What Companies Are Getting Sued Over!

Thanks to Jon Hyman over at the Ohio Employer's Law Blog who wrote the other day on Do you know? Employment Litigation Expected to increase in 2010. It was an eye opener. I clicked through from his blog to the Fulbright & Jaworski Fifth Annual Litigation Trends Survey and Highlights and read through the employment law section. Here is some of the information I gleaned from that report, but I would recommend you look at Hyman's analysis and also the actual report itself.

The report deals with multi-plantiff cases (aka class-action suits?) and here are some of the results (Note: I am only report results from the U.S., but there are results from the U.K. as well):

• In the U.S. largest increase in multi-plantiff cases where in FLSA wage & hour (19%), discrimination (14%), and Americans With Disabilities Act (10%).
• Increases in FLSA wage & hour cases were highest in California, the South and the Midwest.
• Education and retail had the highest increase in wage & hour cases.
• Discrimination increases where highest in education, financial services and retail.
• ERISA cases were highest in the Midwest and retail and engineering/construction sectors.
• Age discrimination cases rose the highest in education, financial services, retail, and technology/communication.
• Privacy cases were most common in California, but were generally a smaller percent of the overall cases.
• For small companies discrimination was the biggest issue followed by wage & hour. For big companies the reverse was true.

The costs associated with dealing with these cases, excluding settlements often exceed $50,000 per case and almost a quarter of the time exceed $100,000. For a small company that can be devestating. The areas that cost the most to deal with are race, sex and wage & hour cases.

What are we to conclude from these facts and figures? Well the overall conclusion of the report is that companies are going to be spending more on litigation in 2010. Other conclusions that I reached are:

• Education is having some difficulty. That arena made it on just about every list. Anyone have a reason for this? Suggest some.
• Small businesses probably need to do alot more training and education to both supervisors and employees, with race and sex discrimination still being the big expensive issues.
• There is still alot of misunderstanding of the Fair Labor Standards Act, which has only been around since 1938. My experience has been that many companies unknowingly and knowingly violated the FLSA.
• The recession is probably driving alot of this litigation. As people are let go and then have difficulty finding work they start grasping at straws to provide income. One way to do that is to sue your former employer. All the TV ad lawyers will tell you that.

How can you avoid some of this litigation increase? Three things pop to my mind.

1. Understand the laws, train supervisors on the laws, train HR on the laws and abide by the laws. (I can hear all the bitching and moaning about compliance now.)
2. Document that training, document your decisions, especially your compensation decisions (Ledbetter requires it) and document your actions with employees.
3. Treat people with respect and dignity, even when you are firing them for gross misconduct. People are more likely to sue you when they feel like they have been mistreated.

So there you go. As Jon concluded in his blog post about this topic "What does all this data mean for your business? Your legal budgets will likely increase next year. The question you need to answer is whether you want those funds to pay to defend lawsuits, or to proactively audit your internal personnel and employment practices to limit your litigation costs?" I vote that you be proactive! And of course I know a good consultant that would be more than happy to help you. LOL. 

ISM Number Two: SexISM

Sexism is the second part of my series on ISM's in Human Resources in the United States. According to Wikipedia "Sexism, a term coined in the mid-20th century,[1] refers to the belief or attitude that one gender or sex is inferior to, less competent, or less valuable than the other."   (Click here for a great discussion of the totality of the meaning of the word SEXISM.) In the US the term sexism is generally taken to mean men see themselves as superior to women, exhibiting a sexist or chauvinistic attitude toward women and their place in society. Though this is just one interpretation of the term it has been generally been taken to mean that women have had a history of being discriminated against in the workplace. However, the 20th century saw a number of laws passed that moved to lessen or eliminate the discrimination.

One of the early laws to do so was establishing that women had the right to vote. The movement to establish this right was called Women's Suffrage and more information can be found HERE. Although this was not really a workplace right it did set the standard for later movement.

One major, and early law regarding the workplace, was an amendment to the Fair Labor Standards Act in the Equal Pay Act of 1963. This law was passed to address the issue of women making only $0.58 for every $1.00 that men were making. The law requires that men and women doing the same work that requires substantially equal skill, effort, and responsibility, and is performed under similar working conditions within the same establishment, receive the same pay. There are exceptions for seniority, merit, quantity or quality of production, and any other factor other than sex (gender.) This law required of HR departments to focus on the work done, not titles, and to insure that the same rate of pay was paid if the jobs met the standards were met.

Title VII of the Civil Rights Act of 1964 was the next law to deal with sexism in the workplace as it did with racism. Originally sex (gender) was not one of the protected catagories in the law. Sex was inserted as an attempt to defeat the law. In the early 1960's the make up of Congress was mostly males, so the opponents of Civil Rights attempted to defeat the law by sticking gender in the law. Well, as we well know it did not work! Sex discrimination became illegal, as did sexual harassment, and today all HR departments need to be aware of situations in which discrimination and harrassment occurred or could occur and take corrective action. All good HR people know this.

The next step in dealing with sexism in the workplace was the Pregnancy Discrimination Act of 1977, an amendment to Title VII. This made it illegal to discriminate against pregnant women in all terms and matters of employment. Even prohibiting employers from barring women from doing high risk jobs that could endanger the development of the fetus. Employers are required to point out the dangers but cannot bar a woman from performing that job if she is qualified. Many companies still struggle with this issue. Even women managers have difficulty with this. I have encountered female managers who do not want to hire a candidate who is pregnant knowing that they run the risk of productivity issues or the possibility of loss of the employee after birth, just as I have encountered male managers feeling the same way. I would be interested to know if any of you have encountered a similar dilemma. How did you deal with it?

Since these three big laws several others have been passed that deal with the issue of sexism. The Family and Medical Leave Act to an extent touches sex discrimination by providing protection to allow for the birth of a child, a benefit few men initially used, and certainly not to the extent the female employee giving birth is likely to have done. The most recent law passed that deal with sexism is the Lily Ledbetter Fair Pay Act, passed earlier in 2009. It goes back to the pay issue, not as a revision of the FLSA, but as a revision of Title VII. It changed the interpretation of when an act of pay discrimination can be reported. It has major implications for recordkeeping, how pay decisions are documented and how long a company is liable for its actions. The Ohio Employer Law blog has a very good discussion of these implications. The Compensation Cafe also has a very good discussion.

Coming down the pike is proposed legislation called the Paycheck Fairness Act. I posted earlier about it here and here. It brings back the very nasty issue of comparable worth, a concept that was rejected many years ago as unworkable. It has not yet been passed, and may not in the current legislative year, but it is definately on the agenda for the current administration. So educate yourself.

All of this pay legislation, both passed and proposed, is based upon the concept of discrimination in pay based upon sex (gender.) Statistics show that currently women make $0.75 for every $1.00 that men make. Ann Bares at Compensation Force presents research that may cast a different light on this subject. This research shows that compensation differences are not as simple as JUST sex discrimination. You can read the research and make your own decisions.

As a close to this, already too long, post I will just say that sexism is not a simple subject. Sexual harassment is a two way street. Reverse discrimination, where women receive preferential treatment, exists in many forms. Fathers in divorce situations are frequently not given the same rights as mothers, even in situations where it is evident the father would be the better care-giver and provider. Society allows Women only events, groups and gyms yet protest loudly against men only groups. Examples include: Silicon Valley Women In Human Resources, Executive Women in Chamber of Commerce groups, women only workout gyms, etc. I can only imagine the outrage that would be expressed by Silicon Valley Men in Human Resources. Yes I understand the issues of trying to overcome the past, but to my way of thinking discrimination is discrimination.

Will sexism go away? Nope, no way. It is even less likely to go away than racism. Eventually everyone could be the same racial mix, but there is no possibility for us to be the same sex. So it is something we will have to learn to deal with as a society. But as a workplace we have the responsibilty to minimize it as much as possible.

Discuss your trials and tribulations of dealing with sexism in the workplace by leaving a comment here.

Next week: AGEISM

Let Me Introduce a New Blog on Compensation

An associate of mine has joined the blogsphere. Phil Blount and his associate Barbara Mackintosh are the main players in Phillip Blount & Associates, a compensation and human resources consulting firm located in Atlanta. Their new blog leads off with an explanation of the Lily Ledbetter Fair Pay Act. It is a great explanation and offers a pay-for-performance solution to dealing with the requirements of the act. So give them a visit and add them to your list of excellent comp blogs, right along side Ann Bares' Compensation Force.

Ledbetter: The Perpetual Paperwork Act

On Thursday the 19th of March I attended a good seminar at at great venue. The seminar was hosted by the lawfirm of Drew Eckl & Farnham and was held at the Georgia Aquarium in Atlanta. One of the sessions was lead by a long time aquaintence, Joe Chancey. The format for this session was different any other session I have attended. Joe and his fellow attorneys used a scenario presentation that brought home the point they were trying to cover. The scenario that really caught my eye was the following:

• Ten years ago, my supervisor game me a bad review because I had complained about him sexually harassing me. I received no raise that year, as a result. He was fired shortly after that, and I've gotten good raises since then, but I don't think I've ever caught up. Can I do anything to recover the difference?

How do you answer this? What do you think? Well prior to the Lily Ledbetter Act the answer would have been "no." The statute of limitations for reporting the act of discrimination, 180 days, would have long been passed. But now, with the passage of the Ledbetter Fair Pay Act the answer would be different. As Joe and his collegues responded "Every new paycheck tainted by the discrimination is a new violation and restarts the statute of limitations clock." Thus our employee in the above scenario would now be able to go claim sex and pay discrimination and recover some of the money she feels she had missed out on. I say some, because the law only allows retroactive claims back to May 28, 2007.

To make a further point, if this woman had already retired, and was receiving a pension check based upon the amount of her income, then potentially she may still have a claim, since each pension check is a repeat of the act of discrimination and thus resets the statute of limitations clock.

What does this mean for HR? You:

• Must make sure that pay and promotional decisions are documented and are business related, including the business justification for having made that decision.


• May not be able to purge paperwork files for much longer periods of time. If you have someone receiving wage or pension payments in any way shape or form you must retain that paperwork in case someone decides to file a claim. Thus, my title of The Perpetual Paperwork Act


• You need to review any possible such situation you may currently have and see what paperwork or justification you have in the file.

So get to it. Get that work done now before someone files against you. Besides, we have more laws coming later in the year and if you don't do this now you may not have the time.

Merit Pay Going the Way of the Dinosaur: Fallout From Ledbetter

A SHRM alert I received today had this quote in it: "Camille Olson, an attorney at Seyfarth Shaw in Chicago, said that some HR executives have wanted to revisit their companies’ entire pay systems as a result of the new law. Here’s why: An annual pay increase based on merit has a life under the new law until the employee no longer receives a paycheck, she explained." The article went on to discuss alternative methods of paying people as a way to people because of the passage of the Ledbetter Fair Pay Act. Included in these was " Employers might instead adopt policies awarding pay based on objective factors such as job title and years of service, she noted. Employers would pay employees a certain amount, and everyone would get the same percentage increase. " This will certainly eliminate individual merit increases.

An alternative suggestion was “A lot of HR executives are asking me if they should move from performance-related increases to lump-sum payments” so that pay won’t have a continuing effect, she remarked. The merit portion of this compensation scheme would result in bonus payments but not increases in base salaries." This suggestion certainly keeps merit in the pay system, but will require a large attitude change in how compensation is seen, by both employers and employees. Who knows it may open the door to putting everyone on a system of having a significant percentage of compensation "at-risk."

Either way, it appears that merit increases of base wages will be going the way of the dinosaur. What do you think?