President Obama Signs Executive Order Significantly Limiting When Employers with Federal Contracts of $1M+ Can Mandate Arbitration

Predispute ArbitrationEffective immediately, companies who want to bid on federal contracts valued at $1M+ can no longer require their employees or independent contractors to waive their right to a jury trial for discrimination, harassment or sexual assault claims.

On July 31, 2014, President Obama signed an Executive Order that, among other things, prohibits employers with federal contracts in excess of $1 million (except for contracts for commercially available off-the-shelf items) from requiring their employees or independent contractors to waive their right to a jury trial and agree to arbitrate a dispute before it arises if it involves a claim arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment.  Under the President’s Executive Order, agreements to arbitrate those types of claim are only enforceable if the employee or independent contractor agrees to waive his or her right to a jury trial and go to arbitration if the agreement is made after the dispute arises.

The Executive Order also applies to employers who are federal subcontractors if the estimated value of the supplies acquired and services provided by the subcontractor exceeds $1 million.

There are two limited exceptions to the pre-dispute arbitration prohibition:

  1. It does not apply to employees employed pursuant to collective bargaining agreements.
  2. It does not to any employees or independent contractors “who entered into a valid contract to arbitrate prior to the contractor or subcontractor bidding on a contract covered by this order,” unless the contractor is permitted to change the terms of the mandatory arbitration agreement or the agreement is later renegotiated or replaced.

Implications for Employers

Employers with plans to bid on federal contracts of $1M+ should evaluate any existing or contemplated arbitration agreements to determine whether they are in compliance with this Executive Order.

As it relates to the prohibition against pre-dispute mandatory arbitration, this Executive Order is, for all intents and purposes, effective immediately.  I say this because although the Executive Order calls for the Federal Acquisition Regulation (“FAR”) Council and Secretary of Labor to provide further guidance on the new obligations set forth in the Executive Order, it is unlikely that the prohibition against pre-dispute arbitration agreements will be materially impacted.

For readers interested in learning more, I’ve provided below the relevant excerpts from the Executive Order and accompanying Fact Sheet issued by the White House as well as links to the full documents.

Relevant Excerpts from the Executive Order and Accompanying Fact Sheet Issued by the White House

     Executive Order

Here is the excerpt from the Executive Order relative to the prohibition against pre-dispute arbitration agreements.  The full Executive Order can be read by clicking here.

Sec. 6.  Complaint and Dispute Transparency.  (a)  Agencies shall ensure that for all contracts where the estimated value of the supplies acquired and services required exceeds $1 million, provisions in solicitations and clauses in contracts shall provide that contractors agree that the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise.  Agencies shall also require that contractors incorporate this  same requirement into subcontracts where the estimated value of the supplies acquired and services required exceeds $1 million.

(b) Subsection (a) of this section shall not apply to contracts or subcontracts for the acquisition of commercial items or commercially available off-the-shelf items.

(c) A contractor’s or subcontractor’s agreement under subsection (a) of this section to arbitrate certain claims only with the voluntary post-dispute consent of employees or independent contractors shall not apply with respect to:

(i) employees who are covered by any type of collective bargaining agreement negotiated between the contractor and a labor organization representing them; or

(ii) employees or independent contractors who entered into a valid contract to arbitrate prior to the contractor or subcontractor bidding on a contract covered by this order, except that a contractor’s or subcontractor’s agreement under subsection (a) of this section to arbitrate certain claims only with the voluntary post-dispute consent of employees or independent contractors shall apply if the contractor or subcontractor is permitted to change the terms of the contract with the employee or independent contractor, or when the contract is renegotiated or replaced.

      Fact Sheet

Here is the excerpt from the Fact Sheet issued by the White House relative to the prohibition against pre-dispute arbitration agreements.  The full Fact Sheet can be read by clicking here.

Give Employees a Day in Court: The Executive Order directs companies with federal contracts of $1 million or more not to require their employees to enter into predispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment (except when valid contracts already exist). This builds on a policy already passed by Congress and successfully implemented at the Department of Defense, the largest federal contracting agency, and will help improve contractors’ compliance with labor laws.

Part of the basic American bargain is that if you take responsibility, work hard and play by the rules, workers can count on fair wages, freedom from discrimination on the job, and safe and equitable workplaces. Taxpayer dollars shouldn’t be used by unscrupulous employers to drive down living standards for our families, neighbors, and communities. By creating incentives for better compliance and a process for helping contractors come into compliance with basic workplace protection laws, the Executive Order is basic good government that will increase efficiency in federal contracting and will help strengthen our workforce and our economy.

Ohio State “Victim” of Harassment Calls Investigation “Deeply Flawed”

ohio stateThe social media fallout from the discharge last week of Jonathan Waters, the Director of the Ohio State University Marching Band, has been extensive.  The University discharged Waters following issuance of an investigation report that concluded:

1) The Marching Band’s culture facilitated acts of sexual harassment, creating a hostile environment for students.

 
2) Jonathan Waters, the Marching Band’s Director, knew or reasonably should have known about this culture but failed to eliminate the sexual harassment, prevent its recurrence, and address its effects.

Click here to read full report.

Now, one of the alleged victims of sexual harassment has taken to Facebook to “take issue with the report” that she calls “deeply flawed.”  In her post, she says “what angers me the most is that, in spite of my feelings, I along with several others on the list have been mischaracterized as victims of “sexual harassment” without being asked directly for our input.”

Click here to read her full Facebook post.

As I’ve written about before, social media has changed the game of workplace investigations.  The leverage social media provides employees can be more problematic and immediate than a traditional administrative charge or even a lawsuit.  A quick post can negatively impact employee morale, as well as damage recruitment and retention efforts.

Click here for a few communication strategies and practical “how to” recommendations organizations can use to increase the likelihood employees and other stakeholders will will accept the results of an organization’s internal investigation and refrain from raising the concern to third-parties on social media or to the government or adversarial counsel.

Hat tip to Bob Webner.

 

Hobby Lobby Decision Creates Costly Uncertainty

What happened to the Establishment Clause?

What happened to the Establishment Clause?

Much will be written in the coming days about the Supreme Court’s ruling in the Hobby Lobby case.

Here’s my two cents:  Justice Ginsburg got it right when she noted in her dissent that the Supreme Court has in this 5-4 decision “ventured into a minefield.”

Regardless of whether you agree with the ruling or not, I think we can all agree that this decision has created uncertainty for employers.  That uncertainty will increase the cost of doing business in the U.S. as it will inevitably result in increased litigation.

Before this ruling, religious exemptions to federal laws were limited to organizations formed for a religious purpose and engaged primarily in carrying out that religious purpose and were not engaged substantially in the exchange of goods or services for money beyond nominal amounts.

Following this decision, courts will now be engaged in the business of evaluating the relative merits of an employer’s differing religious claims or the sincerity with which an asserted religious belief is held.  It seems to me that this risk of the government endorsing any religious belief is exactly what the Establishment Clause was designed to preclude.

Consider the following hypothetical following the Hobby Lobby case:

Burger Joint is a privately held corporation 100% owned by a Jehovah Witness.  The corporation operates 30,000 restaurants across the U.S. and employs 10,000 people. Following the Hobby Lobby decision, Burger Joint decides to exempt from its insurance coverage payment for any blood transfusions.

In explaining this decision to its employees, Burger Joint explains that its sole shareholder is a Jehovah Witness and has a sincerely held belief that the Bible prohibits ingesting blood and, as such, prohibits blood transfusions.  Based on this sincerely held belief by the sole shareholder of Burger Joint the corporation will no longer be paying for blood transfusions under its health insurance coverage.

What do you think?  Will Burger Joint’s exclusion of blood transfusions from coverage under its health insurance plans be deemed legal post the Hobby Lobby decision?

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Win-Win Resolve, Solving Work ConflictWin-Win Resolve (www.WinWinResolve.com) is a law firm focused on helping employers and corporate counsel manage workplace conflict early and internally in a cost-effective manner.   It offers four primary alternative dispute resolution services to assist employers and corporate counsel: (1) Compliance Hotlines; (2) Internal Dispute Resolution Programs; (3) Impartial Workplace Investigations; and (4) Mediation.

U.S. Chamber Calls EEOC Enforcement “Abusive” During Obama Administration

EEOC AbusiveAfter acknowledging in recent testimony before the United States House of Representatives Committee on Education and the Workforce Subcommittee on Workforce Protections that “[c]ombating discrimination in the workplace is a worthy goal and one that the U.S. Chamber of Commerce supports,” the Chamber went on to call the EEOC’s enforcement tactics “abusive.”

The Chamber also accused the EEOC under the Obama Administration of having “misplaced priorities and overzealous litigation tactics.” The Chamber concluded its 17 pages of testimony by calling on the “EEOC to adopt institutional procedures to provide for internal accountability, more efficient use of resources and adherence to its own statutory conciliation and other obligations.”   If the EEOC fails to do so, the Chamber “encourage[d] Congress to use its oversight authority to install much needed safeguards within the EEOC.”

The Chamber’s testimony was delivered by Camille A. Olson, a partner of Seyfarth Shaw LLP, Co-Chair of its National Complex Litigation Practice Group, and National Chairperson of its Complex Discrimination Litigation Practice Group.

The Chamber’s testimony highlighted three areas of concern:  EEOC Investigations, EEOC Conciliations and EEOC Private Party and Amicus Litigation.

EEOC’s Investigations Called “Dilatory, Inconsistent and of Questionable Quality”

Under applicable law, the EEOC has a statutory obligation to “make its determination on reasonable cause as promptly as possible and, so far as practicable, not later than one hundred and twenty days from the filing of the charge.” In its testimony, the Chamber said the EEOC is failing to meet this obligation and criticized the EEOC’s investigations as being “dilatory, inconsistent and of questionable quality.”

The Chamber also stated that plaintiff and management attorneys and courts hare its concerns.  In support of this statement, the Chamber cited the meeting transcripts from public hearings held by the EEOC, including the public hearing in which I submitted testimony and participated.

Based on my informal discussions with employers and their counsel across the country, I concur that the EEOC’s investigations are of uneven quality.  It is for this reason that in my 2013 EEOC testimony, I urged the EEOC to review and standardize its investigation process and to reinvigorate its training program for investigators.

EEOC’s Statutory Obligation to Conciliate Should be Subject to Judicial Review

Under applicable law, the EEOC has a statutory obligation to “endeavor to eliminate any… unlawful employment practice by informal methods of conference, conciliation, and persuasion.”  The Chamber view this obligation as “serve[ing] all sides – employees, employers and courts” and states that “needless, expensive, protracted litigation should be avoided if compliance can be obtained through informal means.”

In its testimony, the Chamber highlights a number of cases in which courts have found that the EEOC did not meet its statutory obligation to use informal conference, conciliation and persuasion prior to commencing litigation.  It also points out, however, that there is a split among the circuits as to what exactly is required under the statute.  Hopefully, the U.S. Supreme Court will grant the petition for writ of certiorari currently pending before the United States Supreme Court in Mach Mining v. Equal Employment Opportunity Commission  and directly address the issue of whether and to what extent a court may enforce the Equal Employment Opportunity Commission’s mandatory duty to conciliate discrimination claims before filing suit.

I agree with the Chamber that the EEOC does not appear consistently across the country to exhaust informal methods of conference, conciliation and persuasion before it files a lawsuit against an employer.  In fact, it is for this reason that in my 2013 EEOC testimony I urged the EEOC to

  • implement a pilot program incorporating a structured ADR process into the EEOC’s post-cause conciliation process;

  • consider promptly the use of ADR methodologies beyond mediation and arbitration, and to consider early case assessment, med-arb, and other hybrid processes prior to tendering a Right to Sue Notice; and

  • set a time line within the Quality Control Plan for implementing a pilot program incorporating a structured ADR process into the post-cause conciliation process.

Chamber Cites $5.6+ Million in Sanctions in Support of Proposed  Requirement that Commissioners Approve Any Multi-Plaintiff Litigation

According to the Chamber, in “the last two years, the EEOC has been ordered to pay employers over $5.6 million dollars as a result of its improper litigation and conciliation efforts.”  It says the EEOC has been sanction for its:  “failure to follow appropriate procedures before instituting litigation, failure to appropriately litigate the case, and failure to reasonably assess the appropriateness of continuing its litigation once it became clear in discovery that its complaint’s theory had no basis in fact.”

As the Chamber rightly points out, these $5.6+ million in sanctions are in addition to the significant internal costs associated with these same lost cases.  These internal costs include tax payer dollars used to pay the EEOC attorneys and staff who worked on these cases plus the tax dollars used to pay the expert witnesses in the cases.

The Chamber proposes that the EEOC mitigate the risks of such future sanctions and waste of EEOC resources (i.e. tax dollars) by returning to the litigation approval process that was in place prior to 1995.  This change would require that the bipartisan EEOC Commission comprised of five presidentially appointed members approve all multi-plaintiff litigation.

 

 

Workplace Investigations: Free Webinar Series

WinWinResolve.com and i-Sight.com

WinWinResolve.com and i-Sight.com

I was so pleased to be invited to present a three-part webinar series for i-Sight on the topic of procedural fairness in the context of workplace investigations.  Now, I’m even more pleased to share with the readers of this blog that I have given i-Sight permission to post these webinars on their website and THEY ARE FREE!!

i-Sight is headquartered in Canada and a global leader in the provision of configurable case management software for investigations.

The webinar series builds on recent research that concluded when employees view internal investigations as fair, they are more likely to report wrongdoing, and that can save companies a great deal of time, money and reputational damage.  To watch the FREE webinar series, simply click here and complete the form.

For readers seeking more in-depth training, I also regularly deliver two-day intermediate training for in-house counsel, risk managers, and human resources professionals on all aspects of workplace investigations.  The training is experiential, with a capstone experience of being deposed on an in-class investigation report.

These programs are designed to cross train in-house counsel and to enhance the skills of Risk Management and HR professionals for conducting investigations into bullying, discrimination, harassment and retaliation. Training is truly hands-on as mock witness interviews, report writing, and more are conducted in a small class setting.

Here are the dates and locations for this two-day training.  To learn more and register just click here.  

  • September 18-19, 2014 in Tampa, FL
  • September 22-23, 2014 in Atlanta, GA
  • October 27-28, 2014 in Washington, DC/N.Va.
  • November 10-11, 2014 in Chicago, IL
  • December 2-3, 2014 in Metro-New York City
  • December 4-5, 2014 in Hartford, CT
  • January 12-13, 2015 in Scottsdale, AZ
  • January 15-16, 2015 in Las Vegas, NV
  • February 10-11, 2015 in Denver, CO
  • March 10-11, 2015 in Cincinnati, OH

 

 

Is Equal Pay the Next Union Battle Cry?

equal payThe public and very messy firing of the New York Times executive editor Jill Abramson has been likened to a “lightning strike to dry tinder.”   As Amanda Bennett (former editor of the Philadelphia Post who was also fired) points out in her opinion piece in today’s The Washington Post, women across America are openly furious about unequal pay for equal work.   Many who have weighed in on this situation have highlighted how difficult it is for even well-educated, female top executives to challenge unequal pay.

Today’s guest blog by an attorney in Atlanta, Jennfer Keaton, offers a different perspective.  She asks the question — is equal pay the next battle cry of unions?

Savvy employers, of course, will not wait for a union to place pressure on them for equal pay for equal work.  They will proactively conduct compensation self-audits and remedy any pay disparities not attributable to one of the exceptions to the Equal Pay Act.

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Is Equal Pay the Next Union Battle Cry?
Guest Blog by Jennifer Keaton, Esq.

Cue the Unions!

Jill Abramson’s recent, swift dismissal from the apex of the New York Times could not have been timed much better.  The Obama White House has seen the signing of the Lily Ledbetter Fair Pay Act and its own disclosures that pay for White House staff may not be equitable across the genders.  Now a major player in Corporate America is admitting some less than stellar news about its own pay disparities.

If they’ll do it at the top, you have to suspect that there are no qualms about doing it at the bottom….or at least to the middle where subjectivity of performance evaluations and merit raises and bonuses thrive.

So, somebody cue the unions!

Union membership has been on a downward trend over the past two decades.  Opinions vary on the reason, but there is no denying that many employees do not see the value in the dues.  But perhaps this writing off of unions is unfair in light of these recent pay issues coming to light.

Unionize the Middle!

Let me define the Middle for you.  The Middle are college educated, largely white collar, salaried employees that are females.  They generally believe unions are for factory workers and “beneath them.”  They also believe that they can negotiate job duties, pay, and professional status for themselves, thank you very much. Yes, they believe they are the “upper middle class,” but they are living paycheck to paycheck most months due to the retail race with the Joneses or the nannies employed to enable the career and lifestyle.  They also came of age thinking that Women’s Lib was over and had achieved its objective well before they entered the workforce.

Middlers Unite!

Well, well, well, Middlers.  Looks like your cynicism about lifetime employment needs to extend a little further to your measly paycheck.  Yes, you earn six-figures, but it still may be four to five figures less than the jack-wad down the hall….but you’ll never know for sure.  So, how are you going to be sure you’re not left behind like Jill Abramson and her Times tattoo?

You won’t do anything, will you!?

But, what if you didn’t have to do anything to get your hands dirty or risk retribution for being the one nail that would get hammered down?  Yes, Middlers….your talent agent can do the messy business of negotiating your deal so that you can focus on closing business!  Your talent agent can ensure that the jack wads don’t make you look like a dolt on the P&L sheets.  Yes, show me the money!!

Your Talent Agent Will Do Something!

Middlers, get smart. Get negotiating.  And get your talent agent lined up.  Nowadays, you can get that talent agency lined up without a big fuss at all.  In fact, you can secure your collective talent agency without your company even knowing it and that talent agency can just march right into headquarters tomorrow and demand a reckoning, a negotiation, and restructuring of terms. That’s right Middlers, just like actors on hit TV shows, all this dirty work of pay negotiations and such can be done without you having to be troubled with it or damage those interpersonal relationships you’ve worked on for years.

Talent Agents Are Just A Phone Call Away

Middlers, faster than you can pull together a jewelry trunk show at your suburban house, you can hold a meeting amongst you and a Talent Agency ready to get you all signed up.  Want to send a message, it can be a simple exercise that won’t require you to stand on a street corner clamoring for cars to honk at you or to be a sweaty Norma Rae.  Ewwww.  A Talent Agency is your answer, or at least a really fast answer with a proven track record of paying jack wads a going rate.

So, why not give a local Talent Agency a try?  Just give a quick Google to the SEIU or AFL-CIO to get started.   You are worth it!

When Internal Documents Aren’t Covered by Attorney-Client Privilege

Daily ReportA decision issued on March 6 by the U.S. District Court for the District of Columbia serves as a stark reminder that internal investigations must be carefully structured and executed to garner the protection of the attorney-client privilege and attorney work product doctrine, especially when non-attorneys are being used to assist in the investigation.  The case is United States ex rel. Barko v. Halliburton, No. 1:05-CV-1276 (D.D.C. slip op. issued March 6, 2014).  I mentioned this case briefly in my blog post Workplace Investigations:  Tips & Templates for Preserving the Privilege.

For those who conduct or supervise internal investigations or manage compliance programs, this case is a must read.

Today’s edition of the Daily Report includes a more in-depth analysis of the case and a discussion of the implications of the case for legal counsel.  For readers outside the metro Atlanta area, the Daily Report is the primary source for news about the courts and the business and profession of law for lawyers in metro Atlanta and the state of Georgia.

Click to read the Daily Report article:  When Internal Documents Aren’t Covered by Attorney-Client Privilege

Should Clipper Owner Follow Github Co-Founder’s Lead?

Wow.

Which debacle should we watch?

Choice one:  The Los Angeles Clippers and their embattled owner, Donald Sterling, who seems to have been caught on tape making racist comments that are causing the fast exodus of sponsors.  The  NBA is scheduled to hold a news conference tomorrow about its investigation into the alleged comments.

Choice two:  Github – where the co-founder resigned following an independent investigations into widely distributed social media  allegations of a sexist environment, hostile work environment and retaliation made by a female developer.  Faced with harassment and retaliation allegations, Github commissioned an independent investigation and has released two press releases about the independent report.

Github has not released the entire report, although today its CEO posted a blog that began “[l}ast Monday I published the least open and least transparent blog post GitHub has ever written.”  

Github went on to apologize for lack of transparency in discussing the investigation that it commissioned into the allegations and provided a summary of the investigation process and its results.  

As regards the findings about the co-founder the blog said:

Founder allegations. The investigation found Tom Preston-Werner in his capacity as GitHub’s CEO acted inappropriately, including confrontational conduct, disregard of workplace complaints, insensitivity to the impact of his spouse’s presence in the workplace, and failure to enforce an agreement that his spouse should not work in the office. There were also issues surrounding the solicitation of GitHub employees for non-GitHub business and the inappropriate handling of employee concerns regarding those solicitations.

After being presented with the results we felt Tom could no longer be an effective leader at GitHub. He offered his resignation and we accepted.

Free Webinar on Conducting Investigations that Are Trusted by Employees

WinWinResolve.comExcited to have been invited by i-Sight to do a free 3-part webinar series on Conducting Internal Investigations That Are Trusted by Employees.

The series kicks-off tomorrow at 2 p.m.  If you haven’t registered yet, click here to do so.

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Win-Win Resolve, Solving Work Conflict

 

 

 

 

 

Win-Win Resolve (www.WinWinResolve.com) is a law firm focused on helping employers and corporate counsel manage workplace conflict early and internally in a cost-effective manner.   It offers four primary alternative dispute resolution services to assist employers and corporate counsel: (1) Compliance Hotlines; (2) Internal Dispute Resolution Programs; (3) Impartial Workplace Investigations; and (4) Mediation.

6 Tips to Increase Employee Trust of Internal Investigations

www.WinWinResolve.com

www.WinWinResolve.com

The most recent study of the nonprofit Ethics Resource Center concluded that an investigation process viewed as procedurally fair “substantially increases the chances that reporting employees will accept the [company’s] outcome.”

Earlier this week, I wrote a post about the research and also spoke with Sue Reisinger at Corporate Counsel about the implications of the research, suggesting that it is time for companies

  • to rethink how they handle internal compliance complaints; and
  • develop protocols and training curriculums that help translate the precepts of procedural fairness into daily practice.

Tips for Employers

Here are a few communication strategies and practical “how to” recommendations companies can use to increase the likelihood employees will first use internal reporting tools and that the reporting party will accept the results of the company’s internal investigation and refrain from raising the concern to third-parties on social media or to the government or adversarial counsel:

  • Humanize the reporting experience: Selection of the person(s) who will receive complaints is critical as appearing approachable and accessible is a key component of procedural fairness. Share the bio and picture of the person who will receive compliance reports with company employees.  Tell your employees why they can trust this person to receive their complaints and concerns.  Ensure that employees can make reports in their native language.
  • Explain what you’re doing and why: For many employees, making a compliance report can be a traumatic event. The jargon and procedures can be confusing and intimidating and many will fear retaliation.   Use simple terms to explain the process and reassure reporting employees that retaliation is prohibited for raising a concern in good faith.
  • Manage expectations.  If an investigation is warranted, explain how the investigator will be selected and the anticipated timing of the investigation.  Establish a process to “check-in” periodically with the reporting employee.
  • Carefully select a well-trained and neutral investigator.  Research shows whether the reporter trusted the investigator was critical to whether the reporter perceived the investigation as procedurally fair.   When communicating with the complaining employee, the accused employee and witnesses, the investigator needs to make eye contact and use body language that conveys respect.
  • Close the loop with the reporting employee, accused and any witnesses interviewed.   Even in situations where confidentiality concerns preclude the ability to share the results of the investigation, closing the loop with everyone who participated in the process is critical.  Closing the loop, gives the opportunity for the company to assure the participants that the company works hard to apply its compliance policies in a consistent manner.  One strategy for doing this where confidentiality precludes sharing the actual results any corrective action or the results of the investigation is for the company to provide an overview of the company’s neutral, fact-based, and unbiased decision-making process.
  • “Market” your reporting and compliance programs.  Develop a communication plan and consider periodically sharing high level and appropriately sanitized summaries of compliance investigations and/or the types of numbers of reports being received and resolved.  Where appropriate, thank the reporting employee and the employees who participated in the investigation.”

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Win-Win Resolve, Solving Work ConflictWin-Win Resolve helps employers save time and money and strengthen compliance programs.  We manage employee hotlines and internal dispute resolution programs and conduct workplace investigations and mediations.  Learn more Win-Win Resolve.