David N. Goldman presented on compliance training in turbulent economic times. He discussed how the poor economy increases employment law risks as unemployment rises and EEOC filings increase. Key developments include the Lilly Ledbetter Act, ADA amendments, and potential legislation like ENDA and EFCA. Training is important to establish defenses, mandated in some states, and reduces costs from lawsuits. Training must cover harassment, discrimination, and new laws to fully protect organizations.

1. LITTLER MENDELSON, P.C.
Compliance Training in
Turbulent Times:
How to Protect Your Organization
on a Shrinking Budget

2. presented by:
David N. Goldman, Esq.
Shareholder
Littler Learning Group (LLG)
Littler Mendelson, P.C.
San Francisco Office

3. Today’s Agenda
1. How Our Turbulent Economy
Shapes Employment Law
Risk
2. Critical Employment Law
Developments
3. Protecting the Bottom Line
With Compliance Training

4. How Our
Turbulent
Economy
Shapes
Employment
Law Risk

5. Risk Exposure in a Down Economy
 The economy will shape
your risk profile in 2009.
 Every 1.5% increase in
unemployment drives
a ~21% increase in
employment lawsuit
filings.
Source: The Changing Nature of Employment
Discrimination Litigation, 43 Stan. Law. Rev.
983 (1991).

6. The Unemployment Rate Soars
 More than 1 year of straight
job losses.
?
? – 4.4 million jobs lost since 2007.
 8.5% is highest rate in 25 yrs.
– Up 3.8% in the past 15
8.5% months.
8.1%
– Rates often higher for
5.8% minorities.
5.8%
www.BLS.gov
 National rate could hit 9.4%+
or higher and remain high
through 2011.

7. EEOC Charges Soar in 2008:
15.2% Increase
?
95,402
80,680
www.eeoc.gov

8. Wage & Hour Charges
On the Rise
8,000
7,000
7,310
6,000
5,000
4,000
4,039 4,207
3,000 3,617
2,000 2,751
1,000
0
2003 2004 2005 2006 2007

9. Average
Wage & Hour Settlements
$8.6 Million
$19 Million
$29 Million
$24.4 Million
$24 Million

10. Impact on Your Business
 Every additional claim hits your budget hard:
– Average defense costs for single plaintiff
discrimination lawsuit can cost $250K+ through
trial.
Source: Littler Mendelson
 Average Discrimination Jury Verdicts:
– Age: $250,500
– Sex-based: $200,000
– Disability: $217,000
– Race: $172,500
– Retaliation: $200,000
Employment Practice Liability:
Jury Awards Trends & Statistics, 2008 Ed.

11. Critical
Employment
Law
Developments

12. Ending “Wage Theft”
• President Obama is committed
to pay equity and fairness.
• Key component of the economic stimulus
plan: fight “wage theft.”
• Obama increases DOL budget by $600M
for 2010; Wage and Hour enforcement
a key focus.
• Combined with key appointments
to lead the charge of defending
American workers.
• Hilda Solis: Head of the Department
of Labor.

13. Lilly Ledbetter Fair Pay Act – 1/09
“It’s fitting that with the very
first bill I sign — the Lilly
Ledbetter Fair Pay Act —
we are upholding
one of the nation’s first
principles: that we are all
created equal and each
deserve a chance to
pursue our own version
of happiness.”
Jan 2009: Obama Comments at Signing Ceremony

14. Advancing Equal Pay
• Reverses 2007
U.S. Supreme Court
Decision.
• Reinstates the
“paycheck rule,”
resetting the statute
of limitations for
filing a wage claim
each time the
aggrieved employee
gets a paycheck.

15. Major Legislative Action
 Already Here:
– (ADAAA) Americans with
Disabilities Amendments Act
– (GINA) Genetic Information
Non-Disclosure Act
– (FMLA) Family Medical Leave
Act Regulations
 Expected Soon:
– (ENDA) Employment Non-
Discrimination Act
– (EFCA) Employee Free Choice
Act – or something similar

16. The ADA:
Sweeping Changes
• The ADA Amendments Act of 2008:
– Effective Jan. 1, 2009.
• Most significant changes:
– Disability to be interpreted broadly.
– Most mitigating measures cannot be considered.
– Expansion of who is perceived/regarded
as disabled.
– Major Life Activities expanded.
• “EEOC Getting More Aggressive in Pursuing
Disability Claims” National Law Journal
6.30.09
• Trend Watch:
– Increased litigation – with cases tougher to
defend.
– Age/Disability cases.

17. Genetic Information
Nondiscrimination Act (GINA)
 Title II of GINA (effective Nov.
2009) is most relevant for
employers:
– Cannot discriminate against someone
on basis of genetic information.
– Cannot intentionally acquire genetic
information except under specific
circumstances.
– Imposes very strict confidentiality
protections for genetic information,
which can be revealed only when
permitted by statute.
– Prohibits retaliation.

18. The New FMLA Regulations
 The regulations are too extensive
to discuss today, but include:
• Changes to both general
and specific employer notice
obligations.
• Changes to employee notice
obligations.
• New guidance/rights relating
to managing intermittent leave.
• Clarification on denying leave.
• New forms.

19. Employment
Non-Discrimination Act
 Most recently passed by
House of Representatives
in November 2007.
– This version applied
only to sexual orientation.
– Gender identity was removed.
 Expect to see it re-
introduced in 2009.

20. Sex Orientation & Gender Identity
Protections are Expanding

21. National Protection
Could Be on Its Way
 Employment Non-Discrimination Act
of 2009 (H.R. 2981), a bill that would create
comprehensive employment anti-discrimination
protections for individuals based on their
sexual orientation or gender identity was
introduced in the House on June 28, 2009

22. EEO Investigations
Under the Spotlight
 An employee accused of harassment was fired by the employer after
an investigation.
 According to the alleged harasser, his employer made minimal, if any,
efforts to verify the accusations against him.
 His supervisor stated: "I really don't have any choice. Michelle [the
alleged victim of harassment] knows a lot of attorneys; I'm afraid she'll
sue me. And besides you probably did what she said you did because
you're male and nobody would believe you anyway."
 The alleged harasser sued under Title VII, arguing that his supervisor's
statement was evidence that impermissible "sex stereotyping" (i.e. that
men have a propensity to engage in sexual harassment) played a role
in the decision to terminate his employment.
 And the court allowed the claim to go forward!
Sassaman v. Gamache (2ND Cir 2009)

23. EEO Claims Continue to Evolve
 Expanded definition of retaliation
(USSC - Jan 2009).
 Sexual favoritism.
 Religion & National Origin:
– Patriotism.
– Terrorism.
– Immigration.
 Pregnancy Discrimination, Family
Responsibility Discrimination (FRD).
 Bullying.

24. The Employee Free Choice Act
 In its original form:
– Eliminates secret-ballot elections.
Unions can use “card check” process –
50%+1.
– Arbitrators have power to impose
contract terms (1st contracts) if employer
and union unable to agree.
 03/09: EFCA reintroduced.
– 03/09: Obama tells AFL-CIO it will pass,
and he supports it.
 Passage in current form is not assured.
Original support is wavering.
 03/25/09: New compromise versions
being floated, including the “Third Way”
proposal.

25. Protecting
Your Bottom
Line

26. The Law of Training – EEO Rules
 There are many types of
compliance training – all of
which can add value to your
organization …
BUT
 EEO / anti-discrimination
training is the only true
mandatory training subject that
impacts all employers, across
all industries, and is most
critical during a downturn.

27. The Law of Training
 Training may be legally mandated.
 Training may be necessary to
establish affirmative defenses.
 Training makes good business
sense:
– Reduces mistakes and errors.
– The best policies are useless if
employees don’t understand them.
– Training gives your employees the tools
they need to become compliance allies.

28. California Mandatory Training –
AB 1825
 Requires employers who do business in
California, and who have more than 50
employees, to provide 2 hours of high quality,
“interactive” harassment training to all
supervisors.
 Every 2 years; 2009 is a “re-train” year.
 Not just sexual harassment.
 No cap on penalties.
 Benchmark training law. AB 1825’s detailed
and rigorous regulations are influencing
compliance training across
the country.
a

29. U.S. Supreme Court
Mandatory Training Guidelines
Faragher and Ellerth (1998); Kolstad (1999)
• Train all employees on harassment
prevention periodically.
• Train all managers on discrimination
prevention, periodically.
• Distributing policies is not training.
• Evidence of training may provide:
• Defense to liability.
• Defense to punitive damages.

30. And More Federal Guidelines…
 1999 EEOC Guidelines specifically direct that employers
train employees and managers on harassment prevention.
 EEOC consent decrees routinely mandate periodic
anti-discrimination training.

31. The Impact of a
“Mandatory Guideline”
“[L]eaving managers in ignorance of
the basic features of [employment]
laws is an ‘extraordinary mistake’
for a company to make, and a jury
can find that such an extraordinary
mistake amounts to reckless
indifference.”
Mathis v. Phillips Chevrolet, Inc.,
7th Cir. 10/15/01

32. Harassment Training is Not Enough
 Harassment training DOES NOT protect
you if you’re sued for a different form of
discrimination – like race.
 You must train on both harassment and
discrimination.
 You must cover all protected classes:
– Race/Color.
– Gender/Sex.
– Religion.
– Disability.
– Etc.
 You must cover new legal developments –
e.g. retaliation.

33. Policies are Not Training
 U.S. Ct. denied review on
10/08/08.
 Employee claimed he had
been denied a reasonable
accommodation.
 Alleged that managers did not
handle his request properly.
 Jury agreed and awarded
the plaintiff:
– $8,000 in compensatory damages.
– $100,000 in punitive damages.

34. Bad (Uneducated) Managers
Drive Litigation
 Good/fair managers are less likely to
be sued. And if sued, less likely to
be subject to punitive damages.
 Survey of unemployed people who
had been terminated found that:
– Only 4% of those who thought
termination was fair sued.
– While 90% who felt mistreated either
sued or considered it.
Source: Dr. Joni Johnston, Why Jurors Fire
Back During Wrongful Termination
Lawsuits, Nov. 24, 2003

35. Training Pays Off
 Preventing even one claim a year
pays for your training.
– Independent ROI study conducted by
Littler client: Basic EEO / HR training
tied to annual hard cost savings of
$2.2 million.
 Training decreases the settlement
value of tough cases.
 Training can help an organization
avoid/reduce a punitive damage
award.

36. The Power of Training
8th Circuit Court of Appeals held
that punitive damage award was
not appropriate because the
employer demonstrated good
faith, which included requiring
supervisors to go through
harassment training.
Dominic v. DeVilbiss Air Power Co.,
8th Cir. No. 06-3236 (July 20, 2007)

37. EEO Investigations
Under the Spotlight
 “Whoever conducts the investigation
should be well trained in the skills that
are required for interviewing witnesses
and evaluating credibility.”
(Equal Employment Opportunity Commission,
Enforcement Guidance: Vicarious Employer
Liability for Unlawful Harassment by
Supervisors (6/18/99).

38. Choosing Not to Train
is Expensive
 Bains v. ARCO Prods. Co., 405 F.3d 764
(9th Cir., 2005). Plaintiffs were originally
awarded $1 in compensatory damages and
$5 million in punitive damages for failing to
train on harassment.
 Swinton v. Potomac Corporation., 270 F.3d
794 (9th Cir., 2001). Lack of manager training
justified a punitive damage award of $1 million
in a single plaintiff case. Having a policy alone
is not sufficient.
 Godinet v. Management and Training Corp.,
2003 C10 16 (USCA10, 2003). Punitive
damage awarded based in large part on failure
to train.

39. Wage Training
Can Save You Millions
 DOL: 70% + of employers are out
of compliance with Wage and Hour
Law.
 Virtually every organization has a
target on its back.
 The only way to limit exposure is:
– Get it right from the start.
– Build a good faith defense that
can limit liquidated (double) damages and
3rd year back wages for willful violations.
– Wage and hour training helps you
do both.

40. Questions?

41. Thank You
for your time
COPYRIGHT 2009, LITTLER MENDELSON, P.C.

42. Thank You
David N. Goldman, Esq.
Shareholder
Littler Learning Group (LLG)
Littler Mendelson, P.C.
San Francisco Office
DGoldman@littler.com
415.439.6280
COPYRIGHT 2009, LITTLER MENDELSON, P.C.