits-all” approach simply does not work.

Different States Have Different Requirements

Compliance with the various state mandatory training laws is admittedly burdensome and time consuming, but it is important to understand the key differences among the five (discounting D.C.) states that require a large portion of their workforces to receive training.

Varying Time Requirements

California and Connecticut managers are subject to a two-hour training requirement, whereas New York, Maine and Delaware have no specific time requirements. Further, California’s non-supervisory employees must receive at least one hour of training in order to comply with the law in that state.

While the employer who allocates time for comprehensive training may see value in providing two hours of training to all employees, many employers believe that employees taking two hours of the work day to attend harassment training is more than they can spare where such a time requirement is not imposed by law.

Syntrio recently concluded that one hour is a “sweet spot” minimum to effectively communicate the necessary instruction to build the foundation for an effective harassment prevention program. Therefore, if you have managers in multiple states, it would be necessary to provide multiple versions of the manager training to account for the increased volume of training required by California and Connecticut.

Different Content Requirements

A non-state-specific course must by nature focus on federal law, which is the floor for harassment protection. Employees in states with mandatory training laws must receive more detailed state-specific information.

Aside from the basic principle that each mandatory training law requires special training for managers, much of the content and language requirements set forth by the states with mandatory training laws differs:

  • Protected classes vary state to state (which are additions to federal law), thereby creating the need for unique descriptions and scenarios.
  • Definitions of harassment and its interpretation are significantly different in various states (many states are broadening the definition of harassment and its historical analyses).
  • Manager duties prescribed by specific states differ (and conflict) with one another.
  • California requires training on abusive conduct, a state-specific concept and definition.
  • California requires training on gender identity, gender expression, and sexual orientation, none of which are uniformly protected by the federal law, Title VII of the Civil Rights Act of 1964.
  • California recommends training on categories other than sexual harassment such as age, race, and religion, while New York training specifies a focus on sexual harassment.
  • New York, Delaware, Connecticut, and Maine require detailed instructions on how and where to report a claim of harassment to the administrative agency within that state.
  • New York has a state-specific claims reporting process that must be included in the course. It is more detailed and thorough than those in other states.
  • New York requires information on New York City laws, that differ from state and federal law significantly.
  • Connecticut and Maine require line-by-line language from the state anti-discrimination laws and verbatim description of reporting procedures inapplicable in other states.

As you can see, attempts to rationalize and distill all of the above training requirements (which are part of the significant differences) have been futile. For this reason, Syntrio takes the approach that “one-size-fits-all” courseware that generalizes the above requirements is non-compliant for employees who are subject to state-specific harassment training requirements and it diminishes an employer’s ability to train its staff to requirements mandated by these states.

Time Is Money: Examining the Length of Harassment Training Courses

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Harassment training costs money, both in employee time and actual dollars spent. Because of the significant resources that must be expended to train a workforce on the prevention of workplace harassment employers are understandably looking for the most “bang for the buck” on their investment. While efficiency in training is absolutely critical, there comes a point where a core harassment course is simply too brief to educate a workforce on the important concepts that encompass the world of harassment prevention. So where is the “happy medium?”

Five states (and the District of Columbia) currently require at least some employees to be trained on the prevention of harassment in the workplace. Of those five states, only California and Connecticut have statutorily mandated minimum training requirements, both requiring a minimum of two hours of training for managers. California recently enacted a law requiring non-supervisory employees to also be trained, but the state requires just one hour of training for non-managers on the same topics as the two hours of training required for managers. The other four jurisdictions requiring training (New York, Delaware, Maine and D.C.) did not set a minimum within their law, but New York infers in its guidance (and verified in response to a question on the subject) that 60+ minutes is the minimum amount of time required to train employees on the topics it considers mandatory for training to be in compliance with the law.

The previous statement is curious given the “FAQ” answer the New York Department of Human Rights (“NYDHR”) gives in response to the question “is there a minimum number of training hours employees must complete each year?” New York State answered that question with a seemingly unambiguous (yet very qualified) “[n]o. As long as they receive training that meets or exceeds the minimum standards.” In order to determine what those minimum standards are, it is necessary to examine the NYDHR's model training script that was released when that state’s law went into effect. While the script outlines the necessary topics for minimum training, the interactivity requirement in the state’s law certainly adds significant time over just reading through the 23 page script.

A representative from New York State responded to a telephone inquiry on the subject in January 2019 that the minimum training program was written and intended for an approximately 60 to 90 minute delivery time. Therefore, while the state set no minimum time within its law, it not only requires training that meets the minimum standards set forth in the law, but the State itself was unable to develop a program that lasts less than 60 minutes (and more likely longer).

California and Connecticut surely did not develop their statutory one- (California non-supervisors) and two-hour minimum time requirements without conducting significant research into the amount of time it would take to effectively and comprehensively train employees on these important subjects. While the skeptical employer may argue that those requirements were first developed 20 (Connecticut) and 12 (California) years ago, New York followed up with creating a course that was designed to take between 60-90 minutes. Therefore, it is clear from state Human Rights Department conclusions that an hour is the minimum amount of time a core harassment prevention course should be designed to take, and it is possible that state fair employment agencies subscribe to a “more is better” approach.

What to Look For When Selecting Your Training Methods

The aforementioned information should be taken into account when considering the use of an exclusive micro-learning platform or other short-form harassment prevention approach to your organization’s needs. While your state may not have a training requirement, it is certainly important to fulfill this important need as part of the duty your organization has to maintain a culture free of harassment. Even if the well-being of your employees and corporate culture take a back seat to preventing and defending lawsuits (which is not a recommended approach, yet one that we have heard over the years as a reality for some employers) the more than $1 billion annual harassment verdict and settlement costs routinely estimated over the last several years should be enough to convince the most skeptical of training customer that this is a subject well worth investing the proper time and dollars into doing correctly.

While there is no way to quantify what amount of training “works,” in over 12 years of experience providing hundreds of in-person and online training programs to companies of all sizes it has become clear that one hour is the minimum amount of time needed to effectively illustrate the concepts contained in such a broad and complicated topic as the prevention of workplace harassment. While one hour may seem brief, an expert trainer skilled in keeping the audience’s attention can effectively teach these concepts and provide ample time for the interactivity and learner engagement that is so critical to making the educational concepts stick. Anything less is truly doing the workforce a disservice, and nothing more than an attempt to “check the box” without providing an actual learning opportunity.

The most effective approach to training (as reinforced by the states that have developed their own mandatory minimum training scripts and set time limits) is a long-form core training course followed up by a learning continuum consisting of short form training that emphasizes particular concepts and issues. Such an approach builds the foundation necessary for continued learning and is without a doubt the most effective means of improving corporate culture and empowering your employees to work together to prevent incidents of harassment from occurring going forward.

New York City Clarifies Sexual Harassment Training Requirements

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Most employers with a connection to New York City are aware that the City (as well as New York State) enacted legislation requiring mandatory, annual sexual harassment training covering nearly all employers (and employees) in the City and State.

For the past several months employers have been left scrambling to draw inferences from the subtle vagaries within the City and State statutes and seeking guidance beyond the ambiguous answers set forth in the Frequently Asked Question “FAQ” sections provided by the New York City Human Rights Commission and New York State Department of Human Rights.

While many of the provisions of this complicated and time-consuming law remain ambiguous, on April 3, 2019, the City released some final guidance that will help guide you on your path to compliance with New York City’s law.  You can review the full FAQ section here.

We have highlighted important clarifications for your convenience:

Q: When must NYC training be complete?

A: Among the important clarifications is a requirement that training not only be provided each calendar year, but the initial training must be completed by New York City employees by December 31, 2019. This is in conflict with (and superseded by) the State requirement that training be completed by October 1, 2019, but nevertheless firmly establishes the City training requirement of 2019 being a mandatory training year.

Q: How quickly must my organization train a new hire?

A: ASAP. The NYC Human Rights Commission states: “Employers should train staff as quickly as possible after hire. Upon hire, employers are liable for sexual harassment by new employees” (emphasis added).

The bolded language puts employers on notice that the NYC Human Rights Commission will be looking for training (or lack thereof) when there are claims of harassment involving new hires and therefore employers are strongly urged to complete compliant training immediately. We recommend implementing the training package as part of new hire orientation, ideally within the first few days the employee is working for your organization.

Q: What if my employees have contact with New York City but do not work there?

A: The City’s final information sheet clearly states “if the employee is connected to New York City in any way, the employee must be trained.” The City goes on to provide the following examples of employees who work outside the City but would need to take training under its law:

  • Employees who work, or will work, in New York City
  • If an employee works a portion of his or her time in New York City (even one day), he or she must be trained
  • If an employee is based elsewhere but interacts with employees in New York City (even if not physically present in New York City), he or she must be trained

As such, anyone who has even the slightest amount of contact with New York City (arguably even a phone call with a client in that location) must take training that complies with New York City’s law. Importantly, if an employee takes a training module in his or her primary location that substantially complies with the New York City requirements, he or she does not need to be re-trained. Simply stated, New York City expects that all employees receive training on the prevention of sexual harassment in the workplace.

Q: I hired a new independent contractor who claims he or she was trained. Do I need to re-train the contractor?

A: No, provided the contractor can provide documentation that he or she took training within the last calendar year. If there is no evidence that training occurred within the last calendar year, the employee should be re-trained by the new organization to maintain compliance.

Q: I would like to have employees complete training off-duty. Must they be paid?

A: Yes. New York City has unambiguously stated that if an employer requires its employees to take the training outside regular work hours, the employees must be paid at their regular rate of pay. This means Plaintiff attorneys will be on the lookout for those organizations asking employees to view the training on their commute or at some other point outside regular working hours, which could lead to catastrophic damages in a wage and hour class action.

While the updated FAQ and guidance from New York City clean up some ambiguities in the law, the City’s law places a heavy burden on all employers. For this reason it is essential that your organization formulate a plan for training your New York City-connected employees prior to December 31, and ideally by October 1, 2019 to maintain compliance with the City and State laws.