The recent news about Herman Cain and Penn State shocked the public. Yet these high profile cases don’t stand alone. Allegations of injustice, abuse and rape happen. In 2010, the Department of Justice collected $6.7 billion in fines, penalties and settlements. The Equal Employment Opportunity Commission achieved its personal best in 2010, collecting more than $400 million. And the Department of Labor, Wage and Hour Division collected more than $175 million.


High profile cases demonstrate the debilitating impact of an allegation of discrimination or wrong-doing. The allegation itself is derailing. It pulls emotional, physical and financial resources away from the campaign, university or company’s purpose. It places leadership in a fight or flight mentality; and in some cases threatens viability.


Companies and schools must have well- functioning complaint procedures. Employers and educators must teach employees and students their rights and responsibilities to assure a healthy and respectful environment.


Effective compliance training cannot prevent a formal allegation being filed against a company, but evidence exists that it reduces the likelihood of wrongful conduct. Moreover, effective training does reduce or eliminate damages in discrimination, harassment and wage and hour claims.


The US Supreme Court (Kolstad, 1999) stated employers can avoid punitive damages in discrimination cases if they can show good faith efforts to comply with Title VII. Employers demonstrate this by having and following anti-discrimination policies and providing periodic training.


The Faragher and Ellerth (1998) US Supreme Court case decision allows employers to avoid all potential liability in harassment claims as long as employers periodically train managers and employees on related policies including their legal rights and obligations.


Likewise, employers may avoid up to 66% of potential liability for wage and hour violations by demonstrating good faith efforts to comply. Training managers and employees in this area is compelling evidence of good-faith. Wage and hour training has increased in light of the knowledge that 80% of all companies are out of compliance. To further support wage and hour training, the Department of Labor has added more than 300 investigators this year and plans to increase the number of their investigations by 3000 in 2012.


On the other hand, the Supreme Court punishes employers who fail to educate their employees. The phrase, reckless indifference was coined in Mathis v. Phillips Chevrolet, Inc. (2001) when a manager had hiring authority, yet was not provided discrimination training by the employer.


Nothing prevents an allegation from occurring. Yet, a study by the General Counsel Roundtable found compliance training yields a 5:1 return on investment in avoidance of legal liability, lost productivity and harm to a company’s reputation.


Littler Mendelson, P.C. determined there is evidence to support effective training is linked to a decline in claims. Sex-based harassment charges are no longer the majority of harassment charges. The 22% drop in sex-based charges is at least partially attributed to sexual harassment prevention training.


The horrifying real life examples of high profile cases offer companies an opportunity to look at their potential liabilities. It is imperative for companies to know how to prevent and respond to claims of wrong-doing.

Legislative Update

Faragher/Ellerth Defense



Christie Helm worked for the Kansas Judicial Branch as an Administrative Assistant for two judges. Helm alleged one of the judges sexually harassed her. The State of Kansas has well disseminated policy prohibiting sexual harassment and promptly investigated Christie Helm’s allegation of sexual harassment. Helm later took a medical leave. Before returning from leave, she was arrested for and stipulated to the facts of a felony aggravated battery of her husband. Helm was terminated from employment because her felony disqualified her from performing criminal history assessments of defendants. In Helm v. Kansas, (2011) , the court found the Faragher/Ellerth defense was met and there was a clear reason for the adverse action taken against Helm.



Hot Dogs in the News!



Dillard’s Department Store had a cookout on July 4, 2011. The leftovers were to be frozen and used at their Labor Day event. Nolan Koewler ate two hot dogs the next day and was terminated for theft. Koewler won his unemployment claim because his supervisor could not prove Koewler was aware that the hot dogs were to be saved; plus the value of the leftover hot dogs was questioned. Employers bear the burden of proof of just cause in Indiana.



More Hot Dog News



A luxury car salesman criticized his employer for serving hot dogs at a sales event. Because employees had previously expressed concern that providing inexpensive food would negatively affect sales of luxury cars, the National Labor Relations Board considered the posting protected, concerted activity. However, the salesman was terminated for posting other disparaging non-protected information about his employer.

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