MANAGING CORPORATE CRISIS

              PRESENTED BY:
            EDWARD M. “TED” SMITH

               AUTHORED BY:
    ...
A special thanks to Ted Smith
       of Jenkens & Gilchrist
   for his substantial investment
of time spent preparing this...
AUTHOR’S NOTE

The authors have provided the reader with comments concerning the management of certain crisis
situations i...
Sharon M. Schweitzer
Senior Attorney, Labor & Employment, Technology Practice Group
Jenkens & Gilchrist, A Professional Co...
Edward M. ATed@ Smith
Attorney, Labor & Employment
Jenkens & Gilchrist, a Professional Corporation
2200 One American Cente...
Table of Contents

EMERGENCIES/NATIONAL DISASTERS ...........................................................................
CONCLUSION ..................................................................................................................
MANAGING CORPORATE CRISIS
In the wake of the events of September 11, 2001                    fines, loss of market share, ...
Managing Corporate Crisis                                                                      Chapter 14

analysis to det...
Chapter 14                                                                      Managing Corporate Crisis
External Resourc...
Managing Corporate Crisis                                                                          Chapter 14

        (b)...
Chapter 14                                                                         Managing Corporate Crisis
further highl...
Managing Corporate Crisis                                                                                                 ...
Chapter 14                                                                        Managing Corporate Crisis

Industries   ...
Managing Corporate Crisis                                                                          Chapter 14

Negligent R...
Chapter 14                                                                     Managing Corporate Crisis

       (2)    th...
Managing Corporate Crisis                                                                       Chapter 14

reasonable leg...
Chapter 14                                                                       Managing Corporate Crisis

Examples of Jo...
Managing Corporate Crisis                                                                       Chapter 14

          bein...
Chapter 14                                                                   Managing Corporate Crisis

      • Lack of co...
Managing Corporate Crisis                                                                     Chapter 14

       2.     Co...
Chapter 14                                                                     Managing Corporate Crisis

        response...
Managing Corporate Crisis                                Chapter 14

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MANAGING CORPORATE CRISIS PRESENTED BY: E
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MANAGING CORPORATE CRISIS PRESENTED BY: E

  1. 1. MANAGING CORPORATE CRISIS PRESENTED BY: EDWARD M. “TED” SMITH AUTHORED BY: EDWARD M. “TED” SMITH SHARON M. SCHWEITZER JENKENS & GILCHRIST , A P ROFESSIONAL CORPORATION 2200 O NE AMERICAN CENTER 600 CONGRESS AVENUE AUSTIN, TEXAS 78701 (512) 499-3800 sschweitzer@jenkens.com
  2. 2. A special thanks to Ted Smith of Jenkens & Gilchrist for his substantial investment of time spent preparing this paper. .
  3. 3. AUTHOR’S NOTE The authors have provided the reader with comments concerning the management of certain crisis situations in the workplace. The reader is advised that others may reach different conclusions and recommendations due to their differing views of the law. This paper is intended as general information, and not as legal advice. For legal advice concerning a specific situation, the reader should seek independent counsel.
  4. 4. Sharon M. Schweitzer Senior Attorney, Labor & Employment, Technology Practice Group Jenkens & Gilchrist, A Professional Corporation 2200 One American Center 600 Congress Avenue Austin, Texas 78701 (512) 404-3545 sschweitzer@jenkens.com www.jgsolutions.com Practice Concentration & Experience Ms. Schweitzer is Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and has practiced labor and employment law since 1991. Schweitzer specializes in representing start-up, high-tech and emerging growth companies in all aspects of the employer-employee relationship, from training and advice to litigation and appeal. She represents a range of employers and technology companies and provides counsel on recruiting & retaining talent, non-competition agreements, non-solicitation, executive compensation and employment agreements. She has extensive experience before the U.S. Departments of Labor & Justice, EEOC, Texas Commission on Human Rights, and Texas Workforce Commission. Ms. Schweitzer’s other professional experience includes the following: Attorney & President - Law Office of Sharon M. Schweitzer, P.C.; Legal Counsel for Employee Relations & ADA Coordinator, Texas Comptroller of Public Accounts; Assistant Attorney General, Office of the Attorney General, Transportation division; Associate Attorney, Davis & Wilkerson, P.C. Education South Texas College of Law (J.D., 1989) University of Oxford, Oxford England (Summer Study Program, 1984) Ohio State University (B.A., 1984) Professional Affiliations Chair, Travis County Bar Association Technology & Computer Section 2000-01; State Bar of Texas, Member Labor & Employment Section, 1991 - present; American Bar Association Member, Labor & Employment Section, 1995 - present; United States Supreme Court; United States Court of Appeals for Fifth Circuit; United States District Court - Western, Eastern, Northern & Southern Districts; Travis County Bar Association, Board of Directors, 2000-01, 1996-97, Chair, 1997-98 Labor & Employment Section; Chair, Bench Bar 2000; State Bar of Texas High Tech Litigation Conference, Planning Committee 1999-00; South Texas College of Law Employment Law Conference, Chair, 1998-00; University of Houston, Representing Start-Ups and New Companies Conference, Advisory Committee Member, 2000.
  5. 5. Edward M. ATed@ Smith Attorney, Labor & Employment Jenkens & Gilchrist, a Professional Corporation 2200 One American Center 600 Congress Avenue Austin, TX 78701-3248 Telephone: (512) 404-3519 Telecopy: (512) 404-3520 tmsmith@jenkens.com Practice Concentration & Experience Mr. Smith focuses his practice on employment and labor law. He specializes in representing employers in all aspects of the employer-employee relationship, from training and advice to litigation and appeal. In particular, Mr. Smith has significant experience in litigating and counseling clients regarding federal and state employment statutes (including Title VII, the TCHRA, the ADEA, the ADA, the WARN Act, and the NLRB), as well as wrongful discharge matters, individual employee rights issues, retaliation under workers' compensation laws, and matters related to union and individual employee arbitrations. Prior to joining Jenkens & Gilchrist, Mr. Smith served in the United States Army Judge Advocate General’s Corps, where among other aspects of his practice, he litigated federal labor and employment claims before the EEOC, the Merit Systems Protection Board, the Office of Special Counsel, and the Office of Special Complaints. Thereafter he joined the national labor law firm of Littler Mendelson, where he litigated a full range of labor and employment issues in state and federal court, and also gained experience in representing employers in labor grievances, arbitrations, and union elections. Education University of Texas (J.D., 1994) University of Notre Dame (B.B.A., cum laude, 1991) Université Catholique de l’Ouest, Angers, France (1988-89) Professional Affiliations American Bar Association; Texas Bar Association; Dallas Bar Association; Travis County Bar Association; Licensed to Practice in Western, Eastern, Northern and Southern Districts of Texas; Eastern and Western Districts of Arkansas; United States Court of Appeals, Fifth Circuit and United States Court of Appeals for the Armed Forces
  6. 6. Table of Contents EMERGENCIES/NATIONAL DISASTERS .......................................................................................1 Four-Step Plan................................................................................................................................1 Internal Resources ......................................................................................................................2 External Resources .....................................................................................................................3 Assess Vulnerabilities .................................................................................................................3 Executive Summary....................................................................................................................3 Emergency Management Elements ..............................................................................................3 Emergency Response Procedures.................................................................................................3 Support Documents ....................................................................................................................4 Establish a Training Schedule ......................................................................................................4 Coordinate with Outside Organizations........................................................................................4 Maintain Contact with Other Corporate Offices............................................................................4 Implement The Plan....................................................................................................................4 Conduct Training, Drills and Exercises ........................................................................................4 Training Activities......................................................................................................................4 Employee Training.....................................................................................................................4 Evaluate and Modify the Plan......................................................................................................4 WORKPLACE VIOLENCE................................................................................................................4 National Statistics...........................................................................................................................5 Statistics in Texas ...........................................................................................................................5 Industries .......................................................................................................................................7 Cause of Fatalities ..........................................................................................................................7 Worker Demographics ....................................................................................................................7 Workplace Violence Prevention / Preparation...................................................................................9 Warning Signs of Potentially Violent Individuals........................................................................ 12 Personal Conduct to Minimize Violence..................................................................................... 13 Do ........................................................................................................................................... 13 Do Not..................................................................................................................................... 13 Reporting Procedures................................................................................................................ 13 Prepare a Threat Management Plan ............................................................................................ 14 Addressing Violent or Threatening Incidents .............................................................................. 14 Evaluate Security After a Threat................................................................................................ 14 Managing the Aftermath of an Incident.............................................................................................. 15 Trauma Plan............................................................................................................................. 15 Support Prosecution of Offenders .............................................................................................. 15 i
  7. 7. CONCLUSION ................................................................................................................................ 15 Table of Authorities CASES Akins v. Estes, 888 S.W.2d 35, 42 (Tex. App. – Amarillo 1994), affirmed in part, reversed in part.............................7 Deerings West Nursing Center v. Scott, 787 S.W.2d 494 (Tex. App. - El Paso 1990, writ denied) ...............................7 Dickinson Arms – REO, L.P. v. Campbell, 4 S.W.3d 333 (Tex. App. – Houston [1 st Dist.] 1999) ................................8 Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472 (Tex. 1995)..........................................................................7 Exxon Corp. v. Tidwell, 867 S.W.2d 19, 21 (1993)............................................................................................................8 Ghazali v. Southland Corp., 669 S.W.2d 770 (Tex. App. - San Antonio 1984, no writ) ................................................8 Golden Spread Council, Inc. v. Akins, 926 S.W.2d 287 (Tex. 1996) ................................................................................7 Guidry v. National Freight, Inc., 944 S.W.2d 807 (Tex. App. – Austin 1997, no writ)..................................................7 Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354 (Tex. 1998)...................................................................................8 Horton v. Montgomery Ward & Co., 827 S.W.2d 361, 366 (Tex. App. – San Antonio 1992, writ denied) ..................8 Houser v. Smith, 968 S.W.2d 542, (Tex. App. – Austin 1998, no writ) ...........................................................................7 Porter v. Nemir, 900 S.W.2d 376 (Tex. App. – Austin 1995, no writ).............................................................................8 Prescott v. CSPH, Inc., d/b/a Domino’s Pizza, 878 S.W.2d 692, 695 (Tex. App. – Amarillo 1994, no writ)...............8 Read v. Scott Fetzer Co., 990 S.W.2d 732 (Tex. 1998) .....................................................................................................7 FEDERAL CASES H.E. Butt Grocery Co. v. National Union Fire Ins. Co., 150 F.3d 526 (5th Cir. 1998) ....................................................7 Lewis v. Continental Airlines, Inc., 80 F.Supp.2d 686, 696 (S.D. Tex. 1999) .................................................................8 Sanders v. Casa View Baptist Church, 134 F.3d 331 (5th Cir. 1998)................................................................................8 OTHER SOURCES Guidelines for Employers, International Association of Chiefs of Police, www.theiacp.org..........................................9 James M. Clash and Rob Wherry, “Shattered, Not Broken,” Forbes Magazine, October 15, 2001 ..............................2 Jodi Wilgoren, Indiana Factory Shooting Leaves 2 Dead and 6 Hurt, N.Y. Times, December 7, 2001 .......................5 Emergency Management Guide for Business & Industry, Federal Emergency Management Agency, September 23, 1996 ..................................................................................................................................................................................1 Employers Respond to Disaster : Addressing the Effects of Responses to the Events of September 11, 2001, Bureau of National Affairs, Inc., September, 2001....................................................................................................................1 Steve Kaufer and Jurg Mattman, Workplace Violence: An Employer’s Guide, Workplace Violence Research Institute, 2001...................................................................................................................................................................5 ACTS Federal Fair Credit Reporting Act (FCRA) (15 U.S.C.A. § 1601 et seq.) ........................................................................9 ii
  8. 8. MANAGING CORPORATE CRISIS In the wake of the events of September 11, 2001 fines, loss of market share, damages to in New York, Washington, D.C., and equipment, products or business Pennsylvania, employers throughout the country interruption. are re-evaluating their ability to handle a crisis - Reduces exposure to civil or criminal situation in their own workplace. 1 A corporate liability in the event of an incident. crisis may take many forms – fire, natural - May reduce insurance premiums. disaster, explosion at a manufacturing plant, or an incident of workplace violence. Regardless - Helps companies fulfill their moral of the form, each of these scenarios share a responsibility to protect employees, the common theme: the company has experienced community and the environment; and an unforeseen and extraordinary event that enhances a company’s image and places the company in jeopardy of meeting the credibility with employees, customers, demands and expectations of its customers, suppliers, and the community. shareholders and employees. In addition, these Four-Step Plan events further place the company in a position of facing potential litigation and legal liability. FEMA suggests the following four-step plan in creating an emergency management program: This paper addresses some of the considerations that companies face in preparing for, and 1. Establish a planning team. responding to, corporate crisis. For purposes of 2. Analyze capabilities and hazards. this discussion, corporate crisis is divided into 3. Develop the plan. two categories: emergencies/natural disasters 4. Implement the plan. and workplace violence. Establish a Planning Team EMERGENCIES/NATIONAL DISASTERS In order to be successful, there must be an The Federal Emergency Management individual or group in charge of developing the Agency (“FEMA”) has established a step-by- emergency management program. Depending step approach to emergency planning, response upon the size and make-up of the company, and recovery for companies of all sizes. 2 To input from each of the following functional areas start with, for any crisis management program to may need to be considered: be successful, it is imperative that the program - Upper Management receive support from the corporation’s upper - Line Management management. In “making the case” for a crisis management program, the following aspects - Labor may be emphasized: - Human Resources - Engineering and Maintenance - Facilitates compliance with regulatory - Safety, Health and Environmental requirements of Federal, State and Local Affairs agencies. - Public Information - Enhances a company’s ability to recover from financial losses, regulatory - Security - Community Relations 1 - Sales and Marketing See Employers Respond to Disaster : Addressing the Effects of Responses to the Events of - Legal September 11, 2001, Bureau of National Affairs, Inc., - Finance and Purchasing September, 2001. Analyze Capabilities and Hazards 2 See Emergency Management Guide for Business & This step entails gathering information about Industry, Federal Emergency Management Agency, current capabilities, possible emergencies and September 23, 1996. hazards, and then conducting a vulnerability 1
  9. 9. Managing Corporate Crisis Chapter 14 analysis to determine the facility’s capabilities warning systems, emergency power for handling a crisis. The planning team should equipment, decontamination first review current internal plans and policies, equipment including: - Facilities: emergency operating - Evacuation plan center, media briefing area, shelter areas, first-aid stations, sanitation - Fire protection plan facilities - Safety and health program - Organizational capabilities: training, - Security procedures evacuation plan, employee support - Insurance programs system - Plant/Office closing policies - Backup systems: arrangements with - Employee manuals outside facilities to provide for: - Hazardous materials plan (1) Payroll - Risk management plan (2) Communications It is then necessary to determine the critical (3) Production products, services and operations of the (4) Customer services company in order to assess the impact of (5) Shipping and receiving potential emergencies and to determine the need (6) Information systems for backup systems. Areas to review include: support - Company products and services, as (7) Emergency power well as the facilities needed to (8) Recovery support produce them. The necessity of planning and maintaining - Products and services provided by backup systems was dramatically highlighted by suppliers, especially sole source the tragic terrorist attacks on the Pentagon and vendors. World Trade Center.3 Fiduciary Trust Co. - Lifeline services such as electrical International, located in the World Trade Center, power, water, sewer, gas, manages $44 billion securities for pension plans, telecommunications and endowments and wealthy individuals. Despite transportation. being located at “Ground Zero”, Fiduciary was - Operations, equipment and up and running one business day after the personnel vital to the continued bombing due to a comprehensive disaster functioning of the facility. recovery plan that had been in place for 14 Once the critical products, services and years. operations are identified, the team should assess Under the plan, Fiduciary had previously the resources, both internal and external, established an alternate “recovery site” in New currently available to the company to address Jersey containing back-up computers, servers, potential crisis situations. telephones and fax machines. Within hours of Internal Resources the attack, employees of Fiduciary were able to back up the Company’s portfolio system, scan Internal resources and capabilities that may be the trust and accounting books into the new needed in an emergency include: system, and re-establish use of the Federal wire system so that they could transfer funds directly - Personnel: fire brigade, hazardous from the recovery site. Although no backup materials response team, emergency system can in any way mitigate the terrible medical services, security, human toll suffered by Fiduciary (87 employees emergency management group, were lost), the emergency plan did enable the evacuation team, public information Company to avoid financial ruin. contacts - Equipment: fire protection and suppression equipment, 3 communications equipment, first aid James M. Clash and Rob Wherry, “Shattered, Not supplies, emergency supplies, Broken,” Forbes Magazine, October 15, 2001. 2
  10. 10. Chapter 14 Managing Corporate Crisis External Resources (5) What types of emergencies may result from the design or External resources that may be needed in an construction of the facility? Does emergency include the following: the physical facility enhance safety? (a) Local emergency management (6) What emergencies or hazards are office you regulated to deal with? (b) Fire Department Next, it is necessary to rate the likelihood of (c) Hazardous materials response each emergency’s occurrence, as well as the organization level of impact on the Company. This is a subjective consideration, but useful nonetheless. (d) Emergency medical services Use a simple scale of 1 to 5, with 1 as the lowest (e) Hospitals probability and 5 as the highest. (f) Local and State police Develop The Plan (g) Community service organizations FEMA suggests that any plan include the (h) Utilities following basic components: (i) Contractors Executive Summary (j) Suppliers of emergency equipment The executive summary gives management a brief overview of the purpose of the plan; the (k) Insurance carriers facility’s emergency management policy; Assess Vulnerabilities authorities and responsibilities of key personnel; the types of emergencies that could occur; and The next step is to assess the vulnerability of the where response operations will be managed. specific facility, and the probability and potential impact of each emergency. Below are Emergency Management Elements some factors to consider: This section of the plan briefly describes the (1) What types of emergencies have facility’s approach to the core elements of occurred in the community, at this emergency management, which are: facility and at other facilities in the (a) Direction and control area? (b) Communications (2) What may happen as a result of the facility’s location? (c) Life safety (a) Proximity to flood plains, (d) Property protection seismic faults and dams (e) Community outreach (b) Proximity to companies that (f) Recovery and restoration produce, store, use or transport hazardous (g) Administration and logistics. materials Emergency Response Procedures (c) Proximity to major transportation routes and The procedures spell out how the facility will airports respond to emergencies. Whenever possible, develop them as a series of checklists that can be (d) Proximity to nuclear power quickly accessed by senior management, plants department heads, response personnel and (3) What may result from a process or employees. system failure? Specific procedures might be needed for any (4) What emergencies can be caused by number of situations such as bomb threats or employee error? Are employees tornadoes, and for such functions as: trained to work safely? Do they (a) Warning employees and customers know what to do in an emergency? 3
  11. 11. Managing Corporate Crisis Chapter 14 (b) Communicating with personnel and Implement The Plan community responders Implementation means more than simply (c) Conducting an evacuation and exercising the plan during an emergency. It accounting for all persons in the means acting on recommendations made during facility the vulnerability analysis, integrating the plan (d) Managing response activities into company operations, training employees and evaluating the plan. (e) Activating and operating an emergency operations center Conduct Training, Drills and Exercises (f) Fighting fires Almost everyone who works at or visits the (g) Shutting down operations facility requires some form of training. This may include periodic employee discussion (h) Protecting vital records sessions to review procedure, technical training (i) Restoring operations in equipment use for emergency responders, evacuation drills and full-scale exercises. Support Documents Training Activities Documents that may be needed in an emergency include: Training may take many forms: Emergency call lists a. Orientation and Education Sessions. b. Tabletop Exercise. Building and site maps c. Walk-through Drill. Lists of major resources (equipment, d. Functional Drills. supplies, services) that could be needed in e. Evacuation Drill. an emergency, mutual aid agreements with f. Full-scale Exercise. other companies and government agencies. Employee Training Establish a Training Schedule General training for all employees should Have one person or department responsible for address: developing a training schedule for your facility. a. Individual roles and responsibilities Coordinate with Outside Organizations b. Information about threats, hazards and protective actions. Meet periodically with local government agencies and community organizations. Inform c. Notification, warning and appropriate government agencies that you are communications procedures. creating an emergency management plan. d. Means for locating family members Maintain Contact with Other Corporate in an emergency Offices e. Emergency response procedures Communicate with other offices and divisions in f. Evacuation, shelter and your company to learn: accountability procedures (a) Their emergency notification g. Location and use of common requirements emergency equipment (b) The conditions where mutual h. Emergency shutdown procedures assistance would be necessary Evaluate and Modify the Plan (c) How offices will support each other in an emergency Conduct a formal audit of the entire plan at least once a year. (d) Names, telephone numbers and page numbers of key personnel WORKPLACE VIOLENCE The events of September 11, 2001 in New York, Pennsylvania and Washington, D.C., only 4
  12. 12. Chapter 14 Managing Corporate Crisis further highlight a growing area of concern for According to results of a study released August U.S. employers. 14, 2000 by the Texas Workers’ Compensation Commission fatal work injuries in Texas On December 6, 2001, a few hours after arguing increased 22% from 1999 to 2000.7 This study with a co-worker, an angry employee opened is a result of an occupational study conducted by fire at a small factory in Goshen, Indiana, killing TWCC in cooperation with the U. S. Bureau of one worker and wounding six others, two Labor Statistics. A total of 572 fatal work seriously, before committing suicide.4 This injuries occurred in Texas in 2000. The charts shooting was only the latest of about a dozen on the following page reflect the fatal deadly workplace attacks in the last six years, occupational injuries in Texas by several including the killing by a co-worker of seven categories. people at a Massachusetts Internet consulting firm in December of last year. 5 According to the U.S. Department of Justice, more than 2 million persons suffer violence or threats of violence at the workplace or while on duty each year. A recent survey of Fortune 1000 corporate security professions found that workplace violence is considered the most significant security threat to American business today. Employers paid $36 billion annually due to violence in the workplace. This violence results in three deaths daily plus thousands of injuries, according to both the Workplace Violence Research Institute and the Justice Department. 6 National Statistics According to the U.S. Department of Labor’s most recent Census of Fatal Occupational Injuries, workplace homicides accounted for more than one in ten of all deaths at the workplace in 2000. In fact, the number of job- related homicides increased for the first time in six years - from 651 in 1999 to 677 in the year 2000. Homicide was the third leading cause of death in the workplace, behind transportation accidents and fatal contact with objects and equipment. For those workplace homicides where the motive could be ascertained, homicides in which the motive was robbery increased from 255 cases in 1999 to 291 cases in 2000. Statistics in Texas 4 Jodi Wilgoren, Indiana Factory Shooting Leaves 2 Dead and 6 Hurt, N.Y. Times, December 7, 2001. 5 Id. 6 Steve Kaufer and Jurg Mattman, Workplace Violence: An Employer’s Guide, Workplace Violence 7 Research Institute, 2001. See www.twcc.state.tx.us. 5
  13. 13. Managing Corporate Crisis Chapter 14 Fatal Occupational Injuries in Texas, 1991-2000 Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total 530 536 529 497 75 514 459 523 468 572 Fatalities Fatal Occupational Injuries, by industry, Texas, 1995 –2000 Industry 2000 1999 1998 1997 1996 1995 TOTAL FATALITIES.................................... 572 468 523 459 514 475 Construction.................................................... 151 120 143 108 94 93 Retail and Wholesale Trade ........................... 95 46 45 40 64 54 Transportation and public utilities ................. 76 65 99 74 73 76 Services ........................................................... 75 70 68 49 61 70 Agriculture, Forestry and Fishing .................. 41 39 36 43 45 48 Government 46 37 30 36 34 24 Manufacturing 43 43 49 41 61 45 Mining 37 16 24 40 43 28 Finance, insurance, and real estate 8 9 11 8 11 8 Fatal Occupational Injuries, by event, Texas, 1995 – 1999 Event or exposure 2000 1999 1998 1997 1996 1995 TOTAL FATALITIES 572 468 523 460 514 475 Transportation incidents 216 204 213 210 205 200 Highway incidents 135 130 122 116 125 111 Worker struck by vehicle, mobile equip. 22 29 29 37 24 32 Contact with objects and equipment 91 68 77 73 72 65 Struck by object 53 35 41 36 41 39 Assaults and violent acts 101 71 79 63 103 86 Homicides 82 59 60 47 84 74 Exposure to harmful substances or environments 64 54 74 57 50 49 Contact with electric current 34 35 42 38 31 33 Falls 76 55 59 40 50 57 Fall to lower level 73 51 57 36 45 52 Fires and explosions 21 16 21 17 32 17 Other 0 0 0 0 2 1 Note: Totals for major categories may include subcategories not shown separately. Illnesses or diseases, including heart attacks, and accidents that occur outside the scope of employment are not included in the totals. 6
  14. 14. Chapter 14 Managing Corporate Crisis Industries Importantly, liability in this regard is not limited to employees on the company’s active payroll, The construction industry recorded the highest but also may extend to volunteers and other number of occupational fatalities in 2000 (151 “non-traditional” employees. 9 Moreover, unlike total), with falls being the most common cause the doctrine of respondeat superior, liability of construction deaths. Retail and wholesale under negligent hiring extends to intentional acts trade experienced the second highest number of committed by the employee outside the scope of fatalities, with grocery store, restaurant, and employment. 10 drug and liquor store employees most affected. Homicide was the leading cause of death in the To establish a claim for negligent hiring, a trade industry. Following retail and wholesale plaintiff must prove the following elements: trade, transportation and service industries had (1) the employer employed the offender the next highest frequency of fatalities. (or the offender was acting as an agent or Cause of Fatalities employee of the employer); (2) the employer knew, or should have Assaults and violent acts were the second known through a reasonable investigation, that leading cause of death behind transportation the offender was unfit for his/her position with incidents. There was a 42 percent increase in the company; assaults and violent acts from 1999 to 2000, which was the largest increase of any fatal event (3) a third party was injured to whom category. A majority of occupational homicides the employer owed a duty of care; (62 percent) were motivated by robberies, with (4) the injury to the third party was retail workers being the most likely victims. proximately caused by the offender.11 Worker Demographics To establish proximate cause, a plaintiff must prove that the employee’s tortious conduct was Males accounted for 93 percent of the total reasonably foreseeable, and: occupational fatalities – half of them were between 25 and 44 years of age and almost a (1) the injuries were caused by quarter worked in the construction industry. employment of the incompetent or unfit Women between 45 and 54 years of age employee, and employed in retail and wholesale trade industries (2) the injuries were related to the accounted for the highest number of fatalities for employment of the incompetent or unfit their gender group. employee. 12 POTENTIAL LEGAL LIABILITY Employers face a variety of legal liability issues 287 (Tex. 1996); Doe v. Boys Club of Greater in the context of workplace violence, including Dallas, Inc., 907 S.W.2d 472 (Tex. 1995); H.E. Butt Grocery Co. v. National Union Fire Ins. Co ., 150 claims for: F.3d 526 (5th Cir. 1998). • negligent hiring of employees; 9 • negligent retention/supervision of Akins v. Estes, 888 S.W.2d 35, 42 (Tex. App. – employees; Amarillo 1994), affirmed in part, reversed in part, Golden Spread Council, Inc. v. Akins, 926 S.W.2d • premises liability; and 287 (Tex. 1996). • respondeat superior liability. 10 Doe v. Boys Club of Greater Dallas, Inc., 907 Negligent Hiring S.W.2d 472 (Tex. 1995). 11 An employer may be held liable for the violent See, e.g., Read v. Scott Fetzer Co., 990 S.W.2d 732 acts of its employees if the employer was (Tex. 1998); Guidry v. National Freight, Inc., 944 negligent in hiring someone who the employer S.W.2d 807 (Tex. App. – Austin 1997, no writ). knows, or by exercise of reasonable care should 12 have known, was unfit or incompetent. 8 See, e.g., Houser v. Smith, 968 S.W.2d 542, (Tex. App. – Austin 1998, no writ); Deerings West Nursing Center v. Scott, 787 S.W.2d 494 (Tex. App. - El Paso 8 Golden Spread Council, Inc. v. Akins, 926 S.W.2d 1990, writ denied). 7
  15. 15. Managing Corporate Crisis Chapter 14 Negligent Retention/Supervision Intentional Torts (Respondeat Superior) Even if an employer is not negligent in its pre- Generally, employers are not held liable for employment investigation and hiring of an intentional torts committed by their employees employee, liability may nevertheless arise under under a theory of respondeat superior (or the theory of negligent retention where an vicarious liability). Texas courts have differed employer fails to investigate, discipline or with regard to the elements whereby an terminate an employee who the employer employer could potentially be liable for the knows, or should have known, was unfit for the intentional acts of an employee. In one position. 13 As with a claim for negligent hiring, workplace violence case, the court held that it an employer may be held liable under a theory would have to be proven that the employer hired of negligent retention even where the violent act the offender with the desire, or substantially occurs outside of the employee’s scope of certain belief, that the offender would attack the employment. victim. 17 In another case, the court determined that the employer would only be liable if the Premises Liability employer requested or directed an employee to assault another individual, and either 1) the It is a well established legal tenet that employers employer intended to cause the harm; or 2) the have a nondelegable duty of ordinary care to employer had a substantially certain belief that provide a safe work place for their employees. 14 the employee would be harmed. 18 Finally, one Some Texas courts have extended this theory to court has ruled that in order to be vicariously include liability for incidents of workplace liable for an assault, the employer must have violence where there were known risks or “directed, encouraged, or otherwise ‘assented to’ hazards from which the employer failed to any assault or battery that may have occurred.” 19 provide adequate protection. For instance, a Houston court of appeals upheld Occupational Safety and Health Act a $341,000 verdict against an apartment In addition to these potential state law claims, complex that failed to prevent the car-jacking the Occupational Safety and Health and murder of a visitor to the complex. 15 The Administration (OSHA) has responded to the apartment complex was located in a high-crime increase in workplace violence by citing area where there had been similar crimes employers who fail to adequately protect committed prior to this incident. Similarly, a workers from acts of criminal violence occurring San Antonio court reversed a summary in the workplace. Section 5(a)(1) of the judgment in favor of an employer because there Occupational Safety and Health Act is was sufficient evidence that the employer failed commonly referred to as the “general duty to provide adequate security at a convenience clause.” This section requires employers to store for its employees, and failed to take provide employees with a workplace free from preventative measures to avoid potential recognized hazards that cause, or are likely to robberies and violence.16 cause, serious physical harm or death. In order to establish a violation of the general duty clause, OSHA must show: 13 See Hoechst-Celanese Corp. v. Mendez, 967 (1) a condition or activity in the S.W.2d 354 (Tex. 1998); Sanders v. Casa View workplace presented a hazard to employees; Baptist Church , 134 F.3d 331 (5th Cir. 1998); Porter v. Nemir, 900 S.W.2d 376 (Tex. App. – Austin 1995, 17 no writ). Prescott v. CSPH, Inc., d/b/a Domino’s Pizza, 878 S.W.2d 692, 695 (Tex. App. – Amarillo 1994, no 14 See, e.g., Exxon Corp. v. Tidwell, 867 S.W.2d 19, writ). 21 (1993). 18 Horton v. Montgomery Ward & Co., 827 S.W.2d 15 Dickinson Arms – REO, L.P. v. Campbell, 4 361, 366 (Tex. App. – San Antonio 1992, writ S.W.3d 333 (Tex. App. – Houston [1 st Dist.] 1999). denied). 16 19 Ghazali v. Southland Corp., 669 S.W.2d 770 (Tex. Lewis v. Continental Airlines, Inc., 80 F.Supp.2d App. - San Antonio 1984, no writ). 686, 696 (S.D. Tex. 1999). 8
  16. 16. Chapter 14 Managing Corporate Crisis (2) the cited employer, or the procedures for obtaining and considering such employer’s industry, recognized the hazard; information. Personal information concerning applicants or employees must be kept (3) the hazard was likely to cause confidential. In addition, where a background death or serious physical harm; and check will involve interviews with acquaintances and neighbors concerning the (4) feasible means existed to applicant's lifestyle, this must be disclosed and eliminate or materially reduce the hazard. the applicant furnished, upon request, information concerning the nature and scope of Workplace Violence Prevention / Preparation the investigation. The International Association of Chiefs The FCRA requires employers take certain steps of Police (IACP) prepared the following if background checks are to be used. guidelines for employers to help minimize the 1. Before conducting a background check, impact of workplace violence and threats. 20 an employer must first: 1. Conduct Pre-Employment Screening • Provide the applicant or employee with clear and conspicuous written Employers who conduct effective notice that a consumer report/credit background checks can often improve check will be conducted; and productivity and reduce the number of personnel prone to exhibiting violent behaviors. • Obtain written authorization from the applicant or employee. • Prior to hiring any applicant, check 2. If the employer makes a decision to take references and inquire about any prior an adverse action based in whole or in incidents of violence. In addition, part on the information contained in the conduct thorough background checks report, the employer must: and consider using drug screening to the extent practicable. • Provide the applicant/employee with a copy of the report; • Also, evaluate the need for screening contract personnel who work at your • Provide a written description of the facility. Vendors and service applicant’s rights under the statute organization whose personnel make (including the right to request frequent visits or spend long periods disclosure of the nature, sources and of time working at your facility should recipients of the credit report); certify that those individuals meet or • Provide the applicant with oral, written exceed your company’s safety and or electronic notice of the adverse security requirements. Conversely, action; contractors who assign personnel to work at other organizations’ facilities • Provide the name, address and phone should also consider the company’s number of the consumer reporting safety and security policies and agency that furnished the report along practices. with a statement that the consumer reporting agency did not make the Fair Credit Reporting Act decision to take the adverse action and is unable to explain the specific Use of pre-employment screening checks must reasons behind the decision; comply with the Federal Fair Credit Reporting Act (FCRA) (15 U.S.C.A. § 1601 et seq.). • Provide notice of the applicant’s right Under the FCRA, employers must obtain to dispute the accuracy of the report. consent for any inquiries and follow strict Employers who fail to comply with the requirements of the FCRA face monetary penalties as well as legal action from the 20 Guidelines for Employers, International applicants. Individuals who prevail on these Association of Chiefs of Police, www.theiacp.org claims may recover damages, court costs, and 9
  17. 17. Managing Corporate Crisis Chapter 14 reasonable legal fees, as well as punitive (1) participated in the conduct for damages for deliberate violations of the FCRA. which s/he was arrested; Employment Discrimination Issues (2) the conduct indicates unsuitability for the position in question; and In addition to issues under the FCRA, (3) the conduct was relatively recent. inquiries into an applicant's criminal history may also raise employment discrimination concerns. Convictions The Equal Employment Opportunity Commission (EEOC) has taken the position that According to the EEOC, African Americans and if information is sought on a job application, Hispanics are convicted in numbers that are during an interview, or during the hiring process, disproportionate to their representation in the it is assumed that the employer will use the U.S. population. The EEOC has therefore information in making a hiring decision. reasoned that barring individuals from Further, even if the inquiry is not discriminatory employment based on conviction records will on its face, the information requested may tend disproportionately exclude certain groups. Due to screen out individuals who belong to a to this adverse impact, an employer should not protected class. base an employment decision on the conviction record of an applicant or an employee, unless the Employer Considerations: practice serves a significant and legitimate employment goal. (1) Does the business involve care for Employers should consult the EEOC’s Policy the disabled, children or the elderly? Guidance on the Consideration of Arrest (2) Do employees have access to cash, Records in Employment at www.eeoc.gov. for weapons, drugs or residential dwellings? further information. (3) Does the employer have a duty to Job Relatedness & Business Necessity inquire about convictions? An inquiry about a felony conviction is (4) If no inquiry is made, is the risk of generally permissible. However, an absolute bar negligent hiring a consideration? against hiring convicted felons could violate (5) Will the inquiry violate Title VII or Title VII. Employers should consider the the TCHRA? following factors to determine whether employment of a convicted felon would be job- Disparate Impact related and consistent with business necessity. According to the EEOC, these factors include: Some hiring requirements, such as a “no tolerance” policy regarding any type of criminal (1) The nature and gravity of the record, may have a disparate impact on members offense or offenses; of a protected class. To be lawful, an employer (2) The time that has passed since the must show that the hiring requirement: conviction and/or completion of the sentence; (1) is job related, or it validly predicts and successful job performance; and (3) The nature of the job held or sought. (2) is required by business necessity, or necessary to safe and efficient operation Arrests The EEOC has concluded that the use of arrest records as an absolute bar to employment has a disparate impact on some groups protected by Title VII. Accordingly, arrest records alone should not be routinely used to deny employment. Exclusion is justified only if it appears that the applicant, or employee actually: 10
  18. 18. Chapter 14 Managing Corporate Crisis Examples of Job Relatedness d) When appropriate, having more than one employee on the A few examples of how the EEOC has defined premises. job-relatedness may help explain this issue. For instance, the EEOC has determined that a • Use, maintain, and regularly review conviction for gambling was too remote to appropriate physical security justify disqualification of a job applicant for the measures, such as electronic access position of mechanic. However, the EEOC control systems, silent alarms, metal found that a conviction for robbery was detectors, and video cameras in a sufficiently job related to justify the refusal to manner consistent with applicable hire the job applicant as a custodial state and federal laws. worker/janitor where the job involved issuance • Limit former employees’ access to the of a master set of keys. workplace as appropriate. If an employer decides to rely on reports about • Develop policies regarding visitor criminal histories of its job applicants, it may be access within facilities. For example, beneficial to monitor whether members of if warranted, require visitors to sign in protected classes are rejected at higher rates. If and out at reception, wear an such a result is noted, different hiring procedures identification badge while on the may be necessary. business premises, and/or be escorted. Evaluation of Criminal Records 3. Improve Internal/External Communications Compliance with the EEOC guidelines for use of arrest and conviction records requires a Employees should have a means to alert consistent approach. Employers must develop others in the workplace to a dangerous situation consistent policies and procedures for criminal and to provide information requested by record checks, ensure that a system is in place emergency responders. for the evaluation of these records, and set standards for maintenance of such confidential • If appropriate, establish an internal information. emergency code word or phone 2. Institute and Review Security number similar to 911. Procedures • Place lists of contact persons, crisis management plans, evacuation plans, • Conduct security surveys at scheduled and building plans where they can be intervals to help determine whether made available to emergency modifications should be made. Four responders. Keep important telephone examples of improvements that might numbers in several places (including be considered during a security survey offsite locations), available to all are: appropriate managers and employees. a) Improved lighting in and around 4. Establish Ground Rules for Behavior the place of work (including parking lots); Organizations that do not tolerate drug abuse or aggressive interaction lower the risk of b) Arranging escorts for employees workplace violence. who are concerned about walking to and from the parking • Organizations should inform lot; employees about policies concerning drugs, violent acts, and possession of c) Having reception areas that can weapons so that employees know be locked to prevent outsiders exactly what is expected of them. from going into the offices when no receptionist is on duty; • Implement procedures for your and organization to become a drug-free workplace. This includes prohibiting unauthorized use or possession, or 11
  19. 19. Managing Corporate Crisis Chapter 14 being under the influence of alcohol at • Have available for your employees work. information about the potential for violence in the workplace, how to • Disseminate to all employees a policy recognize the early warning signs of a of zero tolerance to threats or actual troubled or potentially violent person, violence at the workplace. For how to respond to those individuals, example, discipline or terminate every and how to report such incidents threat-maker if the complaint is substantiated. Warning Signs of Potentially Violent Individuals • Establish a policy applicable to everyone employed by the company Although there is no exact method to or on company property, including the predict when a person will become violent, one company parking lot, prohibiting the or more of these warning signs may be displayed possession of weapons which have not before a person becomes violent. A display of been authorized by your organization. the following signs are usually exhibited by 5. Employee and Manager Training people experiencing problems. In order for policies and procedures • Irrational beliefs and ideas concerning workplace violence to be effective, • Verbal, nonverbal or written threats or they must be implemented in conjunction with intimidation appropriate employee training. • Fascination with weaponry and/or acts • Train managers and other selected of violence individuals on appropriate ways to handle employee terminations, • Expressions of a plan to hurt himself layoffs, and discipline. Examples or others include appropriate use of Employee • Externalization of blame Assistance Program (EAP) counselors and outplacement services; providing • Unreciprocated romantic obsession managers with sensitivity and • Taking up much of supervisor's time aggression management training; and, with behavior or performance when possible, assessing violence problems potential of individuals prior to termination and taking appropriate • Fear reaction among coworkers/clients measures such as hiring additional • Drastic change in belief systems security. • Displays of unwarranted anger • Suggest local police encourage victims of threats and violence outside the • New or increased source of stress at workplace to notify their employers home or work about incidents when warranted so • Inability to take criticism their employers can take appropriate measures to help protect them and • Feelings of being victimized their coworkers from possible future • Intoxication from alcohol or other incidents of violence at the work site. substances It is recommended that employers reinforce this message to their • Expressions of hopelessness or employees. Upon notification, heightened anxiety employers should provide • Productivity and/or attendance receptionists and other front-line problems personnel having a need to know a description or picture of the alleged • Violence towards inanimate objects offender and inform them what actions they should take in the event • Steals or sabotages projects or that individual seeks entry or contact. equipment 12
  20. 20. Chapter 14 Managing Corporate Crisis • Lack of concern for the safety of • Arrange yourself so that a visitor others cannot block your access to an exit. Personal Conduct to Minimize Violence Do Not The IACP recommends that employees • Use styles of communication which be made aware of the following “do’s and generate hostility such as apathy, don’ts” regarding their daily interactions with brush off, coldness, condescension, people to de-escalate potentially violent robotism, going strictly by the rules or situations. giving the run-around. Do • Pose in challenging stances such as standing directly opposite someone, • Project calmness: move and speak hands on hips or crossing your arms. slowly, quietly and confidently. • Have any physical contact, finger- • Be an empathetic listener: encourage pointing or long periods of fixed eye the person to talk and listen patiently. contact. • Focus your attention on the other • Make sudden movements which can person to let them know you are be seen as threatening. Notice the interested in what they have to say. tone, volume and rate of your speech. • Maintain a relaxed yet attentive • Challenge, threaten, or dare the posture and position yourself at a right individual. Never belittle the person or angle rather than directly in front of make him/her feel foolish. the other person. • Criticize or act impatiently toward the • Acknowledge the person's feelings. agitated individual. Indicate that you can see he or she is • Attempt to bargain with a threatening upset. individual. • Ask for small, specific favors such as • Try to make the situation seem less asking the person to move to a quieter serious than it is. area. • Make false statements or promises you • Establish ground rules if unreasonable cannot keep. behavior persists. Calmly describe the consequences of any violent behavior. • Try to impart a lot of technical or complicated information when • Use delaying tactics which will give emotions are high. the person time to calm down. For example, offer a drink of water (in a • Take sides or agree with distortions. disposable cup). • Invade the individual's personal space. • Be reassuring and point out choices. Make sure there is a space of 3' to 6' Break big problems into smaller, more between you and the person. manageable problems. Reporting Procedures • Accept criticism in a positive way. When a complaint might be true, use All employees should know how and where to statements like "You're probably report violent acts or threats of violence. right" or "It was my fault." If the criticism seems unwarranted, ask ? Encourage employees to report and clarifying questions. establish avenues of communication so they can do so without fear of reprisal or • Ask for his recommendations. Repeat criticism: back to him what you feel he is requesting of you. 1. Incidents of threats, harassment, and other aggressive behavior; 13
  21. 21. Managing Corporate Crisis Chapter 14 2. Conditions where employees are ? Providing employees and their families subjected to excessive or with information about their benefits; unnecessary risk of violence; and and ? Managing operations and trauma care 3. Suggestions for reducing risk of after the crisis. violence or improving negative working conditions, such as The threat management team is a critical establishing a telephone hot-line, component of every successful threat identifying specific points of management plan. contact in the organization for addressing those issues, having a Addressing Violent or Threatening Incidents suggestion box or computer bulletin board, or providing an Use All Available Resources ombudsman. When an incident occurs, bring together all the ? Establish a policy to assure that reports necessary resources, which may include help which are submitted from outside the from outside the company. company, concerning potentially violent people who are likely to be present at ? When a serious threat is made, consult your worksite are routed to the the sources available to you to help appropriate manager and then evaluate the level of risk posed by the investigated. threat-maker. Prepare a Threat Management Plan ? When appropriate, obtain fitness-for- duty evaluations of employees It is important to prepare a threat management exhibiting seriously dysfunctional plan so that when a threat occurs everyone will behaviors at the workplace. know that there is a policy and will understand ? Maintain an internal tracking system of what to do. The plan might include: all threats and incidents of violence. ? Designating a threat management team; ? When a threat has been made or an incident has occurred, evaluate the ? Providing guidance concerning liaison situation and, if warranted, notify the with outside assistance; potential victims and/or police. ? Providing guidance developed in concert with local authorities for Evaluate Security After a Threat collecting and preserving evidence, including interviews of involved parties; The threat management team should review risks and determine what additional security ? Managing of communications regarding measures, if any, should be put in place after an the incident, for example, media incident. relations, internal communications, and possible use of a rumor control desk; ? If warranted, provide increased work- ? Managing the release of sensitive site protection when serious threats of information where appropriate; violence have been made. Such protection might include requesting ? Assigning responsibilities for contacting additional police patrols, hiring security the families of victims; guards, and/or alerting organizations or ? Managing clean-up and repairs; people who might be affected. ? Making decisions about returning to ? Consider the costs and benefits of work; providing increased protection to threatened employees. This could ? Notifying customers and suppliers about include changing their phone numbers, changes in orders; relocating them, loaning them a cellular phone, or providing them with a quick 14
  22. 22. Chapter 14 Managing Corporate Crisis response distress button or information ? Cooperate with law enforcement about where this device can be obtained. authorities to help identify and prosecute offenders through the use of any means ? Seek guidance and training on what at your disposal, such as crime stoppers, procedures should be taken to screen rewards, and similar programs. mail and packages after a threat has been made or after a large-scale layoff. CONCLUSION Contact the U.S. Postal Service or local police for guidance. The ability to manage a crisis in the workplace, ? After a violent incident evaluate the whether a natural disaster or incident of potential for further violence at your workplace violence, should be a concern of workplace and reassess your threat every employer. While many of the causes of management plan. these crises may not necessarily be controlled or eliminated entirely, recent statistics reflect that MANAGING THE AFTERMATH OF AN an employer may take steps to help avoid or INCIDENT reduce some of their potentially devastating Trauma Plan effects. This includes analyzing the potential risks, developing and implementing emergency Helping employees with the psychological plans and programs, providing training to consequences of workplace violence is the management and employees, taking reasonable humane thing to do. It also greatly helps to precautions, and using common sense. To reduce financial losses caused by absence, loss maintain a healthy, safe and productive work of productivity among employees, and workers’ environment, and avoid potential legal liability, compensation claims. employers must take reasonable steps to reduce the risks and effects of these situations. After a violent incident, provide information and offer counseling services to employees and their families which may include: ? Providing a debriefing 24 to 72 hours after a serious incident of violence to include all affected employees so that the cause of the violence and expectations can be discussed, a plan of action can be addressed, and those needing further counseling can be identified; ? Providing a group debriefing after a serious incident of violence for coworkers in how to communicate with the victim/coworker who is re-entering the job after absence; and ? Providing ongoing follow-up, as needed. Support Prosecution of Offenders To prevent further incidents from occurring and to show their support of the victims, employers should support prosecution of offenders. ? Accommodate employees after a violent incident so they can make court appearances and work with the prosecution. 15
  23. 23. Managing Corporate Crisis Chapter 14 (TITLE) Start paragraphs PLEASE NOTE THAT THIS PAPER NEEDS TO BE SUBMITTED IN A COLUMN FORMAT WITH THE FOLLOWING FORMATTING: 30 PAGE LIMIT Margins: Top .5” Bottom .5” Left 1” Right 1” Font: New Times Roman, 11 point Cover Page: Bold, 16.5 Pt. Title: Bold, 16.5 Pt. Headers: Bold, 10 pt. Footnotes: 10 pt. Header: Title of article on left, Chapter number on right with word “Chapter”. Each page flipped. Page numbers: Use automatic page numbering, bottom center Justification: Full Tab Set .3” Columns: 2 columns, Space between .25” Table of Contents: Use word processing program Table of Authorities: Use word processing program 16

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