Unlawful Harassment Remains a Major Compliance High Risk Area

A major high-risk area that may result in serious liability for organizations is workplace discrimination and harassment. Although this area may not rank high on the list of concerns for Compliance Officers focused on health care regulatory matters and enforcement concerns, it is an issue that warrants attention. Under the OIG compliance guidance, all programs with high risks should be subject to ongoing monitoring and auditing. Human Resources (HR) is a program, and therefore should be included when considering regulatory and legal risks. In fact, a recent article in Market Watch reported that allegations of misconduct involving employee harassment have remained almost constant since the 1990s, with about 13,000 cases filed with the EEOC last year. This statistic was in spite of advances in workplace education and the laws governing behavior in the workplace. When factoring in cases brought to state counterparts to the EEOC, the numbers exceed 100,000 annually.

Many other complaints received by HR never go so far as to be reported to outside authorities. It is estimated that one out of every four employees has admitted to experiencing unfairness at work. Even more revealing is that two thirds of employees are not aware of organizational policies concerning harassment and discrimination. It is difficult to determine how many and to what degree organizations pay to settle harassment and discrimination cases, as a very large number are settled internally without Federal or state agencies involved. However, a fair estimate of annual costs is about half a billion dollars.

In understanding the costs of harassment lawsuits, it is important to consider court costs, punitive damages, compensatory damages (pain and suffering), lost wages and benefits (back pay), reinstatement (front pay), plaintiff’s attorney fees, expert witness fees, among others. Certain costs are difficult to calculate in a work environment, such as decrease in productivity, attendance problems, turnover costs, as well as intangible costs related to reputation.

In a series of unlawful sexual harassment cases, the Supreme Court has set forth the principle that no employer can mount an affirmative defense to an allegation of unlawful harassment without meeting three standards: (1) zero tolerance policies and procedures are in place; (2) all employees and managers are trained on these policies; and (3) the organization has taken steps to identify emerging issues and not merely wait until a complaint takes place. On this last point, examples of action steps by management include screening hotline calls for any indications of emerging issues, conducting exit interviews and asking about employee work environment issues, and using training as a means to open discussion of potential problems. Harassment training focused only on avoiding legal liability is not likely to be effective. According to an EEOC report, behavior change is essential in order to have a successful harassment prevention training program. Specifically, workplace civility training and bystander intervention training should be part of the harassment prevention curriculum.

Ashley Felder, SHRM-CP, a HR compliance consultant, explained that to meet the challenge of this high-risk area and to avoid complaints, HR must implement a variety of compliance policies and train everyone on them. This is familiar territory for Compliance Officers, who must see to the same with their risk areas. However, federal and state governments have established special standards for HR-related laws, regulations, policies, and training. It is also critical to respond promptly to allegations in cases of unlawful sexual harassment and discrimination, to evidence the organization’s commitment to the rule of law and for the protection of its employees. Felder offers the following HR tips and suggestions.

Tips for Addressing HR Risks

1. Implement well-defined, strong harassment prevention and anti-retaliation policies.
2. Create an ongoing education and training program for employees and managers on policies.
3. Include harassment prevention and anti-retaliation in the Code of Conduct and employee handbooks.
4. Train employees and managers to recognize inappropriate conduct.
5. Require employees to acknowledge that they are aware and understand company policy.
6. Conduct ongoing monitoring and auditing of policies and procedures governing this area.
7. Promptly investigate all complaints, using only qualified investigators.
8. Fully debrief complainants.
9. Interview all witnesses.
10. Interview alleged harassers.
11. Create a file that includes all relevant information for an investigation.
12. Provide decision-making officials with a complete report.
13. Give decision-making officials the responsibility to determine whether allegations have been substantiated.

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Strategic Management Services has decades of experience assessing and monitoring compliance programs. If you have questions about how to effectively address HR risks, contact us online or give us a call at (703) 683-9600 to speak to an expert.