by Jennifer Roman
Sterling Jewelers, better known as Kay Jewelers or Jared Galleria of Jewelers, has recently been in the news because of a class action claim against the retailer. Various statements from the arbitration of the lawsuit filed by some 69,000 women employed or formerly employed by the company have been released. In addition to the claims filed for promotion and pay discrimination, widespread allegations of sexual harassment have been snowballing.
The claim was originally filed in 2008 by around a dozen females who worked for or formerly worked for the companies. As mentioned above, the number quickly grew to around 69,000 women alleging gender discrimination and sexual harassment. Claims include allegations of unequal pay and promotions, sexual groping, sex in exchange for promotions, and company-wide events in which all of this behavior was widespread and included upper echelon management. In addition to these claims, many women allege after reporting such behavior to the corporate hotline that they were subsequently terminated.
These allegations will result in substantial cost to the company, not only in legal fees and potential damages, but also in customer and employee retention. In the last year alone, the cost of shares dropped over 45%. In addition, the company will naturally experience immeasurable difficulty attracting and retaining talent. All of this damage has occurred prior to any judgment being entered in the class action claim.
Can a company avoid such liability?
The answer is maybe. The fact is, in legal claims, an individual or individuals outside of an organization will make the decision as to whether the company broke the law or not, and there are many factors that will play into the decision. Some of the things that might be examined are training programs, review practices, compensation comparisons, management of complaints and investigations and subsequent disciplinary actions. From a legal standpoint, such things should be put into place to reduce the company’s risk of liability for such claims.
The first thing a company can do to avoid claims of harassment and unprofessional behavior is to implement a policy against harassment. This policy should include all types of harassment and a procedure to follow in order to report any allegations to the company as well as an outline of the investigation process. Following the implementation of a harassment policy, organizations should implement a formal training process for new hires as well as annual refreshers for employees.
Once a policy and training process is in place, a company must take steps to ensure that their human resources professionals and management team are adhering to the process that is outlined in the policy. This is probably even more important than having the policy or training process in place. The strength of a policy is only as strong as the consistent, practical application of it. Each claim, no matter who makes the claim or who the allegations involve, must be investigated thoroughly, fully implementing the process outlined in the policy. This can become extremely time-consuming for those conducting the investigation and sometimes even uncomfortable if it involves a high level manager, but proper investigation, documentation and implementation of the disciplinary process can assist a company when defending claims. It is important to take EVERY claim seriously and those who have had experience with such claims know that initial impressions of the validity of claims should not affect the investigation process.
Further, once a claim is made, it is important to protect the alleged victim, witnesses and others participating in the investigation from potential retaliation. Retaliation is tricky, because whether the claim is valid or not, if an employee reports the allegations in good faith, they are protected from retaliation. Retaliation can include any negative or adverse job action from increased scrutiny in performance evaluation, all the way up to termination. It is important for those investigating a claim to advise all those involved about retaliation and what action to take if they feel they are being retaliated against.
In general, performance evaluations should be uniform in an organization and use measurable results. It is a good practice to conduct regular compensation comparisons examining rates of pay by position, performance ratings, and years of service, to ensure that there are no disparities in pay. Developing ranges of pay for positions is usually a good way to ensure that no employee is too far below or above the average.
Putting such practices into place will not fully protect any company from liability, however it will increase the chances that the company will be successful in defending claims of discrimination and harassment.
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