A workplace that embraces diversity and civility is imperative for protecting employees, minimizing corporate legal risk, and advancing an organization’s business and culture objectives. In our last article, we discussed how to foster a collaborative environment and minimize legal and compliance risk, but what should a company do when, despite even the best efforts, misconduct occurs?
Effectively responding to misconduct requires the implementation of a well-defined disciplinary framework that is built on thoughtful responses to behavior and the fair application of disciplinary measures to all employees without explicit or implicit “safe harbors” for rank, function, or any other “special” segment of the employee population. As the DOJ has stressed in its guidance, consistency is critical to discipline. To evaluate the effectiveness of a compliance program DOJ advises asking: “Have disciplinary actions and incentives been fairly and consistently applied across the organization?
Does the compliance function monitor its investigations and resulting discipline to ensure consistency? Are there similar instances of misconduct that were treated disparately, and if so, why?
What metrics does the company apply to ensure consistency of disciplinary measures across all geographies, operating units, and levels of the organization?” Inconsistent application of discipline can erode employee confidence and the ability to run a professional workplace. It opens employees to allegations similar to those recently leveled against Barbara Lynch. As the New York Times reported, a former employee of Ms. Lynch stated: “We couldn’t write someone up if they were one of her favorites or deal with a complaint about a chef drinking in the kitchen.”
However, consistent application of discipline does not mean that companies must take a one-size-fits-all-behavior approach to misconduct.
Discipline Guided by a Fact- and Values-Based Approach
Effective discipline and remediation requires fact-based and nuanced decision-making based on the totality of circumstances. Stated simply, discipline should be proportionate to misconduct. Companies rightly communicate “zero tolerance” for harassment and other workplace misconduct. However, this has led many companies to view discipline as zero sum—identifying termination as the only way to communicate zero-tolerance.
Terminating an employee for any degree of misconduct may seem attractive because it eliminates the need for difficult determinations about the severity of harassment incidents and is a clear way to demonstrate that no degree of misconduct will be acceptable. However, zero tolerance policies that require termination for any infraction can be overly punitive or counter-productive to reducing inappropriate behavior in the long term. For example, fear of disproportionality can chill employees from reporting minor offenses that warrant corrective action, leaving them to fester into systemic issues that erode culture.
Of course, some companies, fearing overly punitive outcomes may face paralysis when evaluating less severe misconduct and relent to doing nothing at all. In such cases, zero-tolerance becomes “some-tolerance,” also causing an erosion of trust in the compliance program by signaling to employees that an organization lacks commitment to enforcing its own policies.
To avoid these zero sum scenarios, an organization should implement a disciplinary policy that provides for a range of disciplinary measures. such as verbal to written warnings to additional trainings for less severe infractions, to suspensions and terminations for more egregious offenses or repeated behavior.
In addition to providing a broader range of disciplinary options, measures such as focused coaching and meaningful warnings provide companies the opportunity to reinforce policies and standards of behavior and to directly communicate corporate commitment to a respectful and inclusive workplace culture. Employees can therefore learn the boundaries of what is appropriate and appreciate the consequences of their actions while permitting them the opportunity to correct behaviors and, perhaps, become champions of compliance.
Beyond Discipline: A Look at Incentives
The U.S. Department of Justice has long promoted the notion that employers should punish misconduct. Recently, the DOJ has also placed a finer emphasis on wanting to see employers actively incentivize compliant behavior. In a March 2023 speech, Deputy Attorney General Lisa Monaco stated that “nothing grabs attention or demands personal investment like having skin in the game, through direct and tangible financial incentives." In its recently released Pilot Program Regarding Compensation and Clawbacks, the DOJ sets expectations that companies will create “incentives for employees who demonstrate full commitment to compliance processes.”
No specific incentives are required; companies should design incentives that are geared towards their employee populations. This is an opportunity to be creative as well and forward-thinking companies will take the opportunity to develop incentive programs that speak to their particular sets of employees in order to maximize the benefits of the programs.
Alejandra Montenegro Almonte, Ann Sultan, and Nicole Gokcebay work with Miller & Chevalier’s Workplace Culture and Conduct practice. The authors acknowledge the contributions of Elissa Harwood, Summer Associate at Miller & Chevalier.