Tag: Human Resources

Managing Workplace Conflict: 3 Lessons to Learn from the Super Bowl Game Kelce-Reid Incident

During the recent Super Bowl game, millions of viewers witnessed a tense moment that quickly became a talking point far beyond the realm of sports. Kansas City Chiefs’ star tight end, Travis Kelce, was seen apparently pushing and yelling at Head Coach Andy Reid. The incident seemed to stem from the player’s frustration over being sidelined during a crucial part of the game, leading to an outburst that suggested he was demanding more playing time.

This high-profile episode serves as a powerful example for managers and supervisors across all industries, illustrating the challenges of dealing with insubordinate (and possibly disruptive) behavior in the workplace. If not for Coach Reid’s calm and collected response, this incident could have escalated into a far more unpleasant exchange.

Drawing lessons from the incident, here are three key actions that leaders can take when faced with threatening or insubordinate employees:

1. Exercise Professional Restraint and Demonstrate Leadership

The first lesson is the importance of maintaining composure and professionalism. In any situation where tensions may rise, it’s crucial for managers to exercise restraint and avoid escalating the situation further. This approach not only helps in diffusing immediate tension, but also sets a positive example for the rest of the team. It’s essential that managers not misuse their position of power; rather, as Coach Reid exemplified, demonstrating calm and decisive leadership can often de-escalate a potentially volatile situation.

2. Refer to Company Policies and Engage HR

When dealing with insubordination or an outburst by an employee, it’s important to follow established corporate protocols. Managers should consult the company’s employee handbook for procedures to handle complaints and investigations. Filing a formal complaint with Human Resources can initiate a process that is both fair and impartial. Ideally, the HR department should be properly trained to address a tense situation. This step ensures that all parties are heard, and that the incident is addressed thoroughly, respecting the rights and dignity of everyone involved, and setting an example for the rest of the company.

3. Support the Investigative Process

Once a complaint is filed, cooperating fully with the ensuing investigation is paramount. An effective investigation can uncover the root causes of the conflict, offering insights into not just what happened, but why. By supporting this process, managers can help ensure that resolutions are just, and that similar incidents can be prevented in the future. It’s also an opportunity for organizations to reinforce their commitment to a respectful and safe working environment for all employees.

Conclusion

The incident at the Super Bowl game, while unfortunate, provides valuable lessons for leaders in any field. Managing workplace conflict requires a balanced approach that prioritizes restraint, adherence to company policies, and support for the investigative process. By applying these principles, managers and supervisors can navigate complex interpersonal challenges, fostering a workplace culture that is both respectful and productive.

Recognizing principles of good leadership remains constant and essential, whether on the football field or in the office.

 
©2024 Norris McLaughlin P.A., All Rights Reserved
For more on Workplace Conflict, visit the NLR Labor & Employment section.

Between the Legal Lines — Jessica Pfisterer [PODCAST]

With big dreams of helping people, Jessica Pfisterer began her career in public interest law, though she soon realized she wasn’t going to see the change she hoped for at the pace she wanted. Where Jessica truly found her passion was in People Operations and HR, thanks to her GC at the time. In this episode of Between the Legal Lines, Jessica shares with Andrea Bricca the story of how that pivotal role shaped the future of her career and what she has learned as a human resources leader who is also a trained lawyer.

Jessica Pfisterer is an HR leader and dancer, with a background in civil rights law and social justice work. She currently heads the People team at Lively, and dances with Duniya Dance and Drum Company. She is also on the board of TurnOut, a nonprofit that supports LGBTQ+ organizations, support for LGBTQ+ organizations, ensuring they are positioned to succeed and to continue serving the community. She is a Bay Area local and spends her free time traveling and exploring the great outdoors.

Between the Legal Lines · An Interview with Jessica Pfisterer
©2022 Major, Lindsey & Africa, an Allegis Group Company. All rights reserved.

But I’m in HR – What Do You Mean I Can Go to Jail?

Wage and hour laws.  Child labor laws.  OSHA laws.  Immigration laws.  When employers do not comply with these types of employment laws, civil charges and lawsuits are not the only things that can happen.  In what may come as an unwelcome surprise to employers, and to Human Resources, in particular, these laws have criminal penalties embedded in them too.

For example, willful violations of the Fair Labor Standards Act (FLSA) – the federal wage and hour law that also contains certain child labor provisions – may be prosecuted criminally, with violators subject to potential fines of up to $10,000.  Various states also have their own wage and hour laws, and many of them include criminal sanctions.

Although the Department of Justice and administrative agencies enforce laws like the FLSA less or more vigorously, depending on who is president, a case from 2013, during the Obama administration, is instructive.  In that FLSA matter, a company and its owner, plant manager, and office manager were all convicted of various felony counts.  The facts were extreme, including that the employer had a history of FLSA violations, submitted false payment evidence to the Department of Labor during its investigation, demanded kickbacks from workers while continuing to fail to pay overtime, and kept a second set of time records hidden from investigators.  These facts resulted in criminal convictions for the company and three of its management individuals.

The Department of Justice also enforces certain immigration laws that carry potential criminal penalties for employers.  These laws are especially noteworthy in today’s atmosphere of heightened immigration enforcement.  Employers who unlawfully employ persons who are not authorized to work in the United States could be subject to criminal prosecution.  Federal and state OSHA laws also contain criminal in addition to civil penalty provisions.

We know that Human Resources professionals can sometimes have a hard time convincing other leaders in an organization to listen to their suggestions.  It can be very frustrating, for example, when HR knows that certain employment policies need to be revised or certain payment methods may not comply with legal requirements, and yet other members of the management team will not make the changes.

One way HR can help guide managers who need to make decisions about certain employment policies – and to get their attention – is to point out that not only can failure to follow certain laws result in expensive civil lawsuits; but sometimes they can also result in criminal prosecution.  Though rare, these prosecutions and convictions do happen – something clearly all HR and all managers want to avoid.

Are you likely to go to jail as an HR professional under these laws?  Not likely.  Nonetheless, HR professionals should be aware of the possibilities and be prepared to discuss them when educating management.

© 2019 Foley & Lardner LLP
For more on employment matters, see the National Law Review Labor & Employment page.

Connecticut’s Pay Equity Law Prohibits Salary History Inquiries

As of January 1, 2019, Connecticut employers are prohibited from inquiring about prospective employees’ wage or salary histories. Connecticut’s new pay equity law is intended to promote equality in pay and close the wage gap. Under the new law, employers—defined as entities having “one or more employees”—are also prohibited from using a third party to inquire about any applicant’s wage or salary history. Employers may still inquire about the components of an applicant’s compensation structure—for example, retirement benefits or stock option plans—but they may not inquire about the value of any individual component.

Nothing in the law prevents an employer from verifying salary information if a prospective employee voluntarily discloses such information. Additionally, the law does not apply where a federal or state law “specifically authorizes disclosure or verification of salary history” in the employment context.

A private right of action exists for violations of the law, and a prospective employee can potentially recover compensatory damages, attorneys’ fees and costs, and punitive damages. A two-year statute of limitations applies.

In light of this new law, Connecticut employers should revise their employment applications to remove any requests for candidates’ salary histories. Employers that have hiring policies and/or hiring scripts should revise these documents to remove any questions about salary histories. Further, employers may want to affirmatively state that it is the employer’s policy not to make such inquiries. Connecticut employers may also want to ensure that any employees involved in interviewing candidates are trained on the new law and understand that they should not be asking about salary history information. Finally, employers may want to verify that any third parties they are using to help screen candidates are aware of and in compliance with the new law.

 

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
Read more employment updates on the National Law Review’s employment law page.

More Employers Were “ICED” in Fiscal Year 2018

The U.S. Immigration and Customs Enforcement agency (ICE) recently released statistics on its worksite enforcement activities for the federal fiscal year ending on September 30, 2018. It should surprise no one that worksite enforcement designed to crack down on the employment of undocumented aliens has skyrocketed.

In FY 2018, 6,848 worksite investigations were initiated, representing a fourfold increase from the prior fiscal year. Similarly, ICE conducted 5,981 audits of employers’ Form I-9s, which is five times the number from the prior year. Criminal and worksite arrests were also way up and readers will recall that immigration law violations are one of the few areas of employment law which can result in direct criminal prosecution.

As stated by ICE, “[our] worksite enforcement strategy continues to focus on the criminal prosecution of employers who knowingly break the law, and the use of I-9 audits and civil fines to encourage compliance.”

What does this flurry of activity mean for employers? Under the Immigration Reform and Control Act of 1986, all employers must verify the identity and work eligibility of all individuals hired by completing a Form I-9 within three days of starting work. While appearing to be fairly simple on its face, many employers fail to pay attention to the details and fail to properly complete and certify that they have carefully verified the identity and work authorization of each hire. This can be especially true when hiring is done in remote locations where there are no trained management personnel to supervise the completion of the I-9.

When an employer receives a Notice of Inspection from ICE, it has three business days after which ICE will physically inspect the I-9s. Noncompliance could result in civil fines or even criminal prosecution. ICE worksite investigations are also designed to look for evidence of mistreatment of workers, human trafficking, and document fraud.

Given the reality that immigration enforcement activities are not likely to update anytime soon, employers are well-advised to take the following steps now:

  • Conduct a self-audit of all of your I-9s and if mistakes are identified take the appropriate steps to correct them. Consult the Handbook for Employers to know how the form must be completed.

  • Review and, where necessary, retrain all employees who are responsible for reviewing the documents presented by the new hire and certifying the accuracy of the form I-9.

  • Be sure you know the right way to fix errors that are identified.

  • Audit the records of any employees who are working under temporary visas. Oftentimes, employers verify work authorization at the time of hire but then fail to track expirations and renewals. What may have been legal at the time of hire may not be the case years later.

© 2018 Foley & Lardner LLP
This post was written by Mark J. Neuberger of Foley & Lardner LLP.
More immigration news at the National Law Review’s Immigration Page.

R2-Me2? How Should Employers Respond to Job Loss Caused by Robots?

There is no question that the use of robots, along with other similar technological changes in the workplace, will continue to eliminate or downgrade jobs. Indeed, it has been estimated that on average, each workplace robot eliminates six jobs. This article will examine (1) the impact such changes will have on women and (2) whether these changes can be subject to legal challenge as prohibited gender discrimination.

The gender pay gap has become a much debated and controversial topic, but this article will stay out of the fray. However, data produced by the consultancy firm Korn Ferry has concluded that women in Britain make just one percent less than men who have the same function and level at the same employer.  Therefore, some have suggested that the main problem today is not necessarily unequal pay for equal work, but rather the forces and circumstances that lead women to be forced into and stuck in lower-paid jobs at lower-paying organizations. According to The Economist, this is the true gender “pay gap,” which is a much more difficult problem to solve.

Current research suggests that, unless addressed, this gender “pay gap” will increase rather than decrease. Last month, a report to the World Economic Forum in Davos, Switzerland, predicted that “artificial intelligence, robotics and other digital developments,” and the consequent job disruption, are likely to widen rather than diminish the gender pay gap. See “Towards a Reskilling Revolution” at p. 3. Citing statistics published by the federal Bureau of Labor Statistics, the report concluded that of the 1.4 million U.S. jobs that are projected to become “disrupted” because of robotic and other technological changes between now and 2026, 57 percent will be held by women.

But there could be good news for those concerned about gender wage equality. The report argued that an increased awareness of the impending effect of these changes, along with a concerted plan by governments, employers, businesses, labor unions and employees themselves to retrain or “reskill” disrupted workers, will present displaced workers with more opportunities for jobs at higher pay levels than their current wages. In a summary of the main report, the authors predicted that reskilling programs could result in higher wages for 74 percent of all currently at-risk female workers, thereby narrowing the gender wage gap.

Although job disruption from the use of robots will disproportionately impact women, the fact that it will result from “business necessity” means that employees may have difficultymounting successful legal challenges to this practice. Instead, thoughtful employers may want to focus their energies on learning more about the scope of this looming problem and, wherever possible, create or participate in programs that will reskill impacted employees, and thereby provide them with more opportunities in expanding and higher-paid occupations.  Nor is this an unrealistic proposition as, overall, in the decade ending in 2026, the U.S. job market is projected to create 11.5 million new jobs.

 

© 2018 Foley & Lardner LLP
This post was written by Gregory W. McClune of Foley & Lardner LLP.

Handbook Wars – Common Sense Returns NLRB Overhauls Standard for Legality of Work Rules

We have noted many times over the years how the NLRB’s zeal to review employer policies, or more correctly, fragments of employer policies, for lawfulness has led to nettlesome issues that rarely, if ever, involve actual employees.  The results have been absurd and have raised an entire cottage industry of attacks on language by unions and vetting of employer policies for lawfulness.

This may be ending.  As we noted yesterday, the NLRB issued a significant decision that will have far-reaching implications for both unionized and non-unionized workplaces.  In Boeing Company, 365 NLRB No. 154 (2017), the Board established a new standard for evaluating whether facially lawful workplace rules, policies or employee handbook provisions unlawfully interfere with employees’ exercise of Section 7 rights.  In so doing, the Board placed in doubt the applicability of scores of decisions issued in the 13-years since Lutheran Heritage, 343 NLRB 646 (2004), was decided.  We previously identified this issue as a case that the NLRB would revisit once a new majority was installed.

“Reasonably Construe” Standard

For the last 14 years the Board evaluated whether an employee would “reasonably construe” the language of a work rule to prohibit the exercise of NLRA rights.  If it did, then the rule—regardless of whether it actually restricted Section 7 activity—was found unlawful.  Applying this standard, an inconsistent line of cases developed.  Take, for instance, a sampling or recent decisions concerning “civility in the workplace.”  A rule prohibiting “abusive or threatening language to anyone on Company premises” was lawful, while a rule restricting “loud, abusive or foul language” was not.  And, as noted, a policy or fragment of a policy could be found unlawful even if there was no evidence that employees read the policy or were even aware of its existence.  It was, in terms of the NLRA, a victimless crime.

Policy Considerations Behind Abandoning The Lutheran Village Standard

The new three member Board majority (Miscimarra, Kaplan and Emmanuel) decided to change this standard because employers were often held to an impossible standard of precision in drafting language in which they would need to foresee any potential impact on any Section 7 right, regardless of how remote.  An employer would have to foresee the future, which the majority characterized as requiring “perfection that literally is the enemy of the good.”  The Lutheran Heritage standard has been criticized as unworkable by many in the employer community, and by various Board members over the years.  So it is not surprising that that a new standard was on the agenda.

New Balancing Test

The Board abandoned the singularly-focused and vague “reasonably construe” standard, in favor of a new balancing test, which would consider the impact of the rule on NLRA rights and an employer’s business justification for the rule.  Going forward,  in order to provide greater clarity and certainty to all parties, the Board indicated it would categorize the results of future decisions in three ways:

  • Category 1: Lawful rules because (i) when “reasonably interpreted,” the rule does not prohibit or interfere with the exercise of NLRA rights or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of these types of rules include the no-camera requirement in the Boeing case, where the employer supported its rule with multiple business and security justifications.  The Board also found that a rule requiring employees to have “harmonious interactions and relationships” in the workplace, and other rules requiring employees to abide by basic standards of civility would be categorically lawful.
  • Category 2: Rules warranting individual scrutiny on a case-by-case basis.
  • Category 3: Unlawful rules because they would prohibit or limit NLRA-protected conduct, and the adverse impact is not outweighed by legitimate business justifications (e.g., a rule prohibiting discussion of wages or benefits with another).

The Board proceeded to use this new framework to find that Boeing’s policy restricting the use of camera-enable devices was justified in light of the employer’s security concerns.  As it does in every case in which it overrules precedent and/or sets a new standard, the Board weighed whether to apply this new test retroactively, and decided to apply the standard to all pending cases in whatever stage.

Impact of this Decision

It will be some time before the full impact of the decision will be felt as rules are evaluated under the new standard.  However, the fact Lutheran Heritage was overruled likely will inhibit unions from attacking employer policies as the forum for these sorts of claims is less receptive.

Because the Board will evaluate the purpose for the rule, employers should consider clearly articulating the reasons for a rule in the policy.

Also, employers may feel less constrained by the thicket created by the previous standard; however, the true impact of Boeing likely will be felt once the host of pending cases work their way through ALJs and the Board under this new paradigm.  Only then will employers understand how the Board’s new categories will work.  We will keep you posted…there is sure to be more to follow.

© 2017 Proskauer Rose LLP.
This post was contributed by Mark Theodore and Joshua S Fox of Proskauer Rose LLP.
For more on the NLRB go to the National Law Review’s Labor and Employment Practice group page.

Social Hosts Beware: “One More for the Road?” May Be a Bad Idea

The company was hosting its annual holiday party.  The company had arranged to hold the event that Saturday night in a hotel ballroom.  Moods were festive, especially because the company’s profits were up about 10%.  Because he enjoyed doing it and served as a freelance bartender in his spare time, one of the company’s new sales employees, Tom Collins, was helping to tend bar.

Much of the company’s success that year was attributable to the efforts of Johnny Walker, V.P. of Sales, who, for understandable reasons, was in a celebratory mood.  When he, at about 11 p.m., bellied up to the bar for a fourth round, Tom couldn’t help but notice that Johnny, normally the epitome of self-control, seemed more than a little impaired.  Tom said to Johnny, “Mr. Walker, with all due respect, don’t you think that it may be time to slow down?  In fact, given the hour, I’ll be happy to arrange a ride to take you home.”  Johnny, now irritated, replied “Tom, you make an excellent highball, but I’d be grateful if you’d mind your own business, OK?”  Tom did as he was asked and poured Walker another drink.  With that, Johnny, armed with another scotch and soda, disappeared into the crowd.

The next morning, Tom, to his shock, learned that Johnny had gotten into his Volvo to drive home and promptly collided with another driver.  The other driver, as a result, was seriously injured and remained hospitalized in a coma for about nine months.  He then died.

Candy is dandy, but liquor is quicker, so be careful out there . . .

May an employer with employees in North Carolina, in appropriate circumstances, be held liable for the malfeasance of its employees and, specifically, be held liable as a “social host” because one of its employees served alcohol to a person when the employee knew or should have known that the person was drunk and would soon be driving on public roads and might hurt or kill someone?

Absolutely.  The doctrine of “social host liability” was first declared in North Carolina about 25 years ago.  The North Carolina Supreme Court, in the 1992 case of Hart v. Ivey, ruled that the plaintiffs had stated a valid claim when they alleged that various defendants had been negligent in throwing a party at which beer was served to an 18-year-old, under circumstances in which the defendants knew or should have known that the young man was intoxicated at the time he was served, that he would drive a motor vehicle from the party, and that he was likely to injure someone.

The court wrote that it had not been able to find a North Carolina case dealing with similar facts, but concluded “that the principles of negligence established by our decisions require that we hold that the plaintiffs .  .  . have stated a claim.”  The court emphasized that it was not recognizing a new claim, but was merely applying the established elements of negligence to find that the plaintiffs stated claims recognized by law.

What had the plaintiffs claimed?  Only:

  • That “the defendants served an alcoholic beverage”;
  • To a person they knew or should have known was under the influence of alcohol; and,
  • That the defendants knew that person would shortly thereafter drive an automobile.

The court’s conclusions in Hart, if you think about them, aren’t surprising:

If proof of these allegations were offered into evidence, [then] the jury could find from such evidence that the defendants had done something a reasonable man would not do and were negligent.  The jury could also find that a man of ordinary prudence would have known that such or some similar injurious result was reasonably foreseeable from this negligent conduct.  The jury could find from this that the negligent conduct was the proximate cause of the injury to plaintiffs.

Sadly, the court later had occasion to encounter just such a claim brought by the estate of a man killed by an employee who had attended a party for a retiring supervisor at the home of an officer of the employer.  In the 1995 case of Camalier v. Jeffries, the employer sponsored the party and hired a catering company to help with food and drink service and another company to handle parking arrangements.  The catering company and a company that it hired supplied all of the bartenders at the party.

The employee downed three or four gin and tonics and then decided to leave, and was taken by van to his car.  He then drove his car into an automobile whose driver suffered serious injuries and then died of the injuries about nine months later.  Within two hours after the time of the accident, a blood sample was drawn from the employee showing that his blood-alcohol concentration was well over the legal limit.

In ruling on the case, the North Carolina Supreme Court reiterated the elements of “social-host liability” that it had declared in Hart.  In Camalier, the defendant company and one of its officers dodged liability, but only because the evidence was insufficient to show that they knew or should have known that the employee was hammered when he was served alcohol at the officer’s home.

The court observed that there was no question that the defendant employer and its officer caused alcohol to be served to the employee and knew or should have known that the employee would be driving an automobile after the party.  Thus, the first and third factors set forth in Hart were not in dispute.  But the court also found that the predicted evidence didn’t show that either the employer or the officer knew or should have known that the employee was drunk when he was being served.

The impaired employee who caused injury in Camalier had been served by a vendor hired by the employer rather than by an employee of the defendant employer.  It appears that North Carolina’s appellate courts have not yet held an employer liable as a “social host” based on the actions of an employee, but the circumstances in which a court may do so are not difficult to imagine.  Such liability can arise from an employer-hosted event at a restaurant, country club, pub, or similar establishment.  The location will not matter and a court is likely to find employer liability if there is proof that an employee, under circumstances intended to promote the interests of the employer, served alcohol to a person when the employee, or its representative, knew or should have known that the person was intoxicated and would soon be driving and that a third-party was injured as a result.

The Supreme Court of New Mexico, addressing such an issue, highlighted the principles of employers’ and employees’ liability as “social hosts” where the host purchases liquor and causes it to be served to a guest and, as a result, a third person is injured.  In the 2011 case of Delfino vs. Griffo, employees of a pharmaceutical company, in the course of their employment, entertained a physician’s employee in several restaurants.  The guest consumed considerable alcohol, became very intoxicated, departed in her car, and shortly thereafter caused a fatal accident.

The New Mexico court, discussing liability as a “social host,” observed:

Social hosting need not occur in a home; one may host in a bar or restaurant where the actual delivery of alcoholic beverages to the guests is performed by a licensed server.  Factors that are key to determining whether one is a social host in a public establishment are whether the alleged social host exercised control over the alcohol consumed by the guests; whether the alleged social host convened the gathering for a specific purpose or benefit to the alleged social host, such as promoting business good will; and whether the alleged host intended to act as ‘host’ of the event, meaning arrange for the service of and full payment for all food and beverages served to the guests.

The New Mexico court found, based on the facts of the Delfino case, that the employer was a “social host” for the drunk driver and, in such capacity, the employer could be sued and held liable.

Bring your carrier along for the ride . . .

Employers may consider purchasing general liability insurance to insure them against losses arising from the provision of alcohol by their employees to an intoxicated driver who then causes injury or death.  A typical general liability insurance policy includes a business liability provision that will pay for damages arising from causing or contributing to the intoxication of a third party, so long as the insured entity is not in the business of manufacturing, distributing, selling, or furnishing alcoholic beverages.  Employers can also buy a one-time special event policy if their current insurance doesn’t provide that kind of coverage.

Employers may also try to insulate themselves from “social host” liability by hiring professional caterers or bartenders who maintain such general liability insurance coverage, so that the employer, if it encounters a “social host” liability claim, may at least try to pass the liability to the caterer’s or bartender’s insurance carrier.

Employers should bear in mind, however, if tragedy occurs and litigation ensues, that it is the employer—not the insurance company—that will be sued, and that having insurance does not mean that the employer is immunized from liability.  It means only that the insurance carrier may have to pay if the employer is found liable (or, more likely, if the employer convinces the carrier to pay a pre-trial settlement to enable the employer to avoid an embarrassing lawsuit).  Moreover, a policy’s limits of liability are not always high enough to cover all claims.  The amount of liability can exceed the limits, in which case the employer, if held liable as a “social host,” can, to one degree or another, be on its own to pay a settlement or judgment.

Conclusion

One useful tip for employers who want to celebrate with their employees and host social events at which alcohol is served is to limit the access to alcohol, such as by setting limits on how much or how long alcohol is served at the event.  You can’t mandate good judgment, but you can decide how much temptation you’re willing to pour.

 

© 2017 Ward and Smith, P.A..
This post was written by Grant B. Osborne of Ward and Smith, P.A..
Read more Labor and Employment News on the National Law Review’s Labor and Employment Practice Group page.

Insurance Coverage in the Post-Weinstein Era

With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider.

Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent, sexual misconduct allegations, causing financial and reputational harm to the organization, and the critical role insurance can play in protecting companies and their executives against such claims.While reports indicate that one or more of the settlements is being funded entirely from insurance proceeds, it is unclear whether the settlement proceeds will be coming from D&O insurance or EPLI insurance, or both. D&O insurance is intended to cover corporate mismanagement claims but typically contains some form of employment practices liability exclusion. EPL insurance is intended to cover employment practices liability claims but may not cover management liability claims arising from allegations of sexual harassment. This creates a potential gap in coverage that could have serious consequences.

D&O and EPLI policies are not standard and contain different wording and exclusions.

WHAT TO DO?

In this environment, it behooves corporate management of every company to understand the scope of insurance coverage for sexual harassment and management liability claims and to ensure that appropriate coverage is in place without coverage gaps.

Here is what policyholders should do: comprehensively review all relevant corporate insurance programs to determine what coverage is in place for sexual harassment claims of any variety, and for claims arising from corporate actions that might be necessary in the wake of an issue or claim, such as claims of wrongful termination and defamation.

Policies to be reviewed should include CGL, EPL, D&O and E&O.

Determine whether coverage gaps exist and if so, consider enhancing coverage to ensure proper protection.

Understand what needs to happen in terms of notice to insurers in the event of a claim or knowledge of circumstances that might lead to assertion of a claim.

And be aware of the potential for coverage before agreeing to any payments or settlements that might preclude or limit coverage.

© 2017 Proskauer Rose LLP.
This post was written by Seth B Schafler of Proskauer Rose LLP.
Learn more at the Insurance Law Page on the National Law Review.

Oregon Expands Effort to Achieve Equal Pay

This month, Oregon joined a number of other states, including California, Massachusetts, Maryland, and New York by strengthening existing equal pay laws. The new law, the Oregon Equal Pay Act of 2017 (“OEPA”), has three (3) central components:

  • Applying equal pay protections to disparities based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age;
  • Curbing an employer’s ability to obtain or rely upon an applicant’s prior compensation to determine his or her current compensation; and
  • Changing and substantially limiting the defenses available to employers sued for alleged equal pay violations.

The bulk of the OEPA’s substantive provisions is effective January 1, 2019.

Broadening Scope of Equal Pay Protections

The OEPA prohibits disparities in “wages or other compensation” between employees performing work of a “comparable character” based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. Work is of a “comparable character” if it requires “substantially similar knowledge, skill, effort, responsibility and working conditions [.]” This is a substantial expansion of prior law, which only applied to sex-based pay disparities.

The OEPA also limits an employer’s ability to rely upon prior compensation by:

  • Making it unlawful to seek information about an applicant’s or employee’s compensation history; and
  • Prohibiting employers from screening job applicants or determining compensation based on a prospective employee’s current or past compensation.

However, these pay history restrictions do not apply “during a transfer, move or hire of [an] employee to a new position with the same employer.”

Limited Defenses to Equal Pay Claims

Under prior Oregon law, an employer could defend a sex-based pay disparity by demonstrating that it was based on (a) a seniority or merit system, or (b) good faith factors other than sex.

However, under the OEPA an employer can only pay differential wages for work of a comparable character if the disparity is attributable to “a bona fide factor that is related to the position in question and is based on” one or more of the following:

  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production;
  • Workplace locations;
  • Travel, if travel is necessary and regular for the employee;
  • Education;
  • Training; or
  • Experience.

The employer must also demonstrate that the factor(s) creating the pay disparity account for the entirety of the differential.

Potential Limits on Remedies

In addition to back wages, employees bringing claims under the OEPA may also seek compensatory and punitive damages. However, the law limits remedies against employers that take specified steps to achieve pay equality.

Under the OEPA, a court “shall” disallow an award of compensatory or punitive damages if the employer shows that within three (3) years of the employee bringing the OEPA claim, the employer conducted a good faith equal pay analysis that: (a) was “[r]easonable in detail and scope in light of the size of the employer”; (b) related to the protected class at issue in the action (e.g., sex, age, race, etc.); and (c) “[e]liminated the wage differentials for the plaintiff and [] made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.”

What This Means for Employers

Because the bulk of the OEPA changes are not yet effective, now is the time for employers to commence their compliance efforts including:

  • Reviewing job applications to ensure they do not seek prior compensation information;
  • Auditing compensation data to identify protected class-based disparities, if any. If this analysis reveals disparities, employers can avoid or limit future claims and damages by eliminating any identified differentials;
  • Training managers and human resources professionals regarding the permissible considerations when making compensation decisions, and how to document such decisions;
  • Revising employee job descriptions to ensure they reflect the substantive distinctions between positions – i.e., the fact that jobs are not of a “comparable character” is reflected in job descriptions; and
  • Revising employee reviews on which compensation decisions are based to ensure they reflect the considerations that are permissible grounds for a pay disparity under OEPA.
This post was written by Brian K. Morris of Polsinelli PC.