New HR Challenges in the
Dynamic Environment of
Legal Compliance
By Teri J. Elkins
Regulatory Issues


Legal compliance in HR has increased
in significance, complexity and
breadth over the last 50 years
Failing to comply with business
regulations can have significant
negative outcomes for the
organization
Topics



Employment discrimination
Corporate reform
Alternative dispute resolution
Sexual Harassment

This section looks at recent rulings
related to an employer’s liability for
hostile work environment
harassment and provides some
guidelines on how organizations can
protect themselves in such cases
Vicarious Liability Defense

An employer is liable for hostile work
environment sexual harassment
committed by nonsupervisory
employees when the employer knew
or should have known about the
harassment and failed to take
prompt remedial action (29 C.F.R. §
1604.11(d))
Defense for the Company


The employer exercised reasonable
care to prevent and correct promptly
any sexually harassing behavior
The plaintiff employee unreasonably
failed to take advantage of any
preventive or corrective opportunities
provided by the employer or to avoid
harm
Exception to the Defense

No affirmative defense is available
when the supervisor's harassment
culminates in a tangible employment
action, such as discharge, demotion,
or undesirable reassignment.”
(Faragher v. City of Boca Raton, at
2292-2293, 1998; Burlington
Industries, Inc. v. Ellerth, at 2270,
1998)
Policy Guideline


Guideline 1: Write, communicate,
and implement comprehensive antiharassment policies
Employers may be liable for
harassment if employees are
unaware that anti-harassment
policies exist
Training Guideline


Guideline 2: Provide training to all
employees regarding the
organization’s anti-harassment
policies and complaint procedures
All employees should receive periodic
training regarding an organization’s
anti-harassment policies and
complaint procedures
Training Content

All employees should be informed
about specific prohibited behaviors,
how to report complaints of
harassment, and the company’s
complaint procedures
Training Content Continued

Managers should also be instructed
on how to monitor for sexual
harassment, and how to handle
complaints, documentation,
performance evaluations, counseling,
and the company’s prohibition
against retaliation
Investigative Guideline


Guideline 3: Conduct thorough
investigations of harassment
complaints and take appropriate
corrective actions
Failing to conduct proper
investigations can result in company
liability for compensatory as well as
punitive damages
How to Investigate


The investigator should interview the
complainant, the alleged harasser,
and any relevant third parties
Credibility should be determined
based upon plausibility of the
accounts, demeanor, motives to lie,
corroboration, and past records
Investigator Actions


The investigator should determine
whether sexual harassment
occurred, inform the parties of the
decision, and take immediate
appropriate corrective action
This may include a written/oral
reprimand, demotion, decrease in
salary, suspension, termination,
training, and monitoring
Age Discrimination

This section looks at recent rulings
related to an employer’s liability for
disparate impact claims of age
discrimination and provides some
guidelines on how organizations can
protect themselves in such cases
Disparate Impact Claims


U.S. employers cannot discriminate
against individuals 40 and older
because of their age
Suit can be brought against a
company that discriminates
unintentionally through neutral
policies
Age Discrimination Guidelines


Guideline 4: Review HR policies and
practices for disparate impact based
upon age
Evaluate benefit plans, layoffs,
retirement/pension plans,
compensation systems,
restructuring, and hiring and
promotion policies
Age Discrimination Guidelines
Continued

Guideline 5: Identify and document
reasonable factors other than age for
problematic policies
Alternative Dispute Resolution

This section looks at recent rulings
related to the legality of using
mandatory arbitration agreements
and provides some guidelines on how
organizations can use such
agreements to their benefit
Arbitration

Arbitration is less expensive than
most litigation and it can be a much
faster mechanism for resolving
disputes than the trial process
Mandatory Arbitration Agreements

Overall, federal statutory law and
court decisions in the United States
have been favorable toward
mandatory arbitration clauses in
which, as a condition of employment,
employees and applicants agree to
arbitrate claims against employers
and waive their right to litigation
Arbitration Guidelines
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
Guideline 6: Follow contract law
principles when executing a
mandatory arbitration agreement
Guideline 7: Establish terms and
conditions in mandatory arbitration
agreements that ensure procedural
and substantive fairness
Corporate Reform


Management is responsible for
establishing and maintaining an
adequate internal control structure
and procedures for financial
reporting
Assessing the effectiveness of the
internal control structure and
financial reporting procedures
Reform Guidelines
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
Guideline 8: Work with the
company’s finance department to
comply with financial controls
requirements
HR should work closely with finance
to develop documentation that will
be will be requested by auditors
Reform Guidelines Continued


Guideline 9: Write, communicate,
and implement a comprehensive
code of ethics
Codes should describe specific
prohibited behaviors, create
confidential reporting mechanisms,
identify investigation procedures,
and protect whistleblowers
Reform Guidelines Continued


Guideline 10: Establish procedures
for reporting and investigating
complaints of Sarbanes-Oxley Act
violations
Establish confidential complaint
mechanisms such as hotlines,
helplines, and web sites to a wide
range of stakeholders
Reform Guidelines Continued


Guideline 11: Review and monitor
compensation and benefits policies
for compliance
HR should conduct a thorough review
and stop illegal practices
Concluding Guideline

Guideline 12: Utilize the outreach
and training functions of
administrative agencies to monitor
changes in the legal environment