Training In Turbulent Times July 2009


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This presentation shows some alarming statistics regarding employment law litigation trends during a tough economy and how compliance training can be used to lessen the burden of such litigation.

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Training In Turbulent Times July 2009

  1. 1. LITTLER MENDELSON, P.C. Compliance Training in Turbulent Times: How to Protect Your Organization on a Shrinking Budget
  2. 2. presented by: David N. Goldman, Esq. Shareholder Littler Learning Group (LLG) Littler Mendelson, P.C. San Francisco Office
  3. 3. Today’s Agenda 1. How Our Turbulent Economy Shapes Employment Law Risk 2. Critical Employment Law Developments 3. Protecting the Bottom Line With Compliance Training
  4. 4. How Our Turbulent Economy Shapes Employment Law Risk
  5. 5. Risk Exposure in a Down Economy  The economy will shape your risk profile in 2009.  Every 1.5% increase in unemployment drives a ~21% increase in employment lawsuit filings. Source: The Changing Nature of Employment Discrimination Litigation, 43 Stan. Law. Rev. 983 (1991).
  6. 6. The Unemployment Rate Soars  More than 1 year of straight job losses. ? ? – 4.4 million jobs lost since 2007.  8.5% is highest rate in 25 yrs. – Up 3.8% in the past 15 8.5% months. 8.1% – Rates often higher for 5.8% minorities. 5.8%  National rate could hit 9.4%+ or higher and remain high through 2011.
  7. 7. EEOC Charges Soar in 2008: 15.2% Increase ? 95,402 80,680
  8. 8. Wage & Hour Charges On the Rise 8,000 7,000 7,310 6,000 5,000 4,000 4,039 4,207 3,000 3,617 2,000 2,751 1,000 0 2003 2004 2005 2006 2007
  9. 9. Average Wage & Hour Settlements $8.6 Million $19 Million $29 Million $24.4 Million $24 Million
  10. 10. Impact on Your Business  Every additional claim hits your budget hard: – Average defense costs for single plaintiff discrimination lawsuit can cost $250K+ through trial. Source: Littler Mendelson  Average Discrimination Jury Verdicts: – Age: $250,500 – Sex-based: $200,000 – Disability: $217,000 – Race: $172,500 – Retaliation: $200,000 Employment Practice Liability: Jury Awards Trends & Statistics, 2008 Ed.
  11. 11. Critical Employment Law Developments
  12. 12. Ending “Wage Theft” • President Obama is committed to pay equity and fairness. • Key component of the economic stimulus plan: fight “wage theft.” • Obama increases DOL budget by $600M for 2010; Wage and Hour enforcement a key focus. • Combined with key appointments to lead the charge of defending American workers. • Hilda Solis: Head of the Department of Labor.
  13. 13. Lilly Ledbetter Fair Pay Act – 1/09 “It’s fitting that with the very first bill I sign — the Lilly Ledbetter Fair Pay Act — we are upholding one of the nation’s first principles: that we are all created equal and each deserve a chance to pursue our own version of happiness.” Jan 2009: Obama Comments at Signing Ceremony
  14. 14. Advancing Equal Pay • Reverses 2007 U.S. Supreme Court Decision. • Reinstates the “paycheck rule,” resetting the statute of limitations for filing a wage claim each time the aggrieved employee gets a paycheck.
  15. 15. Major Legislative Action  Already Here: – (ADAAA) Americans with Disabilities Amendments Act – (GINA) Genetic Information Non-Disclosure Act – (FMLA) Family Medical Leave Act Regulations  Expected Soon: – (ENDA) Employment Non- Discrimination Act – (EFCA) Employee Free Choice Act – or something similar
  16. 16. The ADA: Sweeping Changes • The ADA Amendments Act of 2008: – Effective Jan. 1, 2009. • Most significant changes: – Disability to be interpreted broadly. – Most mitigating measures cannot be considered. – Expansion of who is perceived/regarded as disabled. – Major Life Activities expanded. • “EEOC Getting More Aggressive in Pursuing Disability Claims” National Law Journal 6.30.09 • Trend Watch: – Increased litigation – with cases tougher to defend. – Age/Disability cases.
  17. 17. Genetic Information Nondiscrimination Act (GINA)  Title II of GINA (effective Nov. 2009) is most relevant for employers: – Cannot discriminate against someone on basis of genetic information. – Cannot intentionally acquire genetic information except under specific circumstances. – Imposes very strict confidentiality protections for genetic information, which can be revealed only when permitted by statute. – Prohibits retaliation.
  18. 18. The New FMLA Regulations  The regulations are too extensive to discuss today, but include: • Changes to both general and specific employer notice obligations. • Changes to employee notice obligations. • New guidance/rights relating to managing intermittent leave. • Clarification on denying leave. • New forms.
  19. 19. Employment Non-Discrimination Act  Most recently passed by House of Representatives in November 2007. – This version applied only to sexual orientation. – Gender identity was removed.  Expect to see it re- introduced in 2009.
  20. 20. Sex Orientation & Gender Identity Protections are Expanding
  21. 21. National Protection Could Be on Its Way  Employment Non-Discrimination Act of 2009 (H.R. 2981), a bill that would create comprehensive employment anti-discrimination protections for individuals based on their sexual orientation or gender identity was introduced in the House on June 28, 2009
  22. 22. EEO Investigations Under the Spotlight  An employee accused of harassment was fired by the employer after an investigation.  According to the alleged harasser, his employer made minimal, if any, efforts to verify the accusations against him.  His supervisor stated: "I really don't have any choice. Michelle [the alleged victim of harassment] knows a lot of attorneys; I'm afraid she'll sue me. And besides you probably did what she said you did because you're male and nobody would believe you anyway."  The alleged harasser sued under Title VII, arguing that his supervisor's statement was evidence that impermissible "sex stereotyping" (i.e. that men have a propensity to engage in sexual harassment) played a role in the decision to terminate his employment.  And the court allowed the claim to go forward! Sassaman v. Gamache (2ND Cir 2009)
  23. 23. EEO Claims Continue to Evolve  Expanded definition of retaliation (USSC - Jan 2009).  Sexual favoritism.  Religion & National Origin: – Patriotism. – Terrorism. – Immigration.  Pregnancy Discrimination, Family Responsibility Discrimination (FRD).  Bullying.
  24. 24. The Employee Free Choice Act  In its original form: – Eliminates secret-ballot elections. Unions can use “card check” process – 50%+1. – Arbitrators have power to impose contract terms (1st contracts) if employer and union unable to agree.  03/09: EFCA reintroduced. – 03/09: Obama tells AFL-CIO it will pass, and he supports it.  Passage in current form is not assured. Original support is wavering.  03/25/09: New compromise versions being floated, including the “Third Way” proposal.
  25. 25. Protecting Your Bottom Line
  26. 26. The Law of Training – EEO Rules  There are many types of compliance training – all of which can add value to your organization … BUT  EEO / anti-discrimination training is the only true mandatory training subject that impacts all employers, across all industries, and is most critical during a downturn.
  27. 27. The Law of Training  Training may be legally mandated.  Training may be necessary to establish affirmative defenses.  Training makes good business sense: – Reduces mistakes and errors. – The best policies are useless if employees don’t understand them. – Training gives your employees the tools they need to become compliance allies.
  28. 28. California Mandatory Training – AB 1825  Requires employers who do business in California, and who have more than 50 employees, to provide 2 hours of high quality, “interactive” harassment training to all supervisors.  Every 2 years; 2009 is a “re-train” year.  Not just sexual harassment.  No cap on penalties.  Benchmark training law. AB 1825’s detailed and rigorous regulations are influencing compliance training across the country. a
  29. 29. U.S. Supreme Court Mandatory Training Guidelines Faragher and Ellerth (1998); Kolstad (1999) • Train all employees on harassment prevention periodically. • Train all managers on discrimination prevention, periodically. • Distributing policies is not training. • Evidence of training may provide: • Defense to liability. • Defense to punitive damages.
  30. 30. And More Federal Guidelines…  1999 EEOC Guidelines specifically direct that employers train employees and managers on harassment prevention.  EEOC consent decrees routinely mandate periodic anti-discrimination training.
  31. 31. The Impact of a “Mandatory Guideline” “[L]eaving managers in ignorance of the basic features of [employment] 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., 7th Cir. 10/15/01
  32. 32. Harassment Training is Not Enough  Harassment training DOES NOT protect you if you’re sued for a different form of discrimination – like race.  You must train on both harassment and discrimination.  You must cover all protected classes: – Race/Color. – Gender/Sex. – Religion. – Disability. – Etc.  You must cover new legal developments – e.g. retaliation.
  33. 33. Policies are Not Training  U.S. Ct. denied review on 10/08/08.  Employee claimed he had been denied a reasonable accommodation.  Alleged that managers did not handle his request properly.  Jury agreed and awarded the plaintiff: – $8,000 in compensatory damages. – $100,000 in punitive damages.
  34. 34. Bad (Uneducated) Managers Drive Litigation  Good/fair managers are less likely to be sued. And if sued, less likely to be subject to punitive damages.  Survey of unemployed people who had been terminated found that: – Only 4% of those who thought termination was fair sued. – While 90% who felt mistreated either sued or considered it. Source: Dr. Joni Johnston, Why Jurors Fire Back During Wrongful Termination Lawsuits, Nov. 24, 2003
  35. 35. Training Pays Off  Preventing even one claim a year pays for your training. – Independent ROI study conducted by Littler client: Basic EEO / HR training tied to annual hard cost savings of $2.2 million.  Training decreases the settlement value of tough cases.  Training can help an organization avoid/reduce a punitive damage award.
  36. 36. The Power of Training 8th Circuit Court of Appeals held that punitive damage award was not appropriate because the employer demonstrated good faith, which included requiring supervisors to go through harassment training. Dominic v. DeVilbiss Air Power Co., 8th Cir. No. 06-3236 (July 20, 2007)
  37. 37. EEO Investigations Under the Spotlight  “Whoever conducts the investigation should be well trained in the skills that are required for interviewing witnesses and evaluating credibility.” (Equal Employment Opportunity Commission, Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors (6/18/99).
  38. 38. Choosing Not to Train is Expensive  Bains v. ARCO Prods. Co., 405 F.3d 764 (9th Cir., 2005). Plaintiffs were originally awarded $1 in compensatory damages and $5 million in punitive damages for failing to train on harassment.  Swinton v. Potomac Corporation., 270 F.3d 794 (9th Cir., 2001). Lack of manager training justified a punitive damage award of $1 million in a single plaintiff case. Having a policy alone is not sufficient.  Godinet v. Management and Training Corp., 2003 C10 16 (USCA10, 2003). Punitive damage awarded based in large part on failure to train.
  39. 39. Wage Training Can Save You Millions  DOL: 70% + of employers are out of compliance with Wage and Hour Law.  Virtually every organization has a target on its back.  The only way to limit exposure is: – Get it right from the start. – Build a good faith defense that can limit liquidated (double) damages and 3rd year back wages for willful violations. – Wage and hour training helps you do both.
  40. 40. Questions?
  41. 41. Thank You for your time COPYRIGHT 2009, LITTLER MENDELSON, P.C.
  42. 42. Thank You David N. Goldman, Esq. Shareholder Littler Learning Group (LLG) Littler Mendelson, P.C. San Francisco Office 415.439.6280 COPYRIGHT 2009, LITTLER MENDELSON, P.C.