© 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 u 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) u Retaliation is criminal offense u 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 u Rewrite nondisclosure pacts to differentiate whistleblowing from leaking u Reconsider rules requiring Ees to receive permission to speak to media or lawmakers  Corporate lawyers have special responsibilities u 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” u 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? u January 2006 survey found 50% of respondents have known married co-worker who was involved w/ someone else at office u 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” u 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% u 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: u Communication of rules and performance criteria u Documentation of the facts u 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. u Notification Was the employee forewarned of the disciplinary consequences of his or her conduct? u Reasonable Rule Was the rule the employee violated reasonably related to safe and efficient operations? u Investigation Before the Discipline Did managers conduct an investigation into the misconduct before administering discipline? u Fair Investigation Was the investigation fair and impartial?

© 2001 by Prentice Hall 14-6 The Just Cause Standard of Discipline (cont.) u Proof of Guilt Did the investigation provide substantial evidence or proof of guilt? u Absence of Discrimination Were the rules, orders, and penalties of the disciplinary action applied even handedly and without discrimination? u Reasonable Penalty Was the disciplinary penalty reasonably related to the seriousness of the rule violation? u 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: u Cost u Arbitrator selection u Limits on awards