Modifying your employee handbook - the lesson from Penn State
The shocking disclosures of the alleged sexual assaults at Penn State and the reported cover up has raised questions regarding the adequacies of many association policies designed to prevent illegal practices such as sexual harassment, embezzlement, discrimination against protected classes, antitrust violations, and other prohibited conduct. Association employee policy manuals generally require an employee who witnesses conduct he/she believes is illegal to report it to the supervisor, and if the supervisor is involved, then to the supervisor's boss. The policy manuals also generally include a whistleblower protection clause advising employees that they will not be penalized for reporting illegal conduct or conduct that they believe to be illegal, even if an investigation determines that no illegal conduct or conduct that has violated the association's policies has occurred.
The Penn State allegations raise a further issue for consideration by associations and for all employers: What does the employee policy manual instruct an employee to do in the event that he/she does report illegal conduct to a supervisor and either no action is taken or action is taken that the employee does not believe adequately addresses the situation? Is it sufficient to instruct the employee to report questionable conduct to a supervisor and then not provide a further course of action in case the supervisor's response does not seem adequate to the employee? Associations need to address this issue.
If the conduct involved is serious enough, such as an allegation of sexual assault, one hopes that a full investigation would be made and if there is any substance to the allegations, the conduct is reported to the police. In such a case, the employee handbook should establish a hierarchy of persons within the association to be contacted in the event that management does not respond to the initial complaint.
In some instances, the cases involving the most serious misconduct provide the easiest answers. In cases such as assault or threatening other employees, the police should be contacted and the employee should be fired. Cases involving lesser levels of misconduct are more problematic.
Assume we have an allegation presenting an economic injury and that the victim is not an individual but the victim is the association or the employer. Evidence is discovered that a high-ranking staff member has been stealing funds from the association. A staff member discovers the theft and reports to the association chief staff officer who in turn reports to the board. An investigation confirms a theft totaling between $50,000 and $100,000. After reviewing the facts and confronting the staff member who took the money, the association decides not to prosecute the staff member based on his agreement to pay back the stolen funds, resign his position and never work in the industry represented by the association again. The board decides that it is not in the best interests of the association to go public or contact the police, and the association has been made whole by a return of the funds. The association wants to avoid the adverse publicity that might follow making the crime public. However, the individual goes out and soon gets a job with another association. When the new association called the former employer for a reference, they were told that it is the policy of the association to confirm dates of employment but not to give references. Does that meet best practice standards? Has the association acted properly?
Let's look at another situation. An employer operates a business that employs several salespeople. Each salesperson has a company car and regularly fills the car with fuel at a pump at the company plant. The company has a strict policy that only company cars and trucks can be fueled at the company fuel pump. One day the company president drives her spouse's car to work and fills it up at the company fuel pump. The employee responsible for the pump reports the violation of company policy to his supervisor and claims that the president is stealing from the company. What does the supervisor do? If the supervisor reports the incident to the CFO and the CFO does nothing, then what does the supervisor do?
In today's business environment with its emphasis on corporate governance, best practices and transparency, associations and all employers must recognize that reporting illegal conduct to a superior is only the beginning of a process and not the end of the employee's responsibility. The more senior the employee in terms of the organization, the greater the employee's responsibility to make sure that allegations of illegal conduct are addressed and not pushed under the table.
The lesson of the Penn State tragedy is clear: all employers need to review their policy manuals and adopt procedures consistent with today's best practice requirements. Reporting an illegal act may only be the beginning of an employee's responsibilities.
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