WinWinHR - Part 8

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Workplace Mediation: View Your Case from the Other Seats at the Table

Posted on August 13, 2013 by Lorene

I’m probably one of the few mediators in the country who has literally sat at every seat at the proverbial workplace mediation table.

Over the course of my career, I’ve been

outside counsel for employers;
in-house counsel at the General Electric Company (including General Counsel of the GE Transportation business);
the client representative for GE;
plaintiff’s counsel representing executives; and
a named plaintiff in a gender discrimination class action.

Now that I’m working as a mediator, I’ve found that those experiences help me to more quickly be able to establish the type of rapport and trust that are essential to successfully resolving workplace disputes.

In reflecting on a recent mediation, I was reminded of what Atticus explains to Scout in To Kill a Mockingbird, “You never really understand a person until you consider things from his point of view…until you climb into his skin and walk around in it.” I wished there was a way to have the parties walk around in the skins of the other mediation participants.

If they could take a walk in the skin of in-house counsel, the other parties would learn, for example, that there is often no established process for getting settlement authority for a mediation and more often than not that there are competing agendas and analysis within the company. They’d learn how important it is to help in-house counsel be able to “sell the deal” to those various contingencies. Defense counsel could benefit from learning the top three things they do in a mediation that, from the perspective of plaintiff’s counsel, kill any chance of successfully mediating the case. Plaintiff’s counsel would get the benefit of understanding how plaintiff’s demeanor and participation or lack thereof in the mediation factors into defense counsel’s settlement valuation of the case.

And then . . . a light bulb went off. I could use this blog to do a series of Q&A’s with various plaintiff’s counsel, in-house counsel and outside counsel and ask just some of those questions. We could all in a “safe environment” — outside the context of an actual lawsuit — learn a bit more about the other’s perspective. We could “walk around” in another’s skin for a bit if you will.

Over the next few weeks I will be interviewing various legal counsel to get their perspectives about mediating workplace disputes. In sharing these perspectives my goal is to generate a rich discussion that helps us all improve our mediation skills.

I invite you to share your comments in the comment section and to email me if you’d like to be interviewed on this topic. My email: Lorene@WinWinHR.com

Update: To read my interview of plaintiff’s attorney Donna Ballman click here. To read the insights of Fox Rothschild partner Richard Cohen click here. To read the Q&A with plaintiff’s attorney Ed Buckley click here and for the perspectives of Ogletree partner Meg Campbell click here.

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Workplace Investigations Group is headquartered in Atlanta, GA but has a national directory of professional workplace investigators who are all attorneys and have a minimum of ten years of employment litigation experience. As such, wherever the workplace issue arises, corporate counsel and employers can easily identify an investigator who can respond to the regional need quickly, impartially and competently. For more information: www.Internal-Investigations.com

Corporate Counsel Article Asks, “Is the Workplace the Right Forum to Discuss Race?”

Posted on July 24, 2013 by Lorene

In my last post, I encouraged employers to anticipate and plan for discussions about race in the workplace following President Obama’s suggestion last week the workplace may be an appropriate forum in which to “convene a conversation about race.”

Today, Grace Tatter, writing for Corporate Counsel continues the discussion and provides insights for employers from Richard Cohen, a partner in Fox Rothschild’s labor and employment practice and Michael Norton, an associate professor of business administration at Harvard Business School. Oh, and yeah, I’m also quoted.

Click here to read the Corporate Counsel article.

Readers interested in this discussion may also find Assistant Professor of Organizational Studies at the MIT Sloan School of Management Evan P. Apfelbaum’s research of interest. Here is a link to an opinion piece he did for CNN discussing what he views as “The Risks of Ignoring Race in the Workplace.”

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Workplace Investigations Group is headquartered in Atlanta, GA and has a national directory of professional workplace investigators who are all attorneys and have a minimum of ten years of employment litigation experience. As such, wherever the workplace issue arises, corporate counsel and employers can easily identify an investigator who can respond to the regional need quickly, impartially and competently. For more information: www.Internal-Investigations.com

Employers Should Anticipate and Plan for Discussions About Race in the Workplace

Posted on July 20, 2013 by Lorene

In President Obama’s remarks about the Zimmerman case and race relations in America, he advocated for a national discussion about race. He felt this national discussion should not be convened by politicians, but at the local level and within religious congregations, community organizations, and possibly even the workplace.

As we all know, even the type of well-intentioned discussions about race (or gender or disabilities or sexuality or religion or other protected category) that President Obama seems to be envisioning can easily be misconstrued by one or more of the participants or observers. When those well-intentioned discussions are misconstrued in the workplace they open up the employer to claims of discrimination and retaliation.

Employers would do well to anticipate that the President’s remarks may spark these discussions in the workplace (even where the employer is not the one starting them) and leaders may want to develop a game plan for responding.

Company cultures that place a premium on transparent leadership and communication about such things as the criteria used for promotion, compensation and training decisions will be best positioned to address the situation when these discussions happen.

A recent example of the potential legal claims that can be generated by workplace discussions of this type is the recent lawsuit filed against Target arising out of a memorandum issued at one of its distribution centers. According to press reports, the memorandum was titled “Organization Effectiveness, Employee and Labor Relations Multi-Cultural Tips” and at least based on its title seems to have been an effort by local management at one of its distribution centers to create a less stereotype-driven work environment. Unfortunately, the memorandum was very poorly worded and according to press reports instructed managers to note differences among Hispanic employees, and stated the following:

“a. Food: not everyone eats tacos and burritos;
“b. Music: not everyone dances to salsa;
“c. Dress: not everyone wears a sombrero;
“d. Mexicans (lower education level, some may be undocumented);
“e. Cubans (Political refugees, legal status, higher education level); and
“f. They may say ‘OK, OK’ and pretend to understand, when they do not, just to save face.”

Three employees sued claiming they suffered crude harassment, discrimination and retaliation at work, and that Target’s tips for managers are offensive in themselves.

Target has issued the following statement making clear this memorandum was created locally and was not approved at corporate headquarters:

“It is never Target’s intent to offend our team members or guests and we apologize. The content of the document referenced is not representative of who Target is. We strive at all times to be a place where our team and guests feel welcome, valued and respected. This document, which was used during conversations at one distribution center, was never part of any formal or company-wide training. We take accountability for its contents and are truly sorry.”

I suspect that Target’s corporate leadership was quite frustrated with the local memorandum given that it has expended a great deal of effort developing a corporate program which according to Molly Snyder, a spokeswoman for Target, is “designed to foster open, honest, respectful conversations.” Here is a link to Kim Bhasin’s article in the Huffington Post in which Ms. Snyder is quoted. Kim Bhasin’s article also includes examples of some of the scenarios Target uses to engage in these conversations.

You’ll note that I have not taken a position about whether employers should initiate discussions about race in the workplace. I think the answer to that question needs to be thoughtfully decided by the leadership within each organization. I will say, however, that this is an area in which it would seem employers will want to tread very carefully and thoughtfully and have any “race discussion” communications reviewed by legal counsel.

What do you think? Should employers initiate discussions about race in the workplace? How should they respond when these discussions are started by employees in the workplace?

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Workplace Investigations: $300,000 in Sanctions Highlights Risks of Using Employer’s Regular Counsel

Posted on June 18, 2013 by Lorene

Most employers and their regular counsel and HR managers are by now well aware of an employer’s legal duty to promptly, thoroughly and impartially investigate any complaint of perceived discrimination, harassment, or retaliation. They also generally understand that an employer may avoid liability under Title VII for harassment or discrimination that does not involve an adverse employment action (e.g., termination or demotion) if the employer can demonstrate: (1) it took reasonable steps to prevent and promptly correct sexual harassment in the workplace, and (2) the aggrieved employee unreasonably failed to take advantage of the employer’s preventive or corrective measures.

This principle is often commonly referred to as the “Faragher/Ellerth affirmative defense,” a reference to the following two 1998 United States Supreme Court decisions: Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998). In 1999, the EEOC updated its earlier guidance on the issue of vicarious liability for harassment by supervisors to incorporate the Faragher and Ellerth decisions and issued its “Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors.”

Due to the importance of conducting legally sound investigations of harassment and discrimination complaints and given the increasing sophistication of the workplace discrimination laws, many employers use attorneys to conduct these types of investigations. Often, they will also, as a matter of course, use their regular counsel (in-house or outside) to do the investigation, with minimal to no strategic consideration of that selection decision or evaluation of the potential conflict issues.

$300,000 in Sanctions Highlights Risks in Using Regular Counsel to Conduct Internal Workplace Investigation

A recent $300,000 sanction against an employer by a federal court in Ohio stemming (at least in part) from an employer’s use of its regular counsel to conduct an investigation that it later asserted as a Faragher/Ellerth affirmative defense serves as a cautionary tale for employers and their regular counsel in the importance of making strategic, thoughtful decisions when selecting legal counsel to conduct an investigation into an internal complaint covered by Title VII.

The case to which I’m referring is EEOC et al. v. Spitzer et al, currently pending in the U.S. District Court of the Northern District of Ohio. The case went to jury trial in February of this year only to end in a mistrial 7 days into the jury trial after it was discovered that the employer had failed to produce the investigation notes of the attorney who conducted the internal workplace investigation into the plaintiff employees’ complaints of discrimination, harassment and retaliation. In ordering the mistrial, the judge was also concerned that the employer had failed to maintain originals of the investigation documents. Click here to read more about the case and the judge’s order of a mistrial.

Following the mistrial, the plaintiffs filed a motion asking the judge to order the employer and its counsel to pay their attorneys’ fees and costs. In a sternly written 18-page order, the trial judge granted the plaintiffs’ motion and ordered the employer and its counsel to pay over $300,000 to the plaintiffs. In addition to the amount of the award, this sanction is also significant in that the judge ordered the award be issued against “all defense counsel” and that they be “jointly and severally” liable with the corporate employer. As my attorney readers know, that means that the plaintiffs may collect the entire $300,000 award from any one of the parties, or from any and all of the parties in various amounts until the full amount is collected.

In noting that because the employer had “relied heavily on the Faragher-Ellerth defense in this matter”, the “heart of the defense would necessarily center around how [the employer] responded to an investigated complaints of harassment and discrimination,” the trial judge’s analysis also hints at the conflict of interest that lurks in the background anytime an employer asserts the Faragher/Ellerth affirmative defense. In those cases, because the investigation itself often becomes a matter of factual dispute, the attorney who investigated the employee complaint will very likely be called as a fact witness at trial.

In the Spitzer case, Rule 3.7 of the Ohio Rules of Professional Conduct applies. It provides, in pertinent part, as follows:

RULE 3.7: LAWYER AS WITNESS

(a) A lawyer shall not act as an advocate at a trial in which the lawyer is likely to be a necessary witness unless one or more of the following applies:

(1) the testimony relates to an uncontested issue;

(2) the testimony relates to the nature and value of legal services rendered in the case;

(3) the disqualification of the lawyer would work substantial hardship on the client.

(b) A lawyer may act as an advocate in a trial in which another lawyer in the lawyer’s firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or 1.9.

In looking at the court docket, I note that the law firm where two of the attorneys who conducted the internal workplace investigation that was relied on in the employer’s assertion of the Faragher/Ellerth affirmative defense is still listed (as of this writing) as litigation defense counsel. As such, it would appear in the Spitzer case that the parties and presumably the trial judge have determined that subsection (b) to Rule 3.7 applies, thereby allowing an attorney within the same firm to continue to serve as an advocate even though other attorneys at that same firm will be called as fact witnesses. It is also quite possible, however, that plaintiffs’ counsel has strategically refrained from raising this issue, concluding that their clients are better served by using this fact to attack at trial the lack of impartiality in the underlying internal investigation. If they are successful in this line of attack, the employer’s Faragher/Ellerth affirmative defense will fail.

In reviewing the judge’s order, the following paragraph also deserves special focus as it highlights the tension that can be created when an employer’s regular counsel is used to conduct the investigation. As discussed above, the EEOC guidance and most subsequent court decisions require an employer demonstrate as a part of its Faragher/Ellerth affirmative defense that its investigation into the employee’s complaint was not only prompt and thorough but also impartial.

Here is the relevant excerpt from the trial judge’s award of $300,000 in sanctions. Query whether the employer’s regular counsel assigned to conduct the internal investigation into the plaintiff employees’ complaints was impartial?

Pena notes

During May of 2006, Attorney Pena was performing work in Giardini’s law firm and was assigned to investigate Okafor’s complaint. Pena admits that she took notes of a conversation she had with Dombrowski and took notes of interviews she performed with 12 other Sptizer employees. Pena claims that she later converted her handwritten notes to typed statements. Those typed statements were later signed by the employees. Pena also asserts that “the written states which [she] prepared accurately and the best of [her] recollection at the time completely reflected the statements given to [her\ by those employees[.]” It is undisputed that Pena’s handwritten notes were not provided before trial. Spitzer, however, contends that no prejudice stems from this non-production because the undated, typed statements were provided. It is these undated statements that Spitzer altered by removing fax headers and caused the initial concerns for the Court.

As Plaintiff’s have highlighted, the typed statement from employee Wane Andrews reads: “I have worked with Jim Dombrowski for two years and have never heard a racist comment from him. Jim usually makes the other employees tone down their comments.” In contrast, Pena’s notes indicate that Andrews witnessed Dombrowski page Okafor with a “Nairobi accent.” In her notes, Pena comments as follows on that statement: “BAD for US.” At a minimum, Andrews’ typed statement is not all inclusive of his verbal interview.[footnote deleted]. Instead, it is apparent that only the most favorable points of Andrews’ statement were included in the typed statement that was ultimately provided. Once again, without these notes, Plaintiffs could not effectively engage in discovery related to Andrews and Pena. Moreover, Spitzer again has failed to offer any reasonable explanation for its failure to produce the notes.

One common way that plaintiff employees attempt to defeat an employer’s Faragher/Ellerth affirmative defense is to demonstrate that the employer’s investigation was not impartial. In the Spitzer case, it would seem that the above-described handwritten notes of the attorney investigator would be plaintiff employees’ exhibit 1. Especially when compared to the typed witness statement she subsequently produced, it seems difficult, if not impossible, to articulate any successful argument that she was engaged in an impartial investigation.

Consider, for example, her use of the phrase “BAD for US” in her handwritten notes. At minimum, it demonstrates she viewed herself as “us.” Any explanation to the contrary would seem to fail when considered in light of the fact that she did not include in the written witness statement the “BAD for US” statement to which she was referring, i.e. the use of a Nairobi accent when the plaintiff employee was paged.

Insights and Guiding Principles for Employers and Their Regular Counsel

It is common and even appropriate and strategically sound in some circumstances for employers to use their regular counsel (in-house or outside) to conduct internal workplace investigations of employee claims of harassment, discrimination, or retaliation. Indeed, I have done so as both in-house counsel and as an employer’s regular outside counsel.

In writing this blog, I am in no way arguing for a bright line prohibition against the use of an employer’s regular counsel or even arguing that an employer should always use an attorney to conduct these types of internal workplace investigations. What I am urging, however, is for employers and their regular counsel to make these decisions in a more thoughtful and strategic way. I also acknowledge that my own thinking on this topic has evolved and grown sharper over the 23 years I have been practicing law.

Today, my general practice is to suggest that employers and their regular counsel faced with the need to conduct a prompt, thorough and impartial investigation have the employer’s regular counsel retain a separate employment attorney who specializes in conducting these types of impartial fact-finding investigations. Under this type of retention agreement, the retained attorney workplace investigator works at the direction of the employer’s regular counsel and conducts an independent investigation and provides employer’s counsel with factual findings so that the regular counsel can provide legal advice to the employer.

Structuring the retention agreement in this manner provides the employer with all of the benefits of having an experienced employment attorney conduct the investigation while at the same time avoids the problems discussed above that can arise if the same attorney conducts an internal investigation and is called upon to represent the client in a continuing dispute with the employee. Structuring the retention agreement in this manner also provides the employer and its regular counsel the flexibility of deciding at a later point whether to utilize the investigation and its findings should litigation ensue. Should the employer and its regular counsel decide not to waive the attorney-client privilege and another party subsequently seeks discovery about the underlying investigation, the employer will be able to assert both the attorney-client privilege and the attorney work product doctrine. In structuring the retention agreement in this manner, and thereby bifurcating the finding of facts from the legal analysis, it is also important to note that should a court later hold that sufficient grounds exist to allow discovery of the attorney work product that it will be much easier for the employer to produce only the underlying facts and avoid the inadvertent waiver of the attorney-client privilege.

Although I am not aware of any case law on this point, it would also seem (at least in some situations) that structuring the retention agreement in this manner also leaves open the possibility the employer could preclude discovery of the investigation by arguing that the attorney expert investigator was serving as a consulting expert to the employer’s regular counsel. Essentially, the separate attorney expert workplace investigator was acting as a professional, expert fact finder and helping the regular counsel understand the relevants facts so that the regular counsel could prepare the litigation strategy and provide legal advice to the employer. Obviously, this argument would only be available where the employer’s counsel decided not to assert the Faragher/Ellerth affirmative defense.

Based on the above considerations, I offer the following two guiding principles for employers and their regular counsel:

An employer’s regular counsel who is asked to conduct an internal investigation of claims implicating Title VII should anticipate the conflict of interest presented if the employer subsequently decides to assert the Faragher/Ellerth affirmative defense and only agree to conduct the investigation after informing the employer of this potential conflict and obtaining the employer’s consent to go forward with this understanding.

If the employer decides to assert the Faragher/Ellerth affirmative defense, neither the attorney who conducted the underlying internal workplace investigation nor his or her law firm should act as defense counsel in any ensuing litigation.

Hat tip: A hat tip to my friend, fellow blogger and expert, attorney workplace investigator, Sindy Warren in Cleveland, Ohio for bringing the trial judge’s award of sanctions to my attention via her blog article. To read her article, click here.

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Workplace Investigations Group is headquartered in Atlanta, GA and has a nationwide directory of professional workplace investigators who are all attorneys with a minimum of ten years of employment litigation experience. For more information: www.Workplace-Investigations-Group.com

Employment Practices Liability Insurance – What Triggers Employer Obligation to Report?

Posted on June 12, 2013 by Lorene

Employment Practices Liability Insurance – What triggers reporting obligation?

In this second of his two-part guest post, attorney Brit Weimer continues to help us uncloak the mystery that surrounds Employment Practices Liability [“EPL”] insurance and what triggers an employer’s obligation to report a claim to its carrier. You can read the first of his postings on EPL insurance by clicking here.

As a general matter, EPL coverage protects employers from liability for wrongful employment practices and most EPL policies cover claims for sexual harassment, discrimination, and wrongful termination. EPL policies became popular in the mid-1990s after the surge in lawsuits that followed the passage of the Civil Rights Act of 1991, which gave employees the option of trying their claims to a jury instead of a judge, and which provided for both compensatory and punitive damages for certain employment practices violations.

Brit is an attorney with over 25 years of commercial litigation experience and the co-author of Employment Practices Liability (National Underwriter, Second Edition 2012). He is also a founding partner in the law firm of Jones Satre & Weimer PLLC in Bloomington, Minnesota. I’ve included a link to his bio at the end of his blog and also a link to the book he wrote.

EPL Insurance (Part 2): Practical Claims-Reporting Issues

By Britton D. Weimer, Esq.

“The insurer really expected all that claims information?”

Employers who are new to the Employment Practices Liability (“EPL”) policy are often surprised by the claims information the insurer requires – and how promptly it must be reported. This sensitivity to timely claims reporting flows from the fact that most EPL insurance is written as “claims made” (or “claims made and reported”) insurance.

“Claims made” insurance triggers coverage when the claim is made against the insured and reported to the insurer. This is in contrast with the more traditional “occurrence” coverage (contained in most CGL policies, for example). Occurrence coverage triggers coverage at the time of the occurrence … which can years or even decades before the claim is asserted against the insured.

Claims-made insurance is common with professional coverages, such as errors and omissions (E&O) and directors and officers (D&O) policies. It makes those coverages more affordable, because the insurer’s exposure is limited to a fixed period of time. However, it does require the insured to be more attentive to promptly reporting actual and prospective claims.

Employers often get tripped up in three areas of reporting: (1) disclosing potential claims on applications, (2) reporting informal claims, and (3) reporting claims within the policy period. These three issues are discussed below:

Potential Claims on Applications

Most EPL applications ask you to identify any facts that may lead to an employment practices claim, or words to that effect. This “potential claims” question is common with claims-made policies. But it can be a trap for unwary employers, who are not used to seeing such a probing question in occurrence applications. Failure to disclose may result in the denial of coverage if a claim is actually made.

Depending upon the specific application language and the law of the state, these questions may be limited to potential claims actually known to the employer (a subjective test), or they may include potential claims a careful employer “should” know about (an objective test). Because the subjective vs. objective issue is often not resolved until litigation, it is safer for the employer to assume that the broader (objective) standard will be applied. Ideally this means the employer should have all upper management (including the CEO, HR VP and Corporate Counsel) review the application to ensure that all potential employment claims are disclosed.

Informal Claims

Most EPL policies define a claim as a “suit” or “demand” made by a current, former or prospective employee. Often “suit” is defined broadly to include both a traditional lawsuit and an administrative claim (such as a charge filed with the EEOC). Often “demand” is defined to include any written request for monetary or nonmonetary relief. Thus, “claim” can include a lawsuit, an administrative proceeding, or a demand letter prior to any legal proceedings. (As always, examine the particular policy language.)

Many employers do not realize that a demand letter or e-mail can be a “claim” that must be timely reported to preserve coverage. And sometimes employers are unsure if an informal communication from an employee is really a “demand” or just a general complaint about working conditions.

When is an e-mail complaint a “claim”? The key elements of an informal claim are (a) an allegation of discrimination or another wrongful act, and (b) a request for some relief. For example, under most EPL policies, there is a claim if an e-mail states “I was fired for refusing my supervisor’s advances, and I need compensation.” (Sexual harassment and requested relief) Conversely, under most policies, there is no claim if an e-mail states “My supervisor is too demanding, and is making life miserable for everyone.” (No discrimination or other wrongful act, and no request for relief)

What about a borderline case, such as an e-mail that states “This is a racist workplace,” but requests no action or relief? When in doubt, forward it to the insurer!

Reporting During Policy Period

Most EPL policies require the employer to report claims to the insurer during the policy period. (For an additional premium, most allow claims to be reported during a fixed extended-reporting period after the policy term expires.)

Often employers wait to report employment claims, hoping to resolve them inexpensively and informally by negotiating directly with the employee. And employers sometimes delay in reporting a claim because they are evaluating if the claim would be covered by the policy. However, delay is risky with EPL insurance.

In most EPL policies, the timely reporting of a claim is a condition precedent to coverage. This means it is an absolute requirement – a threshold that must be crossed before the potential of coverage emerges. (This is in contrast with occurrence policies, where in most cases coverage is denied only if the insurer can demonstrate prejudice from the delay.)

Thus, when in doubt, the employer should submit the claim promptly to the EPL insurer. The ball is then in the insurer’s court.

Conclusion

EPL insurers insist on the timely reporting of claims. And courts will usually deny coverage if an employer failed to timely report a claim. Thus, it important for employers to have a responsible person assigned to report claims – a person who knows the requirements of the particular EPL policy, and who does not procrastinate!

If you are uncertain whether a true “claim” has been made, it is prudent to report it to the insurer. Good EPL insurers do not penalize employers, through increased premiums or cancellation, if there is no actual claim. So work with your broker to find a good insurer!

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You can learn more about Brit by checking out his bio by clicking here.

You can get a more detailed analysis of EPLI coverages and exclusions in Chapter 1 Brit’s book Employment Practices Liability: Guide to Risk Exposures and Coverage (National Underwriter, Second Edition 2012). Here is a link to where you can buy the book.

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Employment Practices Liability Insurance: What Does It Cover?

Posted on May 29, 2013 by Lorene

Although my first experience with Employment Practices Liability (“EPL”) insurance was in the mid-90’s and it has continued to grow in popularity since then, it still seems to be cloaked in mystery. As a general matter, EPL coverage protects employers from liability for wrongful employment practices and most EPL policies cover claims for sexual harassment, discrimination, and wrongful termination. EPL policies became popular in the mid-1990s after the surge in lawsuits that followed the passage of the Civil Rights Act of 1991, which gave employees the option of trying their claims to a jury instead of a judge, and which provided for both compensatory and punitive damages for certain employment practices violations.

I’ve invited an attorney who specializes in EPLI defense, coverage and risk management to help my readers uncloak the mystery surrounding EPLI.

His name is Brit Weimer and he is an attorney with over 25 years of commercial litigation experience and the co-author of Employment Practices Liability (National Underwriter, Second Edition 2012). He is also a founding partner in the law firm of Jones Satre & Weimer PLLC in Bloomington, Minnesota. I’ve include a link to his bio at the end of his blog and also a link to the book he wrote.

Here is the first of Brit’s guest posts. You can read the second installment by clicking here.

Employment Practices Liability Insurance: What Does It Cover?

by Britton D. Weimer, Esq.

“Rats – would that case have been covered by our EPL policy?”

In the past 20 years, sexual-harassment, discrimination, retaliation and other “employment practices” claims have grown exponentially. Employment-practices claims often cost over $100,000 to defend and resolve. Thus, for most employers, obtaining liability insurance for employment claims is an essential part of risk management.

In the early years, employment claims were often covered by Commercial General Liability policies. However, most CGL policies now have broadly-written employment-practices exclusions. Thus, in general, the only meaningful employment practices coverage is found in an Employment Practices Liability (“EPL” or “EPLI”) insurance policy.

In my experience, many employment attorneys find EPL coverages and exclusions to be confusing and mysterious. Thus, defense counsel sometimes neglect to tender employment claims to the client’s EPL insurer … until it is too late.

What is the source of this mystery and confusion? In part it stems from the lack of uniform EPL policy language. While a “standard” Insurance Services Office (ISO) EPL form was introduced back in 1998, most insurers still use their own language. Fortunately, most EPL policies do have the same basic coverages and exclusions. Here is a plain-language overview:

Coverages

Virtually all EPL insurance is written as a named-perils policy. This means there is a positive coverage grant only for the specific wrongs defined as “wrongful acts” under the policy. If the claim asserted against the employer is not one of the listed named perils, then there is no coverage. So this definition is at the heart of coverage under the EPL policy.

The most common EPL “wrongful acts” are the following:

Discrimination;
Harassment;
Wrongful termination;
Failure to hire/promote;
Defamation;
Invasion of privacy/confidentiality;
Negligent hiring and supervision; and
Retaliation and reprisal.

In addition, some EPL policies provide coverage for wage and hour (FLSA) claims. Because of the increasing frequency and severity of wage and hour claims, most employers find this coverage to be an excellent investment.

Exclusions

If there is a covered “wrongful act,” the policy should then be examined to determine if the claim falls within the scope of the exclusions. Most EPL policies exclude the following:

Fraudulent and criminal acts;
Contractual wage claims;
Workers compensation and similar laws;
ERISA; and
Bodily injury.

Many EPL policies also exclude:

Worker Adjustment and Retraining Notification Act (WARN) claims;
Americans with Disabilities Act (ADA) claims;
Wage and hour (FLSA) claims;
Nonpecuniary or injunctive relief; and
Insurance benefits.

Because of the many variations in exclusionary language, employers should be careful when shopping for EPL insurance. Talk to your broker, attorney and/or risk manager. A policy with fewer exclusions may cost bit more, but it may still be a good investment.

Conclusion

EPL insurance provides employers with a vital layer of risk-management protection. However, because of the variations in EPL policy language, it is important to review the particular policy before purchasing coverage, and before tendering the defense.

In the next installment, we will look at practical roadblocks employers often encounter when applying for EPL insurance, and when seeking EPL coverage for particular claims.

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You can learn more about Brit by checking out his bio by clicking here.

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Tips for Successfully Mediating a Workplace Dispute

Posted on May 20, 2013 by Lorene

I recently had the opportunity to speak to a group of HR professionals in Atlanta, GA about the mediation of workplace disputes. In preparing for that discussion, I created a Powerpoint® presentation that I thought my blog readers might also find useful.

It’s pretty self-explanatory. So, without further ado, here’s the link on Slideshare®.

Tips for Successfully Mediating a Workplace Dispute

Workplace Disputes: Continuum of Dispute Resolution

Posted on May 8, 2013 by Lorene

A recent discussion I had with a group of business people at various stages of their careers is the genesis for this blog posting. In the discussion, we were talking about the different dispute resolution processes we might use to resolve a dispute that was happening in their workplace. In the course of the conversation, two things became clear. First, we were not all using the various dispute resolution terms in the same manner. Second, we were not all clear on when the various tools might be used to resolve workplace conflict and the pros and cons of each of the processes.

In that discussion, I found myself sketching out on a piece of paper a dispute resolution continuum. My simple sketch got us through that conversation, but when I got back to my office I decided to “pretty it up” a bit and created the following chart.

Defining the Dispute Resolution Processes

Before I discuss the continuum, I think it’s important to define the common dispute resolution terms.

Negotiation

In negotiation, two or more parties discuss directly their conflict and try to resolve it. There are no third-parties involved.

Mediation

In a mediation, the parties in conflict ask a third-party (the mediator) to try to help them resolve their conflict. The mediator is a neutral and does not decide what is “fair” or “right.” Rather, the mediator’s role is to moderate and guide the process in an attempt to bring the parties together by defining issues and eliminating obstacles to communication. Although a mediator may point out to the parties potential strengths or weaknesses in their positions in an effort to help facilitate resolution, the decision making power remains always with the parties to the conflict.

Arbitration

In an arbitration, the parties to the conflict have agreed that a third-party (the arbitrator) will hear the evidence presented by each of the parties and make a decision. The arbitrator’s decision can either be binding on the parties or non-binding depending on the terms of the parties’ arbitration agreement.

Litigation

Litigation is the term used to describe the filing of a lawsuit in court and the process that follows the filing of the lawsuit. Most commonly in litigation involving workplace disputes, issues of law are decided by a judge and issues of fact are decided by a jury.

The Continuum of Dispute Resolution

In looking at the dispute resolution continuum several things become clear.

Parties Retain Control on Left and Cede Control on the Right

The first thing that jumps out at you in looking at the continuum is that as you move from the left to the right the parties increasingly cede control for decision making to a third-party. Now many readers may think — well that’s not so bad. Sometimes you just can’t resolve a workplace dispute and it’s better – easier – to just hand the issue to a third-party and let them decide. Maybe.

When I discuss the potential of having a jury decide a dispute with parties in a mediation, I often ask them whether they agree with who gets voted on and off of “American Idol” each week. I know I don’t. Those same voters are members of the jury pool. If you are the person involved in a workplace dispute query whether you want to make the decision of how to resolve the issue or whether you are comfortable turning it over to the “American Idol” voters.

The Likelihood of a Win-Lose Answer Increases as You Move to the Right

As you move to the right on the continuum, the parties also increase the likelihood that one of them will be a loser and one of them will be a winner. Notice the missed opportunity for a win-win resolution.

Monetary and Non-Monetary Costs Increase as You Move to the Right

Costs of lawsuits include not only the legal fees that each of the parties will pay their attorneys, but also fees associated with court filings, depositions and expert witnesses. For the employee, there is also the reality of foregoing a regular paycheck if he or she is not working.

There are also the non-monetary costs.

Non-Monetary – Employers

For employers, there is the productivity drain that an on-going workplace dispute causes. Research shows that simple incivility or bad behavior in the workplace (much less the distraction caused by a pending lawsuit) has a significant cost. According to research by Professors Christine Pearson and Christine Porath reported in their book THE COST OF BAD BEHAVIOR: How Incivility Is Damaging Your Business and What To Do About It, among workers who’ve been on the receiving end of incivility:

• 48% intentionally decreased their work effort
• 47% intentionally decreased the time spent at work
• 38% intentionally decreased the quality of their work
• 80% lost work time worrying about the incident
• 63% lost work time avoiding the offender
• 66% said that their performance declined
• 78% said that their commitment to the organization declined
• 12% said that they left their job because of the uncivil treatment
• 25% admitted to taking their frustration out on customers

Non-Monetary – Employees

For the employee, there is the personal distress. As Atlanta plaintiff’s attorney Steve Mixon explains, “employees cannot start their real healing until the lawsuit is over. While the lawsuit is pending, employees are forced to essentially re-live what happened every time they have to answer their attorney’s questions, respond to discovery or give testimony.”

The Workplace Dispute Becomes More Public as You Move to the Right

One of the biggest benefits to employees and employers who can successfully resolve their dispute in either negotiation or mediation is that they can agree to keep the resolution – and perhaps even the dispute – confidential. In a workplace dispute, this can be particularly beneficial to both the employee and the employer. Depending on the terms of the arbitration agreement, it is also possible to have an arbitration and the arbitration decision kept confidential.

By contrast, litigation is public. I think it is particularly important for parties to a workplace dispute to understand this point as it is increasingly easy for any interested party to go on-line and read all of the various documents that make up a lawsuit. As such, investors or potential buyers of a company will often, as a part of their due diligence, read court pleadings to get a feel for the corporate culture. Similarly, potential employers might read court filings as a part of their reference checking.

Insights for Employees and Employers

Control your own conflict. Sit down and talk to each other face-to-face and see if you can negotiate a resolution. If you can’t do it on your own, retain an experienced mediator who knows the applicable laws and can work with you to find a win-win resolution.

Do not turn your dispute over to a jury.

Remember, juries are comprised of the same folks who vote for our “American Idol” each week.

To learn more about mediating a workplace dispute and how to prepare for a mediation, click here.

Screw You and Your Cucumber Too – Even Monkeys Demand Equal Pay For Equal Work

Posted on May 2, 2013 by Lorene

In 1925, the famed Scopes Monkey Trial occurred in Tennessee. The public feverishly debated whether evolution contradicted certain religious teachings and whether humans, viewed by many to be a superior lot, could be related in any respect to monkeys.

A recent video on monkey behavior (and, perhaps, human psychology?) is certainly telling. Briefly, two monkeys are given the same job, but are rewarded differently. The slighted monkey receives watery cucumbers rather than juicy grapes like his co-worker-monkey does for the same work. The reaction of the slighted monkey is priceless!

Click here to watch the video.

Equal Pay is the Law of the Land

While I still chuckle every time I view this video, it is somewhat sobering that the fundamental unfairness of unequal pay for equal work still rears its ugly head today in the “human workplace.” Even women lawyers aren’t immune from the ugliness as the American Bar Association – Commission on Women reports that in 2011 the average woman lawyers’ weekly salary as a percentage of male lawyers’ salary was 86.6%.

Equal pay for equal work has been the law since 1963, which was a pivotal legislative year for civil rights in the workplace. Not only was Title VII of the Civil Right Act passed that guaranteed equal employment opportunity regardless of race and other classifications, but the Equal Pay Act also was passed.

Under the Equal Pay Act (“EPA”), covered employers are prohibited from paying differing wages, based upon the sex of the employee, for equal work on jobs requiring equal skill, effort, and responsibility, and which are performed under similar working conditions. Today, this act seems almost redundant of Title VII, but in 1963 it was clearly necessary. Then, policies that men were paid more than women for the same work were rampant, justified with the logic that men were responsible for being the breadwinner to their families.

Social Media Makes It Easier to Protest Unequal Pay

The bottom line is that fundamental unfairness is just as obvious, palpable, and odious to monkeys as it was and continues to be today to humans.

In the brave new world of the Internet and social media whether an employer is ever held accountable legally for permitting such double standards is not the end of the risk analysis. As I’ve written about in the past, in today’s world what was yesterday’s griping around the water cooler is today’s tweet heard around the world.

A quick look at the comments on Glassdoor® provides a good example of this new reality.

Employer A Glassdoor® comment:

“Equal pay for equal work.”

Pros – Good career opportunities. Good benefits and fair wages.

Cons – Incompetent management and good old boy attitude. No room for advancement as a female.

Advice to Senior Management – Have a more positive outlook for promoting women.

Employer B Glassdoor® comment:

“Discrimination and Untrustworthy”

Pros – When things are slow and going right, it’s a laid back atmosphere.

Most customers are beer brewers, they are cool to work with.

You can (for now) listen to your MP3 player while working.

It pays the bills if your desperate for a job.

Cons – There is ongoing sexual harassment and gender discrimination that management will not address.

Salaries have been based off of gender and parental status, this was stated by upper management.

Bonuses are offered in job offer to get you to sign on, but bonuses never pay out even if company makes money.

A member of upper management has extremely poor communication skills and a very bad temper, has put holes in the walls in anger at work. It’s a small company, you will work with him.

Customers have been told they don’t matter as long as the company makes a profit.

People who have worked here for years or have any skill are leaving left and right.

Advice to Senior Management – Unfortunately any advice would fall on deaf ears, the managers will do what they want, when they want, and how they want with no regards to other employees. All that matters to the company is how much money they make.

Insights for Employers

All that to say, if a monkey is smart enough to recognize disparate treatment, employers should be more keenly aware that monitoring compensation for legal compliance is important not only to avoid lawsuits or government investigations but also to maintain good morale and to retain great employees. Employers who fail to do so should not be surprised when their employees decide to throw back their watery cucumbers and act on their frustration through complaints to the government, to the public on social media, through unionization activity or by filing a lawsuit.

Workplace Investigations – Why Your Rolodex Should Include a Professional Workplace Investigator

Posted on April 27, 2013 by Lorene

While fact-finding investigations have long been a feature of good employer decision-making and dispute resolution, the importance of conducting and documenting prompt, thorough and objective investigations has increased over the past decade.

This change is due, in part, to two United States Supreme Court rulings in 1998 that held that employers can avoid liability for sexual harassment that does not involve an adverse employment action (e.g., termination or demotion) if the employer can demonstrate: (1) it took reasonable steps to prevent and promptly correct sexual harassment in the workplace, and (2) the aggrieved employee unreasonably failed to take advantage of the employer’s preventive or corrective measures. This principle often is referred to as the “Faragher/Ellerth affirmative defense,” in reference to the two 1998 United States Supreme Court decisions in which the Court established the defense.

Courts have applied the Faragher/Ellerth affirmative defense to other types of harassment and discrimination cases. Accordingly, in many instances, an employer’s liability will turn on how it handles a complaint.

In addition to providing the basis for an affirmative defense to a potential claim of harassment or discrimination, having an internal investigation conducted by a professional workplace investigator who is also an attorney will give management the tools to understand what has taken place and to decide upon appropriate courses of action, such as whether to discipline those responsible, whether to waive or retain the attorney-client privilege with respect to the matters investigated, how to conduct interviews of management and employees as well as whom to interview, how to treat whistleblowers and cooperating witnesses, how to document the investigation, and how to implement measures to prevent recurrence.

It also seems that juries (and other regulatory officials) are beginning to expect higher quality investigations by employers. The larger the employer the greater the expectation seems to be. Click here to read about one jury’s expectations of an employer faced with a claim of sexual harassment. Attorneys who regularly represent employees report that one of the key factors they consider in deciding whether to take a case is the quality of the employer’s internal investigation into the underlying matter.

Traditionally, an employer’s regular counsel would often conduct these fact-finding workplace investigations when they could not be handled effectively in-house by human resources. Increasingly, employers and their regular counsel have modified this approach and are retaining neutral and independent workplace investigators. For a more detailed discussion about the risks and issues created when an employer uses its regular legal counsel to conduct a fact-finding investigation, click here.

Why Use Separate Counsel as a Professional Workplace Investigator vs. the Employer’s Regular Counsel?

Employers and their regular counsel who decide to retain a separate attorney to conduct a fact-finding workplace investigation get the benefit of having an attorney conduct the investigation but avoid potential problems such as:

the employer’s regular attorney being deemed a witness;
the conflicting roles of advocacy vs. impartiality;
actual or perceived objectivity of the investigation due to pre-existing relationships between the employer and its regular counsel; and
the risk of the attorney-client privilege being inadvertently waived by combining fact-finding and advisor roles.

Why Use a Professional Workplace Investigator Instead of Human Resources?

Even larger employers who have the benefit of having HR professionals in-house may sometimes decide to retain an external professional workplace investigator. For example, I’m sure in hindsight that Chrysler wishes it had retained an external professional workplace investigator to investigate allegations of anonymous workplace harassment. It didn’t and the result was a $3.5 million verdict that you can read about here.

Reasons employers and their counsel may decide to use an external professional workplace investigator even if they have in-house HR professionals for this include:

HR’s workload may be such that the investigation cannot be a priority;
HR may lack the subject matter expertise and experience to handle the issue;
HR may have a real or perceived conflict of interest; and
HR may not possess the requisite communication skills necessary should the dispute proceed to jury trial.

Will Your Investigation Withstand Scrutiny at Trial?

Should a workplace dispute proceed to trial, it is also becoming more common for plaintiffs’ attorneys and defense attorneys to present the testimony of management practices experts. Such testimony often focuses on the quality of the employer’s investigation of the plaintiff’s underlying complaint. Here is an example of this type of Expert Witness Report from a case pending in the United Stated District Court for the Northern District of Mississippi.

Employment counsel charged with defending the employment action being challenged will be best positioned to do so where they can call as a witness the professional and expert workplace investigator the employer used to conduct the investigation. Click here for tips on how to select an effective workplace investigator.

Recommendation for Employers

In light of these dynamic changes, employers are encouraged to work proactively with their regular employment counsel to review their approach to investigations. As a part of that review, I encourage employers to identify professional workplace investigators to use should the need arise. Having a fully vetted workplace investigator in your Rolodex is just good business sense in today’s environment. As one of my colleagues is fond of saying, “workplace Investigators are kind of like plumbers. You hope never to need one, but when you do, you need a good one and you need them fast.”

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