Proactive Lawsuit Prevention LEADERSHIP Strategies

The focus of my business is about teaching other businesses how to prevent lawsuits. Much of my time is spent teaching awareness raising seminars, law based topics and CYA skills (that stands for Cover Your …you can figure it out on your own.) That is, I often train employees, management, human resources and even in-house counsel how to implement policies and procedures so that when an employee has an internal complaint, the company is primed to diffuse the lawsuit-bomb in order to avert a disgruntled employee from suing. These are what I have termed Proactive Lawsuit Prevention Strategies.

For example, sexual harassment lawsuits are prevented when an employer has a strong policy which prohibits harassment, when employees are trained to take complaints to receptive managers, when human resources is prepared to investigate it, and when the company responsibly acts to remedy the harm done. These are examples of Proactive Lawsuit Prevention Strategies and spreading this dogma is the mission of my business.

Yet, in reading a recent Harvard Business Review article, “The Big Idea: Leadership in the Age of Transparency” (April 2010) by Christopher Meyer and Julia Kirby, it occurred to me that I needed to be invoking an even more proactive “leadership” characteristic into my own curriculum. In their article, Meyer and Kirby make the case that “the true measure of corporate responsibility – and the key to a business’s playing a proper role in society – is the willing, constant internalization of externalities.” In my area of expertise, the “externality” is the extremely, remote, potential litigation. More than CYA tactics which prevent actual lawsuits, companies need to be looking at internalizing all the externalities inherent in employee relations, even the conflicts which may not necessarily give rise to litigation under the current laws or the externalities that a business is not forced to “pay for” by order of a court.

For example, although federal and state laws (Title VII and the Fair Employment & Housing Act (FEHA) in California) protect certain categories from unlawful harassment, i.e. sex, race, religion, etc., companies seeking to stand out as having leadership strategies would also respond to harassment based on “unprotected" categories. That is, when human resources receives a complaint from an employee that she is being “harassed” based on her weight or she complains about a singular “blond joke,” whether she can actually meet the legal criteria for a valid claim with the EEOC or Department of Fair Employment & Housing (in California) should be irrelevant. A leading company takes ownership of all complaints made by employees and seeks to provide a workplace free of any conduct that interferes with an employee’s ability to work optimally.

Why? According to Meyer and Kirby, the rationale goes beyond, “it’s the right thing to do.” Their article puts forth that our corporate society has become literally transparent. So that hiding a wrong is no longer an option. For example, the campaign by Phillip Morris in the 1980s to conceal evidence which linked smoking to lung cancer could not occur in today’s society of social media, whistle blower protections and instant messaging. According to the authors, “the worst of all worlds is to be made responsible, and still not be considered responsible.”

I agree with this premise that transparency demands higher accountability and recent case law supports it as well. In the case of Pietrylo v. Hillside Restaurant Group, disgruntled employees began a Myspace page which maligned their managers’ inappropriate behaviors. Although the company sought to force the employees to remove the page, the damage to the company’s reputation had been done. In a recent investigation I was asked to conduct, after interviewing the company’s employees, I learned that some employees, in reaction to the corporate officers’ secretive conduct, reactively began an anonymous blog which purposely leaked confidential company information to all employees. The availability of social media, the access to technology and the flattening of companies corporate structures encourages transparency. The company’s leadership role is to accept this and to act accountable to transparency’s offspring - heightened corporate responsibility to all externalities.

In the legal realm, that means protecting employees from conduct which has yet to be protected fully under the law, but which is still detrimental. For example, many companies employ an equal-opportunity bully. That is a person, who does not discriminate, but bullies all underlings similarly. Often under these circumstances, an employee may not be able to maintain a claim of unlawful harassment absent a showing of discriminatory behavior. (Although recent EEOC actions suggest that the agency and courts are beginning to recognize this behavior as actionable. See E.E.O.C. v. National Education Association (male supervisor’s temper tantrum had a disparate impact on female employees even when he treated male employees similarly.) A company that protects its employees from “bullying” by disciplining the bully is demonstrating its leadership by refusing to allow its employees to be mistreated, whether it can be “forced” to or not by a court of law or agency.

Similarly, employees who “haze” new employees must also be disciplined whether the law prohibits the specific hazing behavior or not. This is another example where a company can maintain a leadership policy which prohibits any hazing activities whether or not an employee can maintain a cause of action or not. (Some courts recognize hazing employees as actionable when the elements of sexual harassment or assault exist. The U.S. Supreme Court set this precedent in Oncale v. Sundowner Offshore Services.

What are other Proactive Lawsuit Prevention Leadership Strategies or other examples that you can think of? What legal externalities should your company internalize and act to remedy?