New HR Challenges in the Dynamic Environment of Legal Compliance By Teri J. Elkins

Regulatory Issues Legal compliance in HR has increased in significance, complexity and breadth over the last 50 years Legal compliance in HR has increased in significance, complexity and breadth over the last 50 years Failing to comply with business regulations can have significant negative outcomes for the organization Failing to comply with business regulations can have significant negative outcomes for the organization

Topics Employment discrimination Employment discrimination Corporate reform Corporate reform Alternative dispute resolution Alternative dispute resolution

Sexual Harassment This section looks at recent rulings related to an employer’s liability for hostile work environment harassment and provides some guidelines on how organizations can protect themselves in such cases This section looks at recent rulings related to an employer’s liability for hostile work environment harassment and provides some guidelines on how organizations can protect themselves in such cases

Vicarious Liability Defense An employer is liable for hostile work environment sexual harassment committed by nonsupervisory employees when the employer knew or should have known about the harassment and failed to take prompt remedial action (29 C.F.R. § (d)) An employer is liable for hostile work environment sexual harassment committed by nonsupervisory employees when the employer knew or should have known about the harassment and failed to take prompt remedial action (29 C.F.R. § (d))

Defense for the Company The employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior The employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior The plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm The plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm

Exception to the Defense No affirmative defense is available when the supervisor's harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment.” (Faragher v. City of Boca Raton, at , 1998; Burlington Industries, Inc. v. Ellerth, at 2270, 1998) No affirmative defense is available when the supervisor's harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment.” (Faragher v. City of Boca Raton, at , 1998; Burlington Industries, Inc. v. Ellerth, at 2270, 1998)

Policy Guideline Guideline 1: Write, communicate, and implement comprehensive anti- harassment policies Guideline 1: Write, communicate, and implement comprehensive anti- harassment policies Employers may be liable for harassment if employees are unaware that anti-harassment policies exist Employers may be liable for harassment if employees are unaware that anti-harassment policies exist

Training Guideline Guideline 2: Provide training to all employees regarding the organization’s anti-harassment policies and complaint procedures Guideline 2: Provide training to all employees regarding the organization’s anti-harassment policies and complaint procedures All employees should receive periodic training regarding an organization’s anti-harassment policies and complaint procedures All employees should receive periodic training regarding an organization’s anti-harassment policies and complaint procedures

Training Content All employees should be informed about specific prohibited behaviors, how to report complaints of harassment, and the company’s complaint procedures All employees should be informed about specific prohibited behaviors, how to report complaints of harassment, and the company’s complaint procedures

Training Content Continued Managers should also be instructed on how to monitor for sexual harassment, and how to handle complaints, documentation, performance evaluations, counseling, and the company’s prohibition against retaliation Managers should also be instructed on how to monitor for sexual harassment, and how to handle complaints, documentation, performance evaluations, counseling, and the company’s prohibition against retaliation

Investigative Guideline Guideline 3: Conduct thorough investigations of harassment complaints and take appropriate corrective actions Guideline 3: Conduct thorough investigations of harassment complaints and take appropriate corrective actions Failing to conduct proper investigations can result in company liability for compensatory as well as punitive damages Failing to conduct proper investigations can result in company liability for compensatory as well as punitive damages

How to Investigate The investigator should interview the complainant, the alleged harasser, and any relevant third parties The investigator should interview the complainant, the alleged harasser, and any relevant third parties Credibility should be determined based upon plausibility of the accounts, demeanor, motives to lie, corroboration, and past records Credibility should be determined based upon plausibility of the accounts, demeanor, motives to lie, corroboration, and past records

Investigator Actions The investigator should determine whether sexual harassment occurred, inform the parties of the decision, and take immediate appropriate corrective action The investigator should determine whether sexual harassment occurred, inform the parties of the decision, and take immediate appropriate corrective action This may include a written/oral reprimand, demotion, decrease in salary, suspension, termination, training, and monitoring This may include a written/oral reprimand, demotion, decrease in salary, suspension, termination, training, and monitoring

Age Discrimination This section looks at recent rulings related to an employer’s liability for disparate impact claims of age discrimination and provides some guidelines on how organizations can protect themselves in such cases This section looks at recent rulings related to an employer’s liability for disparate impact claims of age discrimination and provides some guidelines on how organizations can protect themselves in such cases

Disparate Impact Claims U.S. employers cannot discriminate against individuals 40 and older because of their age U.S. employers cannot discriminate against individuals 40 and older because of their age Suit can be brought against a company that discriminates unintentionally through neutral policies Suit can be brought against a company that discriminates unintentionally through neutral policies

Age Discrimination Guidelines Guideline 4: Review HR policies and practices for disparate impact based upon age Guideline 4: Review HR policies and practices for disparate impact based upon age Evaluate benefit plans, layoffs, retirement/pension plans, compensation systems, restructuring, and hiring and promotion policies Evaluate benefit plans, layoffs, retirement/pension plans, compensation systems, restructuring, and hiring and promotion policies

Age Discrimination Guidelines Continued Guideline 5: Identify and document reasonable factors other than age for problematic policies Guideline 5: Identify and document reasonable factors other than age for problematic policies

Alternative Dispute Resolution This section looks at recent rulings related to the legality of using mandatory arbitration agreements and provides some guidelines on how organizations can use such agreements to their benefit This section looks at recent rulings related to the legality of using mandatory arbitration agreements and provides some guidelines on how organizations can use such agreements to their benefit

Arbitration Arbitration is less expensive than most litigation and it can be a much faster mechanism for resolving disputes than the trial process Arbitration is less expensive than most litigation and it can be a much faster mechanism for resolving disputes than the trial process

Mandatory Arbitration Agreements Overall, federal statutory law and court decisions in the United States have been favorable toward mandatory arbitration clauses in which, as a condition of employment, employees and applicants agree to arbitrate claims against employers and waive their right to litigation Overall, federal statutory law and court decisions in the United States have been favorable toward mandatory arbitration clauses in which, as a condition of employment, employees and applicants agree to arbitrate claims against employers and waive their right to litigation

Arbitration Guidelines Guideline 6: Follow contract law principles when executing a mandatory arbitration agreement Guideline 6: Follow contract law principles when executing a mandatory arbitration agreement Guideline 7: Establish terms and conditions in mandatory arbitration agreements that ensure procedural and substantive fairness Guideline 7: Establish terms and conditions in mandatory arbitration agreements that ensure procedural and substantive fairness

Corporate Reform Management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting Management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting Assessing the effectiveness of the internal control structure and financial reporting procedures Assessing the effectiveness of the internal control structure and financial reporting procedures

Reform Guidelines Guideline 8: Work with the company’s finance department to comply with financial controls requirements Guideline 8: Work with the company’s finance department to comply with financial controls requirements HR should work closely with finance to develop documentation that will be will be requested by auditors HR should work closely with finance to develop documentation that will be will be requested by auditors

Reform Guidelines Continued Guideline 9: Write, communicate, and implement a comprehensive code of ethics Guideline 9: Write, communicate, and implement a comprehensive code of ethics Codes should describe specific prohibited behaviors, create confidential reporting mechanisms, identify investigation procedures, and protect whistleblowers Codes should describe specific prohibited behaviors, create confidential reporting mechanisms, identify investigation procedures, and protect whistleblowers

Reform Guidelines Continued Guideline 10: Establish procedures for reporting and investigating complaints of Sarbanes-Oxley Act violations Guideline 10: Establish procedures for reporting and investigating complaints of Sarbanes-Oxley Act violations Establish confidential complaint mechanisms such as hotlines, helplines, and web sites to a wide range of stakeholders Establish confidential complaint mechanisms such as hotlines, helplines, and web sites to a wide range of stakeholders

Reform Guidelines Continued Guideline 11: Review and monitor compensation and benefits policies for compliance Guideline 11: Review and monitor compensation and benefits policies for compliance HR should conduct a thorough review and stop illegal practices HR should conduct a thorough review and stop illegal practices

Concluding Guideline Guideline 12: Utilize the outreach and training functions of administrative agencies to monitor changes in the legal environment Guideline 12: Utilize the outreach and training functions of administrative agencies to monitor changes in the legal environment