What's the first thing that comes to mind when I say retaliation?
If you're like most governance, risk management, and compliance (GRC) managers—and like most people, period—your brain probably churned out “whistleblower,” “fired,” or maybe even “corporate scandal.” If so, you would fail this word association quiz (and you would be in good company).
It turns out that retaliation is a much broader activity than most people understand. Legal actions related to retaliation are more pervasive than many managers and executives realize. The number of retaliation claims filed against U.S. companies outnumbered race discrimination charges filed with the U.S. Equal Employment Opportunity Commission (EEOC) for the first time in 2010, according to the Society for Human Resource Management (SHRM) analysis of EEOC records. In 2011, more than one-third (37,334) of the nearly 100,000 workplace discrimination charges filed with the EEOC consisted of retaliation claims.
At first glance, this surge in retaliation claims appears shocking. After all, many companies have invested significant time, money, effort, and intelligence in their governance, risk, and compliance (GRC) capabilities in recent years. Yet, there are real reasons behind the increase, including a shift in public perception to being supportive of whistleblowers and retaliation claimants; enhanced opportunities for reporting; and a widespread misunderstanding by managers of the often subtle behaviors that can spark a retaliation claim.
A closer inspection of the recent rise in retaliation claims and the ways companies respond to these and other governance and compliance risks suggests that something is missing in many GRC efforts.
Starting With a Broader Definition
New laws and regulations, including the Dodd-Frank Act, have strengthened anti-retaliation enforcement capabilities. One of the most influential legal drivers behind the retaliation rise is the Supreme Court's 2006 decision in Burlington Northern & Santa Fe Railway Co. vs. White, in which the Court lowered the standard for the harm (now known as an “adverse action”) that a retaliation claimant must prove. A 2009 Supreme Court ruling, in Crawford vs. Metropolitan Government of Nashville and Davidson County, Tenn., also loosened a standard by effectively increasing the number of employees who can file retaliation claims.
It is crucial for GRC professionals to recognize that under these standards retaliatory actions may manifest in much more subtle behaviors than firing someone or denying them a promotion. Repeatedly excluding an employee from projects, meetings, or even lunches may qualify as retaliation. Comments construed as subtle forms of punishments (e.g., “You're just not a team player”) also may be retaliation.
What's more, an employee does not need to be directly involved in a complaint to be the subject of retaliation. An employee legally compelled to serve as a witness in a discrimination case, for example, could be subjected to retaliation after testifying.
Prevention via Principled Performance
So, what's missing from GRC efforts? I believe the answer is “Principled Performance.” The phrase describes a state of operating that enables companies to achieve their performance objectives while addressing uncertainty and acting with integrity. An effective GRC capability enables Principled Performance.
The most effective way to prevent retaliation is not via a reactive approach to specific governance and compliance risks but through a holistic and integrated GRC approach that cultivates a speak-up culture. Speak-up cultures tend to nip potential initial complaints, as well as follow-up retaliation claims, in the bud, because employees discuss and escalate potential issues before they bloom into thorny problems. This approach does “double-duty” by reducing the number of initial complaints as well as preventing and/or reducing the number of retaliation claims that subsequently arise.
Integrated GRC takes time and care to nurture and promote. It is systematically developed through specific steps, practices, and processes that establish transparency, encourage communication and understanding, and enable identification of risks and appropriate controls and responses to incidents and the potential for issues, sometimes even before they arise. Through an integrated approach, the compliance issues and risks related to retaliation, and the underlying reports from which retaliation may arise, are better managed and addressed.
As the rise in retaliation claims indicates, there are 37,334 compelling reasons to take these steps. Doing so not only helps prevent retaliation; it serves as a stepping stone to the key benefit associated with GRC and bottom-line success: Principled Performance. So now let's play the association game again. When I say “anti-retaliation efforts” what do you think of? Principled Performance is what should come to mind.
Addressing the Rise in Retaliation Claims: An OCEG Roundtable
Switzer: Over the past several years there has been a tremendous increase in retaliation lawsuits. Why is that?
Franklin: The United States Supreme Court and many lower courts have loosened the standard for retaliation claims, adopting a very broad standard for what constitutes adverse action, including even conduct that is not employment related. Thus, it is a lot easier to move forward on a retaliation claim today that it was 10 years ago.
Biskup: Also, the proliferation of whistleblower statutes and the media publicity around certain high-profile cases has likely played a role in the uptick of lawsuits. The public has seen numerous whistleblowers come forward, and oftentimes the media portrays the informers as people who undertook an honorable, if not heroic, action by voicing concerns. This has served to help erase some of the fear or stigma that historically may have been associated with whistleblowing.
Knezevich: The relative instability within the economy no doubt is partially to blame for an increase in retaliation claims, as alleged violators are more in fear of losing their jobs, but there are more underlying factors. Hotline and incident reporting programs have become much more robust and well trusted by the workforce. Plus, new legislation has strengthened anti-retaliation measures as well as enforcement capabilities. And employees are much savvier than ever before. They know their rights, and they are willing to speak up.
Switzer: Retaliation claims can arise after an employee becomes a whistleblower when he or she thinks the company is acting illegally. What should be done to encourage reporting of those initial allegations internally instead?
Biskup: It starts with an expectation—communicated from the top (i.e. the CEO)—that employees have an ethical duty to report known or suspected violations of law or company policy. The high-level communication should be repeated often enough through various communication mechanisms so employees understand and believe that the expectation is deeply embedded in the company's values and not a “flavor of the month” initiative. It then should be reinforced via parallel messaging from the chief compliance officer, and other senior management, and followed up on with further supporting messages from line management.
Knezevich: Along with training, good policies, and a reporting mechanism that an employee knows he or she can trust, your best advocate for a “speak up” culture rests with leadership. Executives and middle managers must take a no-tolerance stand on retaliation and communicate that out to the entire workforce. You have to take steps to keep the whistleblower or internal reporter out of harm's way and you must communicate this to the organization. Engage your workforce to simply not tolerate retaliation against someone willing to try to make a positive difference. Your leaders must be the ones to carry that torch.
Franklin: I agree with my colleagues, that it is critical that the tone of a “speak up” culture should start at the top and be enforced throughout the organization. Speaking up takes courage, and employers should strive to help employees feel that they are doing the right thing and that they will not be punished or retaliated against in any way for reporting unethical conduct. In addition to having comprehensive up-to-date reporting policies and appropriate investigation protocols, the message that it is the employee's right and duty to speak up must be reinforced. Employers should also train all employees regarding the reporting mechanisms, and the importance and merits of utilizing them to report unlawful and unethical conduct. Let the employees know that retaliation will not be tolerated. Executives and managers and supervisors need to “walk the talk” here or the message doesn't get through.
Switzer: What is the single biggest mistake that employers make in handling reports of alleged misconduct from employees?
OCEG ROUNDTABLE PANELISTS
Carole Switzer,Moderator
President,
OCEG
Robert Biskup,
Director,
Forensic and Dispute Services,
Deloitte
Katherine Cooper Franklin,
Shareholder,
Littler
Cindy Knezevich,
VP of Marketing
Operations,
The Network
Source: OCEG.
Biskup: The single biggest mistake is not acting on the report with appropriate urgency and thoroughness. Oftentimes companies are slow to react to reports, either because of capacity constraints, or because they underestimate or misapprehend the potential implications or seriousness of the allegation, which frequently becomes apparent only after the initial triage stage. If that stage is delayed, or not acted upon with sufficient thoroughness, the company is vulnerable to being blindsided, and open to criticism for an inadequately responsive issues management process.
Knezevich: As we have seen time and time again in cases that appear in the nightly news, companies do not have an adequate checks and balances system built into their compliance programs. Too often, executives come to know about wrongdoing only to sweep it under the rug. A similar mistake occurs when companies simply don't take the incident or issue seriously and don't follow through or apply a due diligence approach to escalation. The advent of corrective and preventative action measures and activities that can be tied directly into the incident tracking system will close the loop on these types of issues and allow companies, at the very least, to record every report, regardless of perceived severity.
Franklin: Improper investigations. Investigations need to be prompt, meaning immediate, and thorough, and seek the truth and all the facts, even the bad ones. They must be conducted by an objective, unbiased investigator. Also it is critical to wait until the investigation is concluded before taking action or not taking action. Often employers jump the gun and draw conclusions before discovering all the facts.
Switzer: What are some of the circumstances in which retaliation might be a risk when the employee isn't even reporting about misconduct?
Knezevich: By no means does retaliation have to follow an incident or a report of something like discrimination. The alleged wrongdoers could be retaliating not against a specific charge, but more as an act of revenge or simply because of the potential or assumption of a report being filed, something that can be described as “premeditated retaliation.”
Franklin: Employees are protected from retaliation when they oppose unlawful practices or participate in a protected activity. If an employee makes a charge, testifies, assists, or participates in an investigation or proceeding or hearing, he or she is also protected from retaliation. If an employee rebuffs a supervisor's sexual advances, he or she is protected. So yes, even in circumstances where an employee isn't the reporter, there are many circumstances that could lead to a protection and thus a risk of retaliation.
Switzer: Kathy, I've heard it is harder to defend against a retaliation claim than a discrimination claim? As the defense lawyer on the panel, can you tell us why that is and what employers do wrong to make that the case?
Franklin: Because retaliation cases often involve a critical factual dispute, they may be more likely than discrimination claims to survive summary judgment and get to a jury. This not only increases the likelihood that the plaintiff will prevail, but also can drive up the settlement in a case. Plaintiffs may also be more likely to prevail in retaliation claims because, in some cases, courts impose a presumption that adverse actions occurring within close temporal proximity to protected activity are causally related to that activity. This can be a difficult presumption for employers to overcome in cases where employment decisions have not received sufficient scrutiny or employee performance has not been adequately documented. Further, where a member of management feels that it is appropriate to take some legitimate adverse action against an employee who has recently engaged in protected activity, those decisions should be flagged for additional scrutiny. Also it is critical, that employers keep effective documentation of employee performance so that the employer can prove its case in defending a retaliation claim where, in fact, an adverse action did not occur or it was warranted by poor performance.
Switzer: In what ways can an issue management system help to prevent retaliation?
Knezevich: A robust, integrated incident management system will allow investigators and compliance teams to see much more deeply into the cause and effect of the issues. Case management systems must have the capabilities of generating corrective action plans that tie together with the incident report, training, policies, and the resolution phases of an issue. When these systems are integrated together, leaders gain a much higher degree of visibility into their compliance data, so that they can see the whole forest and not just one or two trees. If an alleged wrongdoer knows that an incident has been reported and believes the incident tracking system to be thorough and foolproof, there is much less a chance of that person retaliating against his or her accuser.
Biskup: It is important for companies to have a means to keep track of employee whistleblowers. Managers and HR personnel should have this information to confirm that former whistleblowers are not subject to work conditions over the course of their career that could be argued to constitute a form of retaliation. A case management system can help maintain a reliable corporate memory of whistleblower experience and identities.
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