presented by: april 30, 2013shared.littler.com/.../pdf/...avoiding_retaliation.pdf · whistleblower...

5/1/2013

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April 30, 2013

Presented by:

Kathy Cooper FranklinLittler Mendelson, P.C.

Seattle Office206.381.4900

[email protected]

Earl M. (Chip) Jones, IIILittler Mendelson, P.C.

Dallas Office214.880.8115

[email protected]

Trish MartinLittler Mendelson, P.C.

St. Louis Office314.659.2011

[email protected]

Revenge- Embedded in our history

How all occasions do inform against me, And spur my dull

revenge!─ Hamlet (4.4.35‐6)

Revenge should have no bounds.─ Hamlet (4.7.143)

When we are born, we cry that we are come

To this great stage of fools: this a good block;

It were a delicate stratagem, to shoe A troop of horse with felt: I'll put

't in proof;And when I have stol'n upon these

sons-in-law,Then, kill, kill, kill, kill, kill, kill!

─ King Lear (4.6.200‐5)

I will have such revenges on you both,

That all the world shall—I will do such things —

What they are, yet I know not: but they shall be

The terrors of the earth. ─ King Lear (2.4.305‐9)

Oft have I heard that grief softens the mind,

And makes it fearful and degenerate;

Think therefore on revenge and cease to weep.

─ Henry VI (4.4.1‐3)

My ashes, as the phoenix, may bring forth

A bird that will revenge upon you all:

And in that hope I throw mine eyes to heaven,

Scorning whate'er you can afflict me with.─ Henry VI (1.4.35‐8)

I'll never pause again, never stand still,

Till either death hath closed these eyes of mine

Or fortune given me measure of revenge.

─ Henry VI (2.3.31‐3)

Which, if not victory, is yet

revenge.─ John Milton, Paradise Lost

(bk. II, I. 105)

Revenge is an act of passion; vengeance of justice. Injuries are revenged; crimes are

avenged.─ Samuel Johnson

Revenge is a kind of wild justice; which

the more man's nature runs to, the more

ought law to weed it out.

─ Francis Bacon

Those who plot the destruction of others often perish

in the attempt.─ Thomas Moore

Revenge –it still part of our culture

In the News… Agenda

• Identify what constitutes unlawful retaliation under EEO and whistleblower protection laws

• Detail key structures and processes that support a speak up culture

• Understand ways to monitor conduct to ensure retaliation does not occur

• Define techniques for developing a strong defense against retaliation claims

• Discuss ethical issues for attorneys conducting Investigations

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Question

• Has your organization faced complaints or litigation alleging retaliation in the past year?A. Yes

B. No

C. I don’t know

D. I’d rather not say

Question

• Do you have an effective an anti-retaliation program?

• Or do you just have to tell your managers that this sort of conduct won’t be tolerated?

Question

• Pick which answer best describes your managers understanding of retaliationA. I am confident that my management knows

what behaviors constitutes unlawful retaliation

B. They know what retaliation is in general but I am not sure they can identify all retaliatory conduct

C. They can’t define it, but I know it when I see it

D. They are not sure what behavior is unlawful retaliation

Elephant in the Room Question

• Do you want your employee to complain internally rather than go to the SEC/ DOJ /EEOC / OSHA etc?

• Do you have an effective system that encourages them to do so?

First -- Update on the Law

• Whistleblower protections

• EEO protections

Whistleblowers

• Make good faith reports of suspected misconduct– For example:

• Non-compliance with accepted accounting practices• Bribery in foreign transactions• Violations of health and safety laws• Securities violations, such as insider trading

• Are protected from retaliation for blowing the whistle

• May be entitled to rewards from the government for blowing the whistle on certain misconduct

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How We Got Here

July 2002

Corporate Scandal Leads to SOX

2002-2007

Years of Minimal SOX Enforcement

2007-2009

The Tide Turns

2010-2013

Dodd-Frank and the New Age of the Whistleblower

In a Time of Public Mistrust…

ENRON TYCO WORLDCOM

Whistleblower Culture Introducing…The Sarbanes-Oxley Act

• 2000: ENRON claims revenues of $101 billion, employs 22,000

• December 2, 2001: ENRON declares bankruptcy after widespread accounting fraud is revealed

• February 2002: Congressional Hearings on ENRON• April 2002, Sarbanes-Oxley introduced as “Corporate and

Criminal Fraud Accountability Act of 2002– From the Senate Report: “[SOX is intended to address ] a

culture, supported by law, that discourage employees from reporting fraudulent behavior not only to the proper authorities...but even internally. This ‘corporate code of silence” not only hampers investigations, but also creates a climate where ongoing wrongdoing can occur with virtual impunity.”

• June 25, 2002: WorldCom reveals $3.8 billion overstatement of earnings

Sarbanes-Oxley’s New Internal Reporting Provisions

• Section 301:– Public companies must create mechanisms

for reporting financial concerns• Specifically requires mechanisms for handling

anonymous complaints by employees

SOX Provides Whistleblower Protections

• Section 806: Prohibits– Retaliation against an employee who reports

conduct that employee “reasonably believes” violates federal laws:

• Mail fraud• Bank fraud• Wire fraud• Securities fraud• Rules or regulations of the SEC• Other laws relating to fraud on

shareholder

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Whistleblowing Timeline

July 2002


2002-2007


2007-2009

The Tide Turns

2010-2013


Sarbanes-Oxley: Years of Minimal Enforcement

• 2002-2008: U.S. Department of Labor rules in favor of whistleblower in only 17 out of 1,273 complaints filed with OSHA

• 2002-2008: 841 cases dismissed

2002 – 2008 Hurdles to Successful SOX Whistleblower Claims

• 90-day statute of limitations• DOL took the position that subsidiaries

of publicly traded corporations were not covered under the SOX whistleblower provisions

• Republican appointed Administrative Review Board

• Narrow interpretation of the law by ARB

• Deference to narrow interpretations by U.S. Courts of Appeals


July 2002


2002-2007


2007-2009

The Tide Turns

2010-2013


Example of Narrow Judicial Interpretation: The “Reasonable Belief”

• Must be subjectively and objectively reasonable• Day v. Staples, Inc., 55 F.3d 42 (1st Cir. 2009)

– To be objectively reasonable, the “complaining employee’s theory of such fraud must at least approximate the basic elements of a claim of securities fraud...”

– Scienter and Materiality– Allegations of corporate inefficiency, failure to maximize

corporate profits, inaccuracies, billing discrepancies not sufficient

– Mere “accounting irregularity” also insufficient– Employee’s belief became objectively unreasonable once

the employer explained challenged practices to employee and assured him there was no fraud

But now…Whistleblowing Legislative Expansion

• Fraud Enforcement & Recovery Act

• Revised False Claims Act

• American Recovery & Reinvestment Act 2009

• Consumer Product Safety Act

• 22 Federal Whistleblower Statutes Enforced by OSHA

• Since 2006, 16 states have passed or strengthened laws protecting whistleblowers

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July 2002


2002-2007


2007-2009

The Tide Turns

2010-2013


The Passage of Dodd-Frank

• June 2009: President Obama introduces proposal for sweeping overhaul of the U.S. financial regulatory system

• Reconciled bill passes House 237 – 192, Senate 60 – 39, in votes along party lines

• Obama signs into law on July 21, 2010

Dodd-Frank’s Amendments to SOX Whistleblower Provisions

• Jury trial guaranteed: No pre-dispute arbitration agreements

• No waiver of claims

• 180-day statute of limitations

• Broader application to subsidiaries

Dodd-Frank: New Whistleblower Provisions

• Section 922 Bounty Hunting: 10-30% reward to bounty hunters who alert SEC to violation of the 1934 Securities & Exchange Act (if > $1M)– May remain anonymous (must have counsel) until

payment of award

• Whistleblower Protection: Employee can file claim directly in federal court—SOX Claims included– Rules also provide SEC with power to enforce– SOL: 6 years after violation; or 3 years after

learns/should have learned; 10 year max– Remedies: Reinstatement, 2X’s back pay,

attorney’s fees

Calculating the Bounty

Increased Percentage• Significance of information

provided to success of SEC proceedings

• Extent of whistleblower assistance

• SEC’s law enforcement interest

• Whistleblower participation in internal compliance systems

Decreased Percentage• Whistleblower culpability for

securities law violations reported • Under SEC regs, culpability

does not preclude award• SEC will not count sanctions

against whistleblower or for liability based substantially on whistleblower’s conduct toward $1 million threshold

• Unreasonable delay in reporting the violation

• Interference with internal compliance systems, such as false statements to compliance department

INCREASED GOVERNMENT ENFORCEMENT EFFORTS

Prevent Retaliation with a Speak-up Culture

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• SEC reports receiving 6-7 tips per day from whistleblowers and their attorneys, many of them “high quality.”

• Has received more than 4,000 tips from people seeking to collect under DFA since it took effect in August of 2011

• Has already posted 245 actions against individuals and companies in which whistleblowers may be able to claim monetary awards (10-30% of monetary sanctions ranging from one million to hundreds of millions of dollars).

• Is expected to announce its first recipient within weeks• In a recent Huffington Post article, Director Sean McKessy

indicated that the first awards will be significant:– “The more, the better, obviously. The higher the amounts, the

better…I would like to have a high number and have high dollar values associated with it."

SEC’s Office of the Whistleblower Bounties Abound

• SEC issues first bounty on August 21, 2012: – $50,000– Statutory maximum (30%) of amount collected in

enforcement action– Whistleblower remains anonymous– Thousands of cases are pending at the SEC

• IRS issues record $104 million reward on Sept. 10, 2012– Whistleblower collects record bounty

despite also being sentenced to 40 months in prison for his role in tax evasion scheme

SEC Reports for 2012

• The SEC received 3,001 tips, complaints, and referrals from whistleblowers from individuals in all 50 states, the District of Columbia, and the U.S. territory of Puerto Rico as well as 49 countries outside of the United States.

• The number filed under OSHA-governed statutes: In fiscal year 2012 a total of 2,787 whistleblower complaints were filed OSHA.

•

ADMINISTRATION AND JUDICIAL ACTION


ARB Dramatically Expands Whistleblower Protections

• No longer need to allege shareholder fraud to engage in protected activity

• Theft of confidential information may be protected activity

• Expansive standard for “adverse action”

Dodd-Frank’s Anti-Retaliation Provisions

• To be protected, whistleblower must:– Possess a “reasonable belief…”

• Both subjectively genuine and objectively reasonable (Only $1000 penalty for frivolous claims!)

– That the information relates to a possible securities law violation…

– That has occurred, is ongoing, or is about to occur…– Anti-retaliation protections apply whether or not the

whistleblower is eligible for an award.• Employer may not discharge, demote, suspend,

threaten, harass or in any other manner discriminate against alleged whistleblower

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ARB’s Recent Expansive Decisions

• Evans v. U.S. Environmental Protection Agency, ARB No. 08-059 (July 31, 2012)– Lowers standard for complaint’s survival of

motion to dismiss• “administrative whistleblower complainants that give

‘fair notice’ of the protected activity and adverse action can withstand a motion to dismiss….”

– Creates obligation for ALJ to allow a complainant to provide additional facts, either in writing or orally, before ruling on a motion to dismiss.

Wiest v Lynch, March 19th, 2013

• Court of Appeals for the Third Circuit became the first federal Circuit Court to adopt the liberal “reasonable belief” standard for determining protected activity under the whistleblower provisions of the Sarbanes-Oxley Act (“SOX” or the “Act”).

• The Court rejected case law requiring a plaintiff-employee’s internal complaint to relate “definitively and specifically” to a statute or regulation specified in Section 806 of the Act in order for the employee’s communication to be considered protected activity.

• This holding represents a significant, employee-friendly development in cases brought under the Sarbanes-Oxley whistleblower provision, which shields employees of publicly traded companies who report fraud

Lowers the bar for Plaintiffs

• This decision is troubling for employers as it sets a standard that plaintiffs can articulate a belief that his or her employer is doing anything that might be construed as a violation of one of the categories under section 806 and then the plaintiff can obtain protection from discipline or termination.

Menendez, March 13 , 2013.

• Employee WB successfully sued his employer for releasing his name when he asked to remain anonymous

• Employee recovered $ 30,000.

• Lesson learned?

The best defense of a strong offense

• Creating a speak up culture

• Understating and preventing retaliation

Retaliation – Your Definition?

Retaliation is...

_______________________________________________

_______________________________________________

_______________________________________________

_______________________________________________

_______________________________________________

_______________________________________________

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What Is Retaliation?

• Taking adverse action against employees who participate in protected activity or oppose unlawful employment practices

Supreme Court Expands Employee Protections Against Retaliation

Recent DecisionsUS Supreme Court (2009)• The Court explained that any time an “employee communicates to her employer a belief that the employer has engaged in ... a form of employment discrimination, that communication virtually always constitutes the employee's opposition to the activity.”

US Supreme Court (2006)Court held that prohibited retaliatory conduct includes any action that “well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”

US Supreme Court (2011)Court held that third party may sue for retaliation : “worker obviously might be dissuaded from engaging in protected activity if she knew that her fiancée would be fired.”

Retaliation

•Retaliation cases continue to grow, now

exceeding 38.1% of all cases filed

All retaliation cases have three elements:

• Protected activity;

• A materially adverse action; and

• A connection betweenthe two.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

http://www.eeoc.gov/eeoc/statistics/

Receipts

Recent Retaliation Verdicts

– $7.9 Million Retaliation Judgment Against hip-hop magazine Publisher & Co-Founders

– Former U.S. Customs Employee Wins$2.5 Million Verdict for Retaliatory Transfer

– $25 Million Award to Two Whistleblowers at a California Nut Processing Plant – Jury “became irrational,” defendant’s attorney said.

Proving a Retaliation Claim

1. I engaged in “protected activity.”

2. I was subject to “adverse action.”

3. There is a “causal connection” between 1 and 2.– 3 strikes: You’re Out

Proving The Causal Connection

– Knowledge of protected activity

– Involvement in adverse decision

– Proximity in time

– Contrast facts before protected activity...and after

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Key Concepts You Need To Understand

• “Protected Activity”– How to define.

– What are the limits, and when can you curb it.

• “Adverse Action”

• A “Causal Connection”

Protected Activity

• Participation– Internal

– External

• Opposition

Not All Opposition Is Protected

• Making unduly disruptive complaints

• Improperly disclosing confidential information or records (split of legal authority)

• Defaming supervisors or coworkers

• Violent picketing• When it’s your job

VIDEO CASE STUDY:ADVERSE ENOUGH?


Most Common Forms of Retaliation

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Adverse Action: Retaliatory Harassment

• Employers face liability for coworker harassment or retaliation if the employer knows of the conduct and fails to address it

• Claim may exist even without a showing of a hostile work environment

• Court focuses on actions of ultimate decision maker

Outside Of Employment

• Incidents outside the employment context can constitute an adverse action:

• The following actions were considered sufficient to constitute an adverse action in the discrimination context:– A false report to a government agency about the

complainant’s immigration status – Accosting a complainant outside of work with a

hostile tone and manner and foul language– Defaming a complainant in the news, the news

media alleging that she misappropriated state funds

Employer Knowledge of Protected Activity

• Employee must demonstrate that the employer actually knew of the employee’s protected conduct at the time it made an allegedly adverse action

• Loose Lips Sink Ships: – “I know you’re taking that legal

route...”– “Were you involved in prior

litigation?”

Get Management to Communicate With HR/ Legal

• When taking adverse action, never assume you have all the information

• Get the whole picture − Get management to consult with Human Resources or with YOU.

A Manager’s Best Defense?

• Systematic, detailed, and accurate documentation of performance problems, so that it does not appear that documentation only starts after an employee complains or makes a report of alleged misconduct.

• Your best defense is a strong offense (i.e., documented record)

• And...don’t be stupid!

And Of Course...Don’t Be Stupid!

• Words Can Kill! – Manager’s comments when

terminating an employee, describing her as a “problem employee,” and specifically referencing an “unsubstantiated” EEOC complaint she had filed six and one-half years before her termination, was sufficient to establish direct evidence of causation!

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...Or Too Web-Friendly

• Manager comments on social networking sites can be evidence of retaliatory intent.

• “If it streams outside the lines, it streams out of control, and once it’s out of control, you can’t bring it in. ... You need to be aware (if you’re on-line), the rest of the world can see it, no matter how you try to protect it.”– David Baker, CEO,

Human Capital Advisors

Expanding Tort of Public – Policy Exception to At-Will Employment

in Missouri

Seminal Case: Fleshner v. Pepose Vision Institute, 304 S.W.3d 81 (Mo. banc. 2010)

Background• Defendant was being investigated for failure

to pay overtime by the DOL.• Plaintiff spoke with the DOL investigator and

then reported conversation to her supervisor.• Plaintiff was terminated the next day.• Sued for wrongful termination in violation of

Missouri public policy.• Awarded $125,000 by St. Louis County jury• Employer appealed.

Fleshner v. Pepose Vision Institute (cont.)

Missouri Supreme Court Decision:• Court held “contributing” factor was proper

causation standard.• Only discussed three categories of

protected conduct that would support such a claim: – Filing a Workers Compensation Claim;– Refusing to Violate the Law;and– Reporting Wrongdoing.

Impact of Pepose

• Missouri Supreme Court did not include “acting in a manner public policy would encourage” as protected.

• Category had previously be recognized by Missouri Courts of Appeals.

• Employers hopeful this reflected a narrowing of categories of protected conduct.

Fast Forward

• Delaney v. Signature Health Care Foundation, 376 S.W.3d 55 (Mo. Ct. App. 2012)

• Employee requested 4 weeks off to be able to donate a kidney to her brother.

• Employer advised could not hold her position open for 4 weeks and terminated her.

• Employee sued for wrongful discharge in violation of Missouri public policy

• Employer moved to dismiss.

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Delaney v. Signature Health Care (cont.)

• Trial court granted the employer’s motion to dismiss.

• Missouri Court of Appeal reversed holding that despite the Supreme Court’s language in Pepose, “acting in a manner public policy would encourage” is protected because the Supreme Court didn’t explicitly overturn prior Court of Appeals cases recognizing this category of conduct as protected.

Delaney v. Signature Health Care (cont.)

• In Delaney, Missouri Court of Appeals said taking time off to be an organ donor is protected because various statutes reflect “a clear mandate of public policy in Missouri encouraging organ donation.”

• Missouri Supreme Court recently denied transfer - Delaney remains good law, especially in the Eastern District of Missouri.

• Reasoning in Delaney could lead to absurd results...

Acting in a Manner Public Policy Would Encourage?

Acting in a Manner Public Policy Would Encourage?

Other Examples

• Missing work to take your child to be immunized?

• Missing work to take your child to school?

• But, the public policy exception is supposed to be “narrowly drawn”

Take Away

• Given Court’s ruling in Delaney, Missouri employers should be cautious in terminating employees who request time off for reasons that may be said to be encouraged by public policy – i.e a statute that encourages the same type of behavior.

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PREVENTING RETALIATION WITH A SPEAK UP CULTURE


Contact Carole S. Switzer [email protected] for comments, reprints or licensing requests ©2013 OCEG visit www.oceg.org for other installments in the Policy Management Illustrated Series

POOR PROGRAMSIN PLACELack of good programs and management can put your organization at risk.

The Low Road

The High RoadROBUST INCIDENTMANAGEMENT PROGRAMWith a robust incident management program and strong anti-retaliation policy in place, your risks are greatly reduced.

POTENTIALINCIDENTIDENTIFIEDWhen someone in your company identifies a possi-ble issue, they will react differently based on your prevailing culture and the systems you have in place for managing incidents.


ETHICAL TONE FROM THE TOP 1

REPORT

CEO

SPEAK UP TRAINING

21 3

We need to get this done, but we need to do it the right way. Our reputation matters.

The company cul-ture supports ethi-cal behavior and reporting.

Executives send a clear message about values.

Employees learn it’s their duty and right to speak up. Manag-ers are trained to receive com-plaints and that reporting them is their duty.

We had three unethical behavior reports this quarter. Reporting is important and retaliation is unacceptable.

What is Tone at the TOP?

• What does this term mean ?

• How important it is to have tone at the top?

• And how do we get there?

Make Culture a Strategic Priority

• Cultural surveys• Benchmark reporting• Conduct a program

review• Determine stakeholder

communication preferences and expectations

• Identify opportunities to drive program awareness: training, communication and internal marketing

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Trend: 2011 National Business Ethics Survey

• 65% of employees reported observed misconduct, up from 53% in 2007

• 22% who reported misconduct say they experienced retaliation, up from 12% in 2007

• 42% reported weak “ethics cultures,” up from 35% two years ago

The Good News: Most Employees Not Motivated by Money

Source: Inside the Mind of a Whistleblower, Ethics Resource Center, 2012

The Whistleblower: Who, Where and Why?

• In 2011, 45% of U.S. employees said they had observed misconduct in the previous 12 months– Approximately two-thirds of those who observed

misconduct reported it• Eighteen percent of employees who report misconduct

ever choose to report externally (i.e., either initially or as a subsequent report)– Of those who report externally, 84% said they did so only

after trying to report internally first• Seventy-two percent of employees who believe their

companies reward ethical conduct chose to report misconduct– Only 57% of employees who did not see ethical conduct

rewarded in their company chose to report

Reporting Rates Rise When Ethical Commitment is Perceived to be Stronger

0102030405060708090

Weak or Weak-Leaning Ethical Culture

Strong or Strong-Leaning Ethical Culture

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Employee Mistrust of Management: Survey Says…

• 2011 Maritz Employee Engagement Survey finds:– 25% of employees report

less trust in management than 2010

– Only 10% say they trust management to make the right decision in times of uncertainty

– Only 14% believe their company’s leaders are ethical and honest

– Only 7% believe senior management’s actions are consistent with their words

Inside the Mind of a Whistleblower

Promote and Enforce Compliance and Ethics Programs

• Use incentives to encourage ethical conduct and compliance

• Incorporate meaningful measures tied to ethical values into compensation decisions and performance evaluations


Investigations must be effective, lawful, prompt and thor-ough.

DEFINED AND EFFECTIVE INCIDENT MANAGEMENT PROGRAM

2

LEGALHR IT

COMPLIANCEAUDIT

Clear controls are in place.

We found some fraudulent activity. We’re changing policy as a result.

Thank you for helping us find it before more damage was done!

Retaliation monitoring must be separate from the inci-dent investigation.

We have a process for this, and you can also report anonymously.

A compliance committee oversees investigations, preserves the chain of evidence and monitors progress.

There is a defined triage process to prior-itize incidents and follow up.

Senior leaders thank and encourage employees when they report problems and unethical behavior.

CEO

Develop an Integrated Incident Management System

• Adopt a continuous improvement management approach to handling incidents and complaints

• Ensure reports do not fall through the cracks

• Implement corrective measures to help managers learn from mistakes

• Ensure that investigations are conducted by the right people and reports are made to those who need to know

Ensure that there are clear and appropriate avenues available for employees to raise concerns and ask ethics

and compliance questions internally.

• Your organization most likely has one or more avenues already in place for employees to formally complain (e.g., workplace harassment policy specifying complaint avenues; Ethics & Code of Conduct that most likely refers employee to your ethics hotline; etc.) – Have you reviewed them to make sure they are not

inconsistent or outdated?

– Do they cover all risk areas (for example, issues with timecards or pay)?

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Ensure that there are clear and appropriate avenues available for employees to raise concerns and ask ethics

and compliance questions internally.

• Critically, as most employee complaints do NOT come via your hotline, are your managers trained to:– Recognize a complaint when it comes in;

– Address it appropriately (almost always involving HR, Legal, or senior management), and

– Not retaliate against those who complain/participate

Supervisors Receive Majority of 1st Reports

56% Your Supervisor

26% Higher Management

6% Other

5% Hotline/Help Line

5% Other Responsible Person Including Ethics Officer

3% Someone Outside Your Company

1. Effective Report and

Intake Procedures

2. Speak up training for manager &

employees

3. Notificationprotocol

4. Effective investigation

protocol – including training for

investigators

5. Effective remedial measures and

appropriate way totrack and communicate

discipline before it occurs

6. Reporting and

Communication

Develop an Investigations Protocol

• Triggers• Triage -Who should Investigate? Who

should know ? Attorney client privileged?• Plan and assign • Thorough Investigation • Take Remedial Action• Disclose• Negotiate from the best position

Take Claims Seriously and Partner with the Right Teams and Departments

HRLegal ComplianceCorporateSecurity

Location Managers

EH&S Other Teams

Question

• Who gets anti-retaliation/ speak up training in your organization? A. Managers and anyone with supervisory

duties

B. All employees

C. No one

D. I don’t know

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Question

• What are the elements of an effective training program to prevent retaliation?

• Who should be trained?

Kathy Cooper Franklin Earl M. (Chip) Jones, III Trish Martin

Speak up Training

• Employees are requested in the your policies / Code of Conduct to report violations of misconduct or when they feel mistreated or uncomfortable

• What do you believe most don't speak up?• Reasons: Afraid of retaliation, think

nothing will be done

Mangers should be trained:

• Welcome the complaint or report( with your words and body language)

• Take the time to listen• Thank them for coming to you• Active listening, ask questions• Show the employee you care• Make sure you inform HR, legal or compliance

immediately• Let the employee know what you plan to do and

that you will follow up with them• Be professional and respectful

Training :What NOT to do?

• Don’t brush off the employee, even if you initially think the issue is trivial

• Do not promise confidentiality as you cannot• Do not retaliate or appear to retaliate• Do not gossip or talk to others (other than

HR) about the compliant • Do not make jokes or trivialize the report• Do NOT send emails with assumptions and

conclusions

Employees should also be trained

• That is their right and responsibility to report misconduct

• That they will not be retaliated a against

• Where to go and what to say.

• That they can report anonymously


POSITIVERESULTS 3

I’m cutting this fine in half be-cause of your strong incident management program and you did a prompt and thorough investigation and self reported.

There is increased loyalty and performance from passionate and engaged workers.

Legal penalties may be reduced and criminal prosecution avoided if a company can demonstrate that it has a robust program in place.

I'm proud of our record and proud to work at this company.

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Morgan Stanley and Ralph Lauren

• In both cases, the SEC and cited the fact that these companies had effective compliance programs and rewarded the company for having them.

Common Mistakes

• What are some of the big mistakes that employers make in handling reports of alleged misconduct from employees?


You’re just not a team player

Executives don’t reinforce values.

Subtlepunishments

Nobody invites me to lunch anymore. When issues

are ignoredinside, serious risks can go unreported.

Nothing ever changes. What’s the point?

History of retaliation and lack of trust.

I know someone who called that hotline, and they got fired.

Culture and values don’t support report-ing

Get it done.I don’t care how you do it.

Lacklustertraining

Oh, by the way, here’s the Code of Conduct.

I don’t understand why we would train our employees how to complain.


When a company lacks robust incident management programs, legal penalties will be much stiffer.

When issues are ignored inside, employees are more likely to go outside for help.

We can also file a civil claim for retaliation.

DEPT OF

JUSTICE

I told my boss in confidence and by the next week everyone knew.

Lack of clear process and controls.

Passionate and engaged employees may seek jobs elsewhere.

I need to work at a place I can be proud of. I’m outta here.

Ignoring complaints and retaliating against reporters can

damage the company's reputation and create serious risks.

Reports of fraud have investors jittery…

I’m fining you to the fullest extent the law will allow.

LAWOFFICE

Ethics issues

Ethical issues

• What are some of the ethical issues that arise?

Applicable Ethical Rules

• Rule 1.1: Competence– Mixed civil and criminal issues– Array of whistleblower protection laws with varying

limitations periods

• Rules 1.2, 1.3, 1.4, 2.1: Best Interests of the Client– “Moral, economic, social and political factors”– How define individual’s or corporation’s best interests?

• Rules 1.5, 1.8, 1.13: Avoiding Conflicts– Reasonable fees– Media rights– Identifying corporation as client

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Applicable Ethical Rules (cont’d)

• Rules 2.1, 3.6, 4.2, 4.6: Litigation strategy and tactics

– Duty not to use means with no substantial purpose other than delay, embarrass or burden third parties

– Ex parte communication with current or former corporate employees

– Statement in the media (including social media)

Hypothetical Potential Defendant

• Ed Executive says “we’ve got an employee in our internal audit department who is a malcontent, raises questions about all of our accounting practices, and is never satisfied with our outside auditor’s clean bills of health. He’s wasted lots of Audit Committee time. Can we fire him?”– What are the accounting practices that have been questioned?

– Has the Company or any outside third party determined whether the questioned practices are appropriate?

– Has the employee been disciplined before? Has the employee raised concerns before? What was the resolution?

– Has the Company ever experienced any investigations or lawsuits related to shareholder fraud?

Settlement Issues

• Can a settlement or separation agreement provide that a current or former employee will not make disclosures to the SEC?

• Can a settlement or separation agreement provide that a current or former employee waives the right to receive any financial award under the SEC’s anonymous whistleblower program?

Ten Ways To Avoid Retaliation Claims

1. Create and Inculcate Whistleblowing and Retaliation Policies


2. Engage in systematic, detailed and accurate documentation of performance problems.

3. Create a speak up culture and measure improvement with engagement surveys

4. Be alert to potential protected activity, as it can assume a variety of forms.


5. Take all complaints of illegal harassment, discrimination, or illegal activity seriously, and make sure they are investigated thoroughly.

6. Involve appropriate partners in HR or legal.

7. Take all claims of retaliation seriously.

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8. Before taking adverse action against an employee who has engaged in protected activity, consider how the action might appear.

9. Do not use the next layoff as a way to get rid of a complaining employee unless the business case is legitimate.

10. Implement processes to minimize the risk of disparate punishment for similar conduct.

Questions?

Prevent Retaliation with a Speak-up

CultureApril 30, 2013

Kathy Cooper FranklinEarl M. (Chip) Jones, III

Trish MartinLittler Mendelson, P.C.

presented by: april 30, 2013shared.littler.com/.../pdf/...avoiding_retaliation.pdf · whistleblower...

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