Editor: Could you mention some of the circumstances where a failure on the part of the company to have adequate compliance systems and adequate coverage by in-house or outside counsel has led to difficulties for the corporate client?
Garland: Sarbanes-Oxley was not written with employment law in mind but because of the experience that employment lawyers have with whistleblowing complaints, some of which now come within the purview of Sarbanes-Oxley, we as outside lawyers have much to bring to the table in assisting our colleagues in-house when it comes to Sarbanes-Oxley issues and having adequate compliance systems in place.
A case in point is a recent Coca-Cola matter, which involved a whistleblower who had written a letter to one of the company's executives shortly before the whistleblower became the victim of a reduction in force. There was no apparent nexus between the whistle-blowing complaint and the inclusion of the whistleblower among the employees for the RIF. Despite that, there was a great deal of negative publicity, not to mention a number of costly investigations that ensued. The Coca-Cola case underscores the importance of having coordination among those involved in the decision-making process together with the human resources and employment law functions. The employment lawyer should have a significant role in reviewing a list of names to be included in a RIF, and for due diligence to be performed to determine whether an employee about to be selected for a RIF has recently made an internal complaint, so that at the time the RIF decision is executed, the risk to the company of terminating the whistle-blower is recognized. Or a decision may be made not to terminate that particular individual because of the potential exposure.
As you well know, whistleblowing hinges so much on timing. And the timing between the whistle-blowing and the adverse employment action - here a discharge - makes it difficult for an employer to convince a jury that the timing was purely coincidental.
Editor: Certain companies have mechanisms for airing employee grievances. Should specialized employee training in compliance be adopted to identify emerging human relations problems?
Garland: Many times those programs are the first steps in a mandatory arbitration program. Anytime that an employee has a comfort level in going to Human Resources or reporting a problem confidentially through someone in HR or through a hotline the company has set up, it gives the company an opportunity to find out about a problem and to address it. This is a laudable goal. Many times, if the company does address the problem adequately, then a claim will be avoided down the road. And if there is a real problem that the complainant has pointed out, it can be addressed. What is important in those situations is not only to have the mechanism set up whereby the employee has the opportunity to complain about the problem, but that individuals, who need to address the problem, do in fact address it thoroughly and have authority to take appropriate remedial action if, in fact, there is a problem. I see these programs as a plus - for the employer - they're good employee relations programs and can avoid costly litigation, but what is critical in ensuring their success is that the HR professionals responding to those issues do so thoroughly and properly.
Editor: How important is it to have in-house or outside counsel interface on a regular basis with those management levels that are involved with significant human relations issues?
Garland: It is critical for in-house counsel to have good working relationships with their in-house clients. I'm focusing on in-house counsel since most of the companies we represent tend to be companies with strong in-house legal departments. Believe me, it is not a good thing when the in-house lawyer finds out about a problem after it has become a legal problem. It is important for the in-house client and his legal counterpart to partner to address issues before they become problems, whether on a regular basis or on an as-needed basis.
Editor: Does your firm play a role in training clients in human relations issues?
Garland: We do. Training is a significant part of what we do. We believe that our emphasis on training distinguishes us from many other firms because we can provide perhaps the greatest value to our clients in helping them avoid costly and disruptive employee relations problems. Our training covers a wide variety of areas, including how to conduct interviews, how to perform internal investigations, how to ensure wage and hour compliance, how to address complaints of harassment, how to conduct performance evaluations, what to do to comply with ADA and FMLA requirements, and how to protect company assets so that restrictive covenants and confidentiality agreements can be enforced. We also recommend training employees in the appropriate use of e-mail. We see more and more examples of inappropriate use of e-mail reported in the newspapers relating to various investigations. Not only should employees be trained to adhere to corporate codes of conduct and codes of ethics but many times tone does not come through in e-mails and people do not think as carefully as they might when writing a letter or memo. A person may put down something in an e-mail that may later prove to be harmful when there was no bad intent at all. The way we conduct discovery today with a significant number of documents in electronic format is far different than it was five years ago. This is another area where we need to be focusing more on training. Some companies are actually focusing on this with employees as part of their orientation process.
Editor: What about formal programs offered by organizations by way of on-line training?
Garland: On-line training is an option, depending on the size of the workforce, but some of our clients do not believe that on-line training is necessarily effective. The training that we provide is on-site for our clients and is tailored to the clients' particular need. Our attorneys train our clients' employees directly. In some instances, we provide "train the trainer programs," which means that we train individuals within the human resources function to deliver that training to other employees at particular sites or to other targeted employee populations. Different clients have different needs but for some of our smaller companies we have trained significant percentages of their employee population. This is particularly true when it comes to anti-harassment. In other areas too, we will target different management groups that have been identified by the client for a particular training session at the client's site. At times, we also provide individual training to high-level executives within an organization.
We are educating our clients to the whistleblowing provisions of Sarbanes-Oxley, which may be done in smaller sessions by targeting employee populations. We have also been providing them with programs addressing electronic discovery, with an electronic discovery component. Earlier this year, a global company headquartered in San Jose, California invited us to conduct such a program for its human resources and compliance professionals worldwide.
Editor: In organizing the things a company should be doing in terms of compliance, do you make any effort to look at the total picture of compliance on behalf of a client to see if youhave specific recommendations for improvement?
Garland: Again, this is a major focus for us because we are determined to add value in areas where other firms may not. Within the sphere of HR or employment law, we work with our clients to point out areas where improvements can be made in reporting structures. One example would be in the area of reporting a harassment complaint. Many policies over the years have been written and adopted by companies whereby the policy allows the complaining party to report a complaint to his or her supervisor or human resources person. We believe that it is a best practice to require that human resources be the recipient of complaints, rather than the supervisor, since sometimes the supervisor is not as well trained as human resources, sometimes the supervisor does not understand when something needs to be reported to human resources. By requiring the employee to go to HR, if he or she does not do that when a lawsuit is later filed, the employer is in a better position to defend against that claim because the employee did not do what was required.
We also provide employment audits for our clients, the purpose of which is to identify potential problems and to correct them before they become costly issues. Among other things, we want to review company policies to ensure that they comply with federal, state, and local mandates and are kept current with the latest developments. For example, New Jersey recently enacted a new posting and notification requirement for CEPA, the state's whistle-blowing law. We have provided our clients with the notices and information necessary to comply with this new requirement.
When it comes more to the area of compliance, we are in an evolving area when it comes to what a company should or should not be doing, but we believe that companies should be providing training to their supervisors on Sarbanes-Oxley, not only those in the financial area but to other supervisors so that should they become aware of an issue or complaint it will be reported through the proper channels. Training should be provided in that area and standards and procedures established so that the information gets to those within the corporation who need to act upon it.
Editor: Do you sit down with clients and help them work out a model of best practices for all areas of their companies' activities?
Garland: Absolutely. We counsel our clients on best practices in a broad variety of areas and the human resources function is a particularly important one when it comes to dealing with compliance issues. It cannot and should not be overlooked. Much of what we do is really risk management, seeking to minimize risk and exposure. The HR professionals and the in-house employment counsel working together with others in the corporation must ensure that there are adequate vehicles where grievances and issues can be raised and addressed. We work frequently with clients in those areas. We see that in a litigation we end up many times defending the failure to address a problem early on which ultimately leads to protracted, expensive and sometimes unnecessary lawsuits. Problems also arise as the result of acquisitions. The HR practices of the company that has been acquired may not measure up with those of the buyer, and those practices should be reviewed to avoid unexpected problems. Sometimes litigation cannot be avoided but in those companies where there is very little employment litigation, you will find active human resources and in-house legal coordination addressing an issue before it becomes a lawsuit. While we have a terrific record on defending employment claims around the country, that is where we can add real value for our clients.
Published January 1, 2005.
