© 2001 by Prentice Hall 14-1

“Year of the Whistleblower” Corporate financial misconduct has helped create

a “do the right thing” culture Historically, whistleblowing has often involved

significant personal cost Half of respondents to 2002 survey said they were fired

after reporting misconduct, those not fired often faced other retaliation; many blackballed in industry

Sarbanes-Oxley (2002) provides protection for whistleblowers (disclosure that could have “material impact” on share price) Retaliation is criminal offense DoL can seek reinstatement of fired Ee

“Revolution in corporate free speech”

© 2001 by Prentice Hall 14-2

“Year of the Whistleblower” Companies must rethink how they deal with

whistleblowers Rewrite nondisclosure pacts to differentiate whistleblowing

from leaking Reconsider rules requiring Ees to receive permission to

speak to media or lawmakers Corporate lawyers have special responsibilities

If they become aware of evidence of misconduct, must report it to top mngt and/or board

“You’re going to see [corporate] policy changes that set the stage for cultural changes” Corporate outliers (e.g., women in macho culture) have

been one type of whistleblower– Source: Business Week, 12/16/02

© 2001 by Prentice Hall 14-3

Restrictions on Office Romance DQ 8: Can you think of a job-related reason why a company

would decide to restrict dating between employees and enforce a no-dating (no fraternization) policy? Do you think employers have a right to restrict any or all of the following off-duty conduct of their ees? (4) having a romantic affair outside of the marriage relationship? January 2006 survey found 50% of respondents have known

married co-worker who was involved w/ someone else at office American Management Association found only 12% of companies

surveyed in 2003 had written policies on issue Of these, most simply prohibit mngrs from dating subordinates Some ers also bar romance among peers on same work team

• “Romance changes the dynamics of team relationships” Studies by SHRM show mngt taking increasingly punitive stance

55% of companies in 2001 survey said ee who mismanaged office romance would be transferred, up from 42% in 1998 study

• 35% said ees could be fired, up from 27% January 2006 survey found 38% of ees have experienced

unwanted advances from co-worker– Source: Wall Street Journal, 2/20/04; HRNews Online, 2/9/06

© 2001 by Prentice Hall 14-4

Basic Standards for Discipline Some basic standards of discipline should

apply to all rule violations, whether major or minor. All disciplinary actions should include the following procedures at a minimum: Communication of rules and performance

criteria Documentation of the facts Consistent response to rule violations

© 2001 by Prentice Hall 14-5

The Just Cause Standard of Discipline In cases of wrongful discharge that involve statutory

rights or exceptions to employment at will, U.S. courts require the employer to prove that an employee was discharged for just cause.

Failure to answer “yes” to one or more of these questions suggests that the discipline may have been arbitrary or unwarranted. Notification Was the employee forewarned of the disciplinary

consequences of his or her conduct? Reasonable Rule Was the rule the employee violated reasonably

related to safe and efficient operations? Investigation Before the Discipline Did managers conduct an

investigation into the misconduct before administering discipline?

Fair Investigation Was the investigation fair and impartial?

© 2001 by Prentice Hall 14-6

The Just Cause Standard of Discipline (cont.)

Proof of Guilt Did the investigation provide substantial evidence or proof of guilt?

Absence of Discrimination Were the rules, orders, and penalties of the disciplinary action applied even handedly and without discrimination?

Reasonable Penalty Was the disciplinary penalty reasonably related to the seriousness of the rule violation?

Note: “Preponderance of the evidence” is lowest quantum of proof

Beyond reasonable doubt Clear and convincing Preponderance

© 2001 by Prentice Hall 14-7

COMPULSORY ARBITRATION OF EMPLOYMENT DISPUTES

U.S. Sup Ct has allowed employers to impose as condition of employment requirement that any employment dispute be resolved by arbitration (even a dispute arising from statutory right, such as Title VII)

Issues: Cost Arbitrator selection Limits on awards