Six Lessons that Redefine Focused Compliance Training: Lesson Four: Building a Legal Defense: Avoiding 4 Fatal Mistakes

by NAVEX Global


bricksUsing training to build a legal defense is a topic that receives significant coverage. It’s also a topic that is often not well understood. Unfortunately, mistakes happen and they can be costly.

A complex web of federal and state laws and agency guidance impose EEO, and compliance and ethics training requirements on employers of all sizes. Some are mandatory, and some are basically mandatory. But what’s the difference and does it matter?

  • Mandated training: Training is actually mandated by law.
  • Business Essential Training: When laws and regulations require employers to demonstrate that they have acted in good faith to establish a legal defense.

Most training obligations in the employment law arena fall under the second category. (To see a summary of the key legal defenses click here).

The reality is, however, that either way, an organization is exposed if they fail to train employees or if they take a check-the-box approach to training. Because, let’s face it, at some point every employer will be faced with lawsuit where having a defense will make all the difference.  In Bains v. ARCO Prods. Co., employees were originally awarded $1 million in compensatory damages and $5 million in punitive damages for failing to train on harassment. See 405 F.3d 764 (9th Cir., 2005). Similarly, in Swinton v. Potomac Corporation, an employee was awarded a punitive damage award of $1 million because the employer did not provide managers with training. See 270 F.3d 794 (9th Cir., 2001).

An Unexpected Twist—You Failed to Train Me!
Typically, employees groan and moan when told they need to take a compliance course or attend a training session. But here’s a training twist that relatively new. An employee (or in this case a mayor) actually claims that he engaged in harassment because he wasn’t trained.

San Diego Mayor Filner is accused of sexual harassment (eight women say he sexually harassed them). In August of 2013 the mayor’s lawyer made the outlandish claim that it’s the city’s fault that he harassed these women… because the city did not provide the mayor with harassment training.  As a result, the lawyer claims, the city and not the Mayor should be liable for damages that flow from his sexually offensive behavior.

So now, you not only need to provide training to build a legal defense against a plaintiff, you may need it to protect yourself from an employee or manager facing personal liability.

Defense Fundamentals
While legal standards may vary (and they do!) building a compliance-based defense boils down to some common techniques and strategies. Courts and juries are looking to reward organizations that make a real, good-faith effort to comply with the laws and get their employees to do the same. Good faith is not a one-time push exercise – it’s really a push, interact, pull, and push again exercise.

Some of the most commonly accepted techniques include:

  1. Have robust, organization-specific policies
  2. Ensure that policies are distributed (to everyone in your organization) on a regular basis and employees attest to them
  3. Provide robust and periodic training that is topic specific
  4. Have a reporting mechanism that really works
  5. Consistently and fairly enforce the rules
  6. Be vigilant against retaliation
  7. Regularly monitor, audit, and improve your program

Giving it a good effort, is not enough. These obligations are ongoing and evolving. Missing one of these steps can be catastrophic for your organization.

Learn From The Mistakes of Others
Many employers have tried to build a defense relying on a “good enough is enough” mentality. Unfortunately, their efforts are not well rewarded by juries or judges. And mistakes can lead to jury verdicts in the millions of dollars.

So what are some of the most common mistakes? I highlight 4 key ones below.

Mistake 1: Assuming That A Policy Alone is Enough
When it comes to policies, the game has changed. Employers cannot rely on a policy grabbed from the internet. The policy needs to be customized to fit their organization and it must be current. An outdated policy from 1938 just won’t cut it. And once you have a solid policy, you have to actually tell people about it.

It seems so simple, but employers do miss this important step. In Miller v. Kenworth of Dothan(11th Cir., 2002), the employer paid out $25,000 for "malice and reckless indifference" because of ineffective employment policies and because they failed to tell their managers about the policies. InGriffin v. City of Opa- Locka, et al. (11th Cir., 2001), the result was even worse for the employer. A jury awarded $1.5 million plus $500,000 of additional damages to a former employee because the city had no policy and no training.

Mistake 2: Assuming That All Training Is Created Equal
Training is another area where missteps can cause huge problems. Employers sometimes think that it doesn’t matter what the training is like; they just need to check-the-box. But don’t make this mistake—don’t assume that all training is created equal. It’s not. Training that helps you check-the-box will not curry favor with juries or judges, or enforcement agencies, or help you build a legal defense.

One employer learned this lesson the hard way. In EEOC v. Management Hospitality of Racine, Inc. d/b/a International House of Pancakes, et al., No. 10-3247 (7th Cir. Jan. 9, 2012), the court let stand a jury verdict of $5,000 in compensatory damages, and $100,000 in punitive damages in part because the employer used canned, generic videotaped harassment training. The court made clear that poor quality training does not qualify for a good-faith defense under federal law.

When vetting training options, ensure that the content and how it is being delivered is contemporary and interactive, and legally vetted. And ensure that managers receive specialized training that teaches them about their unique responsibilities.

Mistake 3: Assuming that Silence Is Golden
Many organizations still fear employee reports, assuming that chatter about inappropriate behavior is a bad thing. The reality couldn’t be further from the truth. Employers should encourage employees to speak up, and should have a formal and well-communicated process for doing so. It’s much easier and more efficient to handle an issue when it is small and manageable. And thestats tell us, that even if you aren’t hearing about harassment (or for that matter other employment law issues) nearly 30% of your employees have experienced it.

Set up a complaint process, and allow employees to come directly to HR or corporate with their concerns. Don’t be afraid to encourage employees to use your ethics or help line. Today, most of the calls coming into employer ethics lines are HR related calls. In fact, 69% of helpline calls are related to HR, diversity, and workplace respect issues.  And make sure that Managers have a true open door policy, and they know how to properly handle an employee complaint.  

If your process breaks down and isn’t effective, you’ll have a hard time establishing a defense under federal and state law. A Texas jury (Waffle House, Inc. v. Williams, 314 S.W.3d 1 (Tex. App., 2007)) awarded an employee $400,000 in past compensatory damages, $25,000 in future compensatory damages, and $3,460,000 in punitive damages (eventually lowered to $425K by judge per law) after she was sexually harassed by her manager. A key fact that led to this verdict, despite the employee’s repeated reports, management failed to handle her complaints properly. And because her complaints weren’t processed properly, her issues never made it to corporate headquarters.

Mistake 4: Assuming That You Only Have to Train 1 Time
Training is a large budget item. It’s not just the cost of the program, but also the seat time costs that add up. Assuming that it’s okay to deliver training one time, however, is a monumental mistake. Employees and managers need periodic reminders about your policies, procedures, and how to make complaints.

Periodic training for managers has been the law in California since AB1825 was adopted. It has also long been the position of the EEOC that Employers should provide employees and managers with periodic training. See EEOC Enforcement Guidance: Vicarious Liability for Unlawful Harassment By Supervisors, No. 915.002, June 18, 1999).  And in Romano v. U-Haul International, punitive damages were available because the employer did not have "an active mechanism for renewing employees' awareness of the policies through...specific education programs." 233 F.3d 655 (1st Cir. 2000).

In fact periodic training is becoming the norm rather than the exception in the broader compliance space. See 2004 Federal Sentencing Guideline, Section 8B2.1(b)(4)(A). Morgan Stanley was rewarded with a non-prosecution agreement, in part because of its robust compliance program which included regular electronic and other training.

Establishing a smart cadence to your training is vital to building a successful defense. Today you have many options, which include full-length courses, short 5-7 minute bursts, and communication and awareness programs that keep issues top of mind. Plan your efforts out carefully (example curriculum map) and make the most of the training time you have.

Written by:

NAVEX Global

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