This installment of "HR Legal Briefing" is written by David W. Garland, a Member of the Firm and Chair of Epstein Becker Green’s National Employment, Labor & Workforce Management Steering Committee. Mr. Garland is frequently retained in matters involving clients’ most senior executives and in high-profile, high-stakes, and highly sensitive cases. He can be reached at [email protected].
The last few months of 2017 saw a seemingly never-ending string of high profile sex harassment allegations against high-level corporate figures. Many of the stories involved household names and recognizable brands. Many of them also had common elements: sordid and salacious allegations making a splash in the media, a news cycle that doesn’t allow sufficient time to respond, social media providing an accelerant to the attention focused on these stories, investigators retained in a shortened time frame and under pressure to find out what happened, and snap decisions on the actions needed to be taken against the alleged perpetrator.
Very few industries and types of companies have been spared. Media, entertainment and technology companies have seemingly borne the brunt, while start-ups to well-established corporate organizations have all experienced potentially disastrous claims and publicity. The harm that can be done to a company’s brand and reputation — and the value of a company’s stock — can be significant.
Before the year ended, Congress entered this drama as well, and not just by the number of lawmakers felled by sex harassment allegations. As part of the tax bill enacted in December, companies can no longer deduct as a business expense the cost of a settlement of a sex harassment case.
Against this backdrop, the #MeToo movement is geared up for 2018. Prominent women executives and actors have formed an initiative to root out harassment in Hollywood and in blue-collar jobs. The confidentiality of settlements of sex harassment claims and cases is under attack. The fight against mandatory arbitration of sex harassment claims has been ratcheted up in Congress with Democrats and Republicans joining together to sponsor bipartisan legislation to ban arbitration of such claims. In California, New Jersey and elsewhere, legislation has been introduced to ban non-disclosure provisions in settlement agreements of discrimination cases.
How can responsible employers be prepared for this new world? How can they get ahead of these problems and manage today’s workforce to prevent – or, more realistically, minimize – the threat of these challenges in the first instance? How can they avoid being the next company in the unflattering headlines?
The answers to these questions cannot be found in an approximately 600 word article (the length of this piece). But we can begin the discussion here. More than ever before, the HR department cannot be a stepchild. Compliance with employment laws cannot be an afterthought. It’s every bit as important as compliance with other laws because failing to address these issues will leave a company exposed; exposed to claims, to reputational damage, to the loss of key leaders and talent and to possible loss of shareholder value. Publishing a policy and periodic training, while required, is not enough. Culture must be impacted.
The C-suite and board must embrace a strong HR organization. For too long, some employers haven’t invested in HR, seeing it as less important as than other departments. All too often, the view has been that HR doesn’t add to the bottom line, and therefore it doesn’t warrant the investment. That can no longer be true in 2018.
In 2018, companies must invest in their HR teams. They need to attract the best and the brightest to HR. HR matters. HR should not occupy a second and less-important tier in the organization. C-suite leadership and board members must not only pay attention to HR, but must visibly support it. HR must have a seat at the C-suite table and in the boardroom, and corporate leadership must support compliance with HR policies.