The end of forced pre-dispute arbitration for claims of sexual harassment and assault, the new pro-employee leadership at the EEOC, the significant shift in power from employer to employee, the negative optics around being fined by the EEOC, and the potential increases to business insurance premiums are significant issues facing businesses today. Add these issues to the already complex challenges employers face in the management of their employees, technology advances, changing customer expectations, and the need to meet sales quotas, it is no wonder a comprehensive approach to HR compliance can too often be neglected. This is a risky practice as many businesses across the nation have already been surprised and felt the financial pain and the public scrutiny from EEOC fines and or lawsuits. As we will discuss further in this paper, these new issues are poised to further overwhelm businesses and derail the progress employers have enjoyed in the past two years.

The EEOC, which is the agency that oversees the enforcement of Title VII of the Civil Rights Act of 1964, regularly files charges against employers on behalf of individuals who believe their rights have been violated under Title VII. Regardless of the outcome of the charge, employers should expect the information to become public.

If you have not made compliance a priority in your business, it is clearly time to start doing so. Beyond just the fines and penalties associated with EEOC violations, there are significant changes taking place in the employment law arena that have, and will continue to, increase the risk of claims for businesses in their day-to-day operations.

The most significant is the recent amendment to the Federal Arbitration Act, signed by President Biden on March 3rd. This amendment went into effect immediately and prohibits the use of pre-dispute arbitration agreements for claims of sexual assault and sexual harassment. Any employer using Arbitration agreements for claims of sexual harassment are now prohibited from using pre-dispute arbitration agreements for claims of sexual harassment. Note, any current arbitration for claims of sexual harassment are unaffected, however, moving forward, new claims are under the new laws.

Arbitration agreements have been of great benefit to employers in recent years as they enable companies to avoid more costly legal fees associated with litigation because the outcomes of arbitration tend to heavily favor the employer. While employees may still elect to arbitrate, they cannot be forced to do so. Employees may now seek out the EEOC to file their complaints, or utilize other administrative remedies and avoid arbitration altogether.

[https://www.eeoc.gov/statutes/title-vii-civil-rights-act-1964](https://www.eeoc.gov/statutes/title-vii-civil-rights-act-1964)

According to Don Gould, a Partner at Johnson Deluca Kurisky Gould, P.C., this change in the Federal Arbitration Act has a widespread impact for many businesses.

"The use of pre-dispute arbitration agreements by companies has been very common in recent years. According to a study conducted by the Economic Policy Institute, more than half of all businesses in the US utilize arbitration agreements with their employees. 53.9% of all nonunion private-sector employers have mandatory arbitration procedures and 65.1% of all nonunion private-sector employers with 1,000 or more employees have mandatory arbitration procedures.

Additionally, recent legislation called the FAIR Act (Forced Arbitration Injustice Repeal Act) passed by the House would, if made into law, effectively prohibit pre-dispute arbitration agreements on all employment-related issues, not just sexual assault or sexual harassment.

Keep in mind, the amendment on March 3rd went into effect immediately, as would the FAIR Act if passed, and regardless of when the pre-dispute arbitration agreement was signed, employers would no longer be able to force employees to arbitrate."

Don Gould, Partner Johnson Deluca Kurisky and Gould, P.C.

The second issue on the horizon that employers need to be aware of is the change of leadership at the Equal Employment Opportunity Commission (EEOC). Currently, there is a 3-2 republican majority. However, the term of the current chair, who was appointed by Pres. Trump, expires on July 1st, 2022. President Biden has recently announced his new choice for EEOC Commissioner as Kalpana Kotagal, a Washington, D.C., plaintiff's side civil rights attorney.

According to her bio found on her law firm's website, Ms. Kotagal is "A highly-acclaimed employment and civil rights plaintiffs’ litigator, Ms. Kotagal represents women and other disenfranchised people in employment and civil rights class actions, involving often cutting-edge issues related to the Title VII, Equal Pay Act, the Americans with Disabilities Act, Family Medical Leave Act, as well as wage and hour issues.”

"The appointment of Ms. Kotagal is a significant shift in the leadership of the EEOC and should be a warning to all employers to expect enforcement efforts from the EEOC to increase and likely with a significant focus in the area of sexual harassment and discrimination, especially including matters involving members of the LGBT community.

Employers need to be prepared as they have not only lost the ability to enforce pre-dispute arbitration in the matter of sexual harassment but, the very enforcement agency which oversees these matters will see a significant change in leadership and likely its focus regarding enforcement efforts." Chris Jeans, empathiHR

These two current changes, the removal of forced arbitration and the change in leadership within the EEOC, tie into one of the most impactful trends shaping the workforce, which is the seismic power shift from employer to employee. This was shown in January when a record 4.3 million workers left their jobs which is near the record set last November, according to the Labor Department. As you are likely well aware, this wave of people quitting their jobs due to the ongoing pandemic, burnout and a deeper reflection on overall fulfillment was coined with three words “The Great Resignation” or “The Big Quit”.

The great resignation is still in full swing which may grow to become the largest challenge facing businesses, considering there are currently 11.3 million job openings, or about two jobs for every unemployed worker, according to the Labor Department. Once businesses are no longer dealing with supply chain issues, they will likely have a significant workforce shortage and will need a laser focused strategy on attracting and retaining mission critical talent.

"The Great Resignation” has placed employees in the driver’s seat as they are reevaluating all aspects of their relationship with work—from trust in leadership, what the company stands for, and what they will and will not tolerate at work. The high labor demand is pushing employers to reevaluate their value proposition to attract talent while also dealing with competitors luring workers away with higher pay or bonuses. Pair that with their growing confidence in expressing their dissatisfaction or complaints through social media outlets, Glassdoor, or through litigation and the risk of HR compliance lawsuits can be a growing endemic for those that disregard the changing atmosphere without a strategy to protect their people, their culture and their bottom line.

Federal law makes it clear, employers must implement processes to remedy and prevent racially and sexually hostile work environments which we only expect to increase with the enforcement of Title VII issues in addition to violations of protections afforded employees by the Family and Medical Leave Act (FMLA) as well as the Americans with Disabilities Act (ADA). For example, it is critical for front-line managers to understand the requirements of laws such as Title VII, the FMLA and the ADA and what they should or should not do in the event they have an employee who calls out of work with a broken leg or a pregnant employee whose Dr. has placed them on bed rest prior to their due date. Front-line managers are not and should not be expected to solve these issues or administer leave under these laws; however, they are expected to understand what they should or should not say or do in order to avoid landing themselves and the company in hot water.

No longer can a company just ‘check the box’. Traditional methods of training, such as a one-hour presentation or generic online training are no longer sufficient. Just training your employees and managers on harassment and discrimination alone is not enough; employers must ensure their front-line managers are properly equipped to face the ever-changing regulatory landscape.

For example, Texas, one of the most employer-friendly states in the nation, passed legislation in Sept. 2021 affecting all employers, even those with just one employee, in the matter of workplace harassment. While the results of the Faragher and Ellerth decisions require employers to respond to employee complaints of harassment and discrimination “promptly”, Texas’ new law requires employers to respond “immediately”. The requirement for employers to respond immediately places a much stronger burden on companies to ensure they have an effective process in place to respond to such claims. However, because employers are obligated to take steps to stop and prevent the behavior from occurring once they’ve been made aware, even the burden to respond “promptly” places significant pressure on companies to not delay in addressing an issue once it has been raised.

Unfortunately, employers are learning the hard way. Not responding promptly will result in an employee seeking aid through outside remedies. For example, Autos of Dallas had been charged with Race Discrimination by the EEOC when they likely could have addressed the issue internally by responding promptly.

Autos of Dallas made headlines when a black sales employee received a “trophy” for being the “least likely to be seen in the dark”. This charge made the local news as well as rounds on social media and email newsletters. Clearly, the comment made by the manager was racist and completely unacceptable, but making matters worse for the company was their repeated failure to address the employee’s complaints. Had they promptly responded to the employee’s complaints to stop the discriminatory behavior and prevent it from occurring in the future, they would have likely been able to resolve the complaint internally; however, because they failed to do so, they are now headed to court.

“EEOC Acting Regional Attorney Eduardo Juarez said, “The defendant should have properly responded to the complaints made by Mr. Sellers about the holiday party. Employers are required to take prompt effective remedial measures in response to complaints about discrimination."

In another recent situation, an auto dealer in Golden, Co. was subject to a charge of sex and race based harassment and retaliation by the EEOC and is now facing legal action because they failed to take prompt action to stop and prevent the behavior. The local news in Denver was quick to not only run the story but release the specific details of the charges against the company.

While the reputational damage has already begun for these two companies, the final bill is yet to be tallied. Legal fees, fines and penalties as well as the loss in productivity and impact to workplace culture are all yet to be accounted for.

How bad can it get? For Victory Automotive Group it reached $150,000.00 to settle with the EEOC. Or, $100,000.00 for Honda of Covington. Note, these are a result of just one incident at one location.

National Car Dealers to Pay $150,000 to Settle EEOC Disability Discrimination Lawsuit SACRAMENTO, Calif. – Car dealers Victory Automotive Group, Inc. and Cappo Management XXIX, Inc. will pay $150,000 and hire a consultant to facilitate changes to their policies and training practices to settle a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today.

Again, what did this single EEOC charge cost each company in attorney fees, productivity, and reputation in the community?

Optics have become a significant concern for companies in today’s market. Cancel culture does not only exist in Hollywood, it affects people, brands and companies all over the country. Nobody likes their dirty laundry being aired out in public, however, with many employees using sites like Glassdoor, Yelp, and Google Reviews to provide reviews on their employer or former employer, it is much easier for a company’s “dirty laundry” to be broadcast to the masses.

Auto Dealers across the nation are also looking to increase their talent pool by casting a wider net to attract and hire a more diverse workforce. The NADA Workforce Study states that the percentage of women in the dealership workforce is 21% with only 5% being in a role of leadership, compared to the national averages of 58% and 40% respectively, according to the Bureau of Labor and Statistics. Companies need to take a deep look at their job descriptions and hiring practices so that from beginning to end, employment decisions are based on ability, not gender, age, religion or race.

As businesses strive to diversify their workforce, they should take a deep look at hurdles of inclusivity around growth and advancement. Employers who do not have, or lack minority representation should take a strong look at their promotion practices, and train their teams on unconscious bias which may be impacting advancement opportunities. It is past time to encourage inclusive leadership so the ‘good old boy” method of promoting can be retired.

Additionally, with the rise of Environmental, Social and Corporate Governance (ESG) among both private and publicly traded companies, socially conscious investors are looking at how a company is run before they invest or spend their money with a company.

With the EEOC naming names and publishing charges, settlements, and fines against companies and news outlets reporting the EEOC’s actions across all mediums, companies are now forced to become more aware of the stories being told. Companies who refuse to do so are not only risking a negative impact to their bottom line, but also a detrimental response from their customers, as well as the quality of applicants they are attempting to hire.

According to Bob Jenkins with Insurica, ”while some companies may feel insulated from lawsuits because they have Employment Practices Liability Insurance (EPLI) in force, these policies are not uniform and vary widely in breadth of coverage. We have seen instances which were not covered by certain insurance companies which are covered by others. And it is very rare where fines and penalties assessed by the EEOC and other government entities are covered by these policies. In addition, if there is claim activity this can and most likely will have a significant impact on the renewability of the policy. Insurance companies are offering scaled back policies at extraordinary price increases to companies with claims activity if at all.

Employment Practices Liability Insurance should be viewed as the last line of defense for employers. The much more cost effective and stable approach is to have a good HR program in place, monitor and manage your program effectively and constantly staying abreast of changes in applicable laws. We also recommend getting a good review of your Employment Practices Liability Insurance coverage to make certain it covers the areas you deem necessary.”

In order for employers to best protect against the impact these changes will have, every company needs to implement comprehensive policies and processes that in turn will establish their Affirmative Defense. Companies who have implemented the necessary policies and processes and adhere to them will have established their Affirmative Defense and will then have best positioned themselves to avoid unnecessary and costly fines, penalties, and legal fees.

An Affirmative Defense is simply a legal doctrine based on the Faragher and Ellerth court decisions and is available to all employers as a safe harbor to liability stemming from harassment & discrimination claims. An affirmative defense can be utilized when an employer can demonstrate they made reasonable efforts to prevent and stop harassing behavior and an employee failed to take advantage of established administrative remedies provided by their employer.

"Employers who have established clearly defined policies and communicated these to their employees via their handbook and online training and have multiple options available for employees to utilize for submitting complaints, to include a non-retaliatory 3rd party and are able to clearly demonstrate they’ve done everything in their power to prevent and stop harassing and discriminatory behavior in their workplace will have established their Affirmative Defense.” Chris Jeans, empathiHR

However, with a tried and true Affirmative Defense solution in place, employers are far less likely to find themselves in a situation where they have to rely on their EPLI coverage. In fact, depending on your provider, employers could positively impact their EPLI premiums when an effective Affirmative Defense solution is implemented.

Let’s dive into how companies can best prepare an affirmative defense solution with one of the co-founders of empathiHR, Chris Jeans.

Fleming: Hi Chris, empathiHR has taken a novel approach to establishing an Affirmative Defense for its clients, will you walk me through your process?

Chris: empathiHR utilizes a solution which has been proven over time having assisted clients of all sizes throughout the country with establishing their Affirmative Defense. We’ve assisted our clients with disputing 100’s of charges brought against them by the EEOC and we do this through the use of our proprietary technology platform and combined decades of consulting experience.

Fleming: Can you share with me the process or steps when a company engages empathiHR to develop their Affirmative Defense?

Chris: The implementation process is typically quick and is far less intrusive than many other platform based services. We begin with a comprehensive review of company policies, through our platform we will communicate these policy changes, we will deliver appropriate training to all employees that includes, but is not limited to, courses on Title VII, FMLA, ADA and the FLSA. All employees will be required to complete our Quarterly Questionnaire and to cap it off, we provide reporting on all training and questionnaire submissions.

Fleming: I am really impressed with the training methodology. Can you share a little about the user-friendly platform that empathiHR has built to deliver the training?

Chris: Absolutely, our clients are really enjoying the technology platform as it was built to be extremely easy to administer. It was important from the beginning to minimize the amount of work required to manage the system for our client administrators. During implementation we set up and task all employees with completing a curated list of training based on the company’s size, the state they work in, their job title, duties and responsibilities. Managers have different training needs and requirements than employees, just as a service technician has different training requirements than a salesperson. This process will also include an acknowledgement of the updated policies and complaint reporting procedures provided by empathiHR. All trainings are set up on a recurring schedule and include an assessment to ensure comprehension. The empathiHR platform is built on a responsive design and can be accessed on any computer or mobile device.

Fleming: An important piece to developing a company’s Affirmative Defense as well as a healthy work environment is for employees to have the ability and confidence to make a complaint or grievance without fear of retaliation. How does empathiHR provide a place for employees to submit these?

Chris: Great question! Our solution includes multiple avenues of submitting a complaint, to include, the use of the Employee Hotline (both phone and email options), and also a ticketing tool within the platform which can be used to submit a complaint or grievance. In addition, empathiHR utilizes a Quarterly Questionnaire which is proactively sent to all employees and while it serves to reset the clock on claims every 3 months it gives a regular opportunity for all employees to share their concerns or grievances.

Fleming: I love the idea of a Quarterly Questionnaire to reset claims and I’m sure it helps you handle issues promptly. What happens when employee issues arise?

Chris: I think what our clients enjoy most is that their managers and employers are no longer left to figure it out themselves or seek out costly legal counsel with each issue. EmpathiHR makes available a Manager Hotline as well. Managers can, and should, seek guidance from empathiHR’s team of consultants made up of decades of experience consulting on best business practices. Our team is focused on addressing concerns and complaints to ensure employee rights are not violated while protecting managers and employers from the litany of potential missteps in the management of

their employees.

With the removal of pre-dispute arbitration agreements and the EEOC’s expected change of focus, it has never been more important to know what problems exist in your workplace. For example, you’d much rather find out you have cancer early when you can still take steps to address it versus not knowing about it before it becomes terminal. Learning about issues at work, and all companies have their own issues, while still being able to address them in house before they are outside your control, is always a better position for employers to be in.

Fleming: I can understand why managers would find great value in the hotline. I understand you even take it a step further with the empathiHR’s consulting solution that involves video technology. I imagine that can save a company time and money?

Chris: Absolutely. We not only save companies time and money, we provide an improved and consistent resolution process. The use of video technology when conducting investigations enables employers to respond and document complaints immediately, as well as with minimal disturbance to the workplace.

Capturing statements on video at the time of the incident or as close to it as possible, before an outside influence can “coach” the employee's story, or a witness's memory fades, is a far better way to document and preserve statements obtained during the investigative process.

Fleming: It seems empathiHR’s training, consulting, investigations and comprehensive reporting will easily consolidate the needed information for disputing unemployment claims, EEOC charges and other DOL charges or violations. When you consider the ever-changing compliance landscape, what do you recommend to employers?

Chris: Employers have to be proactive in addressing any gaps or inefficiencies in their efforts to comply with the litany of workplace laws and regulations. Employers take a comprehensive approach in order to establish their Affirmative Defense. Again, with pre-dispute arbitration agreements now prohibited for claims of sexual harassment and assault, an Affirmative Defense is becoming a necessity and may be the single best course of action available to employers to best avoid costly fines and penalties.

Fleming: Thank you Chris for sharing this timely information so that companies can better protect themselves as we move into a new era of compliance laws and regulations. This has been an extremely valuable conversation. We met through a client referral. What is the best way for companies to connect with you if they would like to learn more or obtain a complimentary review of their complaint and investigation process?

Chris: I’m happy to answer any questions Fleming.