Ford did their investigation, so what went wrong? Result: $10M Settlement.

When a company is in the news for paying out at large harassment discrimination settlement, the first thought is that they did not conduct an appropriate investigation. But that is not always the case. Last week the EEOC ended an investigation into claims of harassment by employees in two Ford facilities in the Chicago area. (https://www.eeoc.gov/eeoc/newsroom/release/8-15-17.cfm) Based on the findings, Ford agreed to settle the claim for $10.125M in monetary relief to multiple female and African-American employees who had claimed sexual and racial harassment. Ford chose to voluntarily resolve this issue with the EEOC, without admission of liability, to avoid an extended dispute.

A spokesperson for Ford provided a statement that, “Ford does not tolerate harassment or discrimination of any kind; we are fully committed to a zero-tolerance, harassment-free work environment at all facilities and to ensuring that Ford’s work environment is consistent with our policies in that regard. Ford conducted a thorough investigation and took appropriate action, including disciplinary action up to and including dismissal for individuals who violated the company’s anti-harassment policy.” As such, it appears that they met the legal requirements. So that may have you wondering what went wrong.

It is simply not enough to conduct an investigation once an employee or group of employees comes to HR and files an official complaint. A company must be able to prove that their managers are trained regularly on what behaviors to look and listen for, in order to stop the behaviors before they become systemic or egregious. And take prompt action to investigate immediately at the first sign of a problem. It is equally important to ensure appropriate follow up post investigation to ensure the improper behaviors have stopped and no retaliation is taking place.

In the Ford Motors case, there was reasonable evidence that employees and managers were aware of the behaviors which were claimed to meet the definition of harassment, and that they did not address the issue in a timely manner. Their excuse was that no official complaint was made, even though there was open discussion by employees in the workplace, so no investigation was required. This resulted in the improper conduct continuing, and affecting more employees, until an actual complaint was filed. By the time a formal investigation was conducted, the EEOC found that the company had retaliated against employees who complained about the harassment or discrimination.

In addition to the $10 million to be distributed among the claimants, Ford will be under the scrutiny of the EEOC for a period of five years and will be required to report any employee complaints of harassment and/or related discrimination. They must also provide documentation that they are continuing to disseminate their anti-harassment and anti-discrimination policies and procedures to employees and new hires. And provide proof that they are constantly monitoring their workforce for issues of alleged sexual or racial harassment and related discrimination, to include monitoring by managers.

To prevent this from happening to your company, take the following steps:

 Institute a walking management policy. This type of policy requires all supervisory employees to spend a required amount of time each day observing and interacting with their workforce, and noting conversations and behaviors that may signal problems.

 Train supervisory, HR and executive employees on what signs to watch for. For example, the absence of conversation when managers walk in the room, changes in absentee patterns and physical rigidity or avoidance when interaction with a specific employee or employees are required.

 When it is noticed that an employee is acting differently, start a conversation. Even if it only includes small talk to begin with, it will increase the comfort level of the employee in coming forward with a complaint.

 Prove that the company/HR open door policy is effective by making it a priority to stop what you are doing to allow employees to come in and talk. It can be difficult for an employee to come forward, and if they are shut down on the first attempt they will generally not try again. Then follow up on the information you receive, even if there is no formal action to be taken.
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KPMG Settles with the OFCCP to Pay $420K to Asian Applicants.

Last week, KPMG (one of the big four accounting and audit firms) agreed to pay $420,000 to 60 qualified Asian applicants who were allegedly not hired due to their race/ethnicity. The firm entered a conciliation agreement with the DOL/Office of Federal Contract Compliance Programs (OFCCP) after applicant and hiring data was found to have had a disparate impact on the hiring of Asians for the associate audit positions in the Short Hills, New Jersey location.  The settlement not only includes back wages and interest, but also allows class participants to be considered first for employment in open associate audit positions until six are hired or the list of interested class members is exhausted.

I have heard discussion that this is not a huge expense to such a large, world-wide company. And that is likely true. However, the bad publicity and continuing exposure due to the case will be far reaching. Not only is there bad press, but claims of this type will likely cause a significant reduction in the applicant pool for open positions at KPMG.  The cost of expanding the search for appropriate staff can be significant. In addition, the OFCCP is requiring the firm to revise their hiring practices, policies and procedures, and monitor the selection process through every step for every open recruitment to ensure selection procedures are not having an adverse impact. This information will need to be reported and provided for audit upon request. The legal defense fees alone, which have accumulated since the inception of this case in 2011, make this a very expensive oversight on the part of KPMG.

This settlement effectively closes the OFCCP investigation and claim. But there are still other means of punishment and restitution that may come for KPMG such as the claim of systemic gender pay disparity and promotion discrimination still pending in the U.S. District Court for the Southern District of New York.