Ounces of Prevention: Avoiding Heavy Compensatory, Punitive Damages Awards Through Training.

The old adage that an ounce of prevention is worth a pound of cure is as true today as when it was first coined. We have seen countless cases where employers have found themselves embroiled in litigation that was avoidable. Supervisors and managers daily make decisions which plainly bind the employer. If these decision-makers are either unaware or unmindful of their legal obligations, then the actions they take can prove quite costly.

Our legislatures and courts, both at the state and federal levels, have not made things any easier. New laws, regulations and interpretations seem to come out each day. Many are counter-intuitive and illogical, others are just plain arcane, as they come up so seldom. As hard as it is for lawyers to keep up with new developments, it is all but impossible for managers who have many hats to wear.

It is easy to justify proactive and strategic training programs designed to avoid or minimize the risk of employment problems that can result in costly litigation. Many forward thinking companies have known this for a long time, and we have trained supervisors, managers and non-exempt employees for our clients for many years. Today, in a growingly litigious society where soaring litigation costs and knee-buckling jury verdicts abound, risk-reducing training programs become the proverbial no-brainer. Unless your supervisors and managers know the "do's and don'ts," there is no way they can avoid the many legal pitfalls they face. Effectively trained managers will help avoid lawsuits in the first place.

At the same time, there is a tendency for many managers to become gun shy. They are afraid to take any action and complain that their hands are tied by all the rules and regulations. Even experienced human resources personnel can be overly cautious at times. Managers who are confident about their understanding of what is permissible will make better decisions. Not to be overlooked is the effect on rank-and-file employees. Employment laws are a result of perceived unfair treatment by employers, and attentive compliance with the spint of these laws can foster a respectful and productive work environment where employees are valued and respected. Effective training on these issues contributes to such an environment.

The Legal Importance of Training

Implementing legal awareness training programs has become even more important in light of several recent Supreme Court decisions which address the issue of affirmative defenses and punitive damages in the sexual harassment context. In California, employers have a statutory obligation to ensure a workplace free of sexual harassment. Educating one's employees and managers regarding what constitutes unlawful harassment is the first step in meeting this legislated duty. In view of these decisions and statutory command, clear and precise policies and pro-active training programs which focus not only on workplace harassment, discrimination and diversity awareness, but also on management and leadership skills, will be increasingly important as organizations seek to avoid liability in the future for the inadvertent conduct of their supervisors and managers.

Recent legal developments have expanded an employer's liability for workplace harassment and discrimination. At the same time, they also have provided certain defenses to employers. The EEOC, for example, specifically recommended that employers provide training to ensure that all employees understand their rights, responsibilities and proper use of harassment prevention policies. Both state and federal EEO enforcement agencies also recommend that organizations train their supervisors and managers to recognize and respond properly to workplace harassment and discrimination.

Courts, like administrative agencies, consider training (or its lack) as a factor in evaluating the affirmative defense available to employers under Faragher and Ellerth (i.e., that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise).

On a similar note, the U.S. Supreme Court in Kolstad highlighted the necessity of anti-harassment and discrimination policies, training and compliance it employers want to avoid punitive damages in Title VII actions. ("In the punitive damage context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer's 'good faith efforts to comply with Title VII.") The logic of Kolstad suggests that an employer who takes adequate steps to prevent harassment, e.g., anti-harassment training and a written anti-harassment policy, generally will not be liable for punitive damages based on a supervisor's harassment. In light of these developments, employers are well-advised not only to review their anti-harassment policies and complaint procedures, but also to provide discrimination and harassment training to their employees. In sum, supervision and training are not only strong evidence of the employer's exercise of reasonab le care, but also are an employer's best hope of prevention as a protection against liability.

Ken Youmans is the West Coast Chair of Seyfarth Shaw's Labor and Employment Practice Group. George Preonas is the Managing Partner of the Los Angeles Office.