Posts tagged ‘sexual harassment’

Tawdry Misconduct At NCUA Uncovered By Inspector General

Reports of marijuana consumption, visits to strip clubs and possible sexual harassment involving NCUA’s office of General Counsel are some of the highlights from a report released by the Office of Inspector General on Friday. Some news just speaks for itself.

 Reach Out And Block Someone

There are many times when legislators and regulators use a chainsaw when they need a scalpel. The leading example of this unfortunate impulse continues to be the TCPA and its regulatory framework which not only take aim against obnoxious robo-calls but are also making it difficult for legitimate businesses including banks and credit unions to engage in rudimentary member communication.

Just how big a deal is this? Recently NAFCU and CUNA signed on to a letter with representatives of several other industries highlighting the practical consequences of the FCC’s overzealous implementation of the fatally antiquated federal statute.

According to the letter, callers and consumers “are not receiving proper notice or procedural protections with blocked or mislabeled calls. If left unchecked, these issues will have significant negative impact on consumers…” For example, the letter noted that two factor identification requests are being blocked as are security related messages and fraud alerts. These aren’t all that useful hanging out in your SPAM folder.

Of course all this was predictable. Remember that this past summer the FCC rushed out regulations giving telephone companies greater protections to more aggressively block suspected robo-calls. At the time credit unions and others warned that this proposal would result in unintended harm to consumers. The FCC went ahead with the rule but coupled it with a mechanism to create a “safety valve” to ensure that consumers could alert the FCC to the fact that legitimate calls were being blocked. The letter includes suggested modifications to the blocking techniques of phone companies. Hopefully some of these will be implemented but I’m not holding my breath.

Get Ready for One Wild Financial Rollercoaster

I’ve included a graph of the Ten Year Treasury Note which continues to drop lower and lower and lower. Combine this with a precipitous drop in oil price and the spreading coronavirus pandemic and today isn’t a good day to check out how your 401k is doing.

March 9, 2020 at 9:19 am Leave a comment

Four Legal Pitfalls to Avoid This Holiday Season

Maybe it’s because I’ve seen so many Christmas commercials already that I wouldn’t be surprised if Macy’s announces it is moving its parade from Thanksgiving Day to Halloween Day. Or maybe it’s because I felt the need to tell my wife that she shouldn’t expect a gift- wrapped Mercedes Benz waiting for her in the driveway Christmas morning but here is one man’s opinion as to how to handle some of the unique issues that arise each holiday season. Remember, these are simply my opinions and not a substitute for consulting with your attorney on these matters should they arise.

  1. Better off being Grinch when it comes to the Board. Many credit unions use this time of year to thank their Supervisory and Board of Directors for all the hard work they do. NCUA has consistently opined that only gifts of nominal value can be provided to board members without providing all that much guidance as to what nominal actually means. According to the trusty Merriam Webster Online Dictionary, nominal is defined as something “trifling or insignificant.” My rule of thumb is that when it comes to holiday gift giving, if the gift is something that would entice someone to be a member of your board, don’t do it.
  2. Festivus for the rest of us. This is always a good time of year to brush up on the rules governing religious discrimination. For example, if you let employees take time off for Christmas Eve, you sure as heck better allow employees who don’t celebrate Christmas to take time off for their religious holidays as well. An exception to this rule applies if the employer would suffer a true hardship by permitting the time off. A misapplication of this rule got Comfort Inn Ocean Front sued by the EEOC for religious discrimination. These protections apply to individuals with sincerely held religious beliefs. As the EEOC explains in this useful Q&A, religion extends far beyond the traditional faith. It includes “religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or that seem illogical or unreasonable to others. An employee’s belief or practice can be “religious” under Title VII even if the employee is affiliated with a religious group that does not espouse or recognize that individual’s belief or practice, or if few – or no – other people adhere to it.”As a result, we aren’t far from the day when employees make legitimate claims that they want to have Festivus off. You are better off just having a set number of floating days set aside for religious observance. If you find yourself delving into the merits of an employee’s beliefs, you are making a big mistake.
  3. The time of year to trust but verify. Both state and federal regulators emphasize the need to make employees in sensitive positions take continuous time off so that the credit union has the ability and time to identify maleficence. While both NCUA’s examination guide (Section 4-6 Examiners Guide) and New York’s Department of Financial Services strongly suggest two consecutive weeks must be taken off, anecdotally it seems that only state examiners occasionally are sticklers about the two week requirement. Incidentally, I have reason to believe that the state will be issuing guidance on this issue in the near future. In the meantime, make sure your policy in place mandating at least five days off for your key employees. What’s the holiday tie-in? Because with the end of the year right around the corner you should put those employees who haven’t complied with this requirement on notice that they are expected to do so.
  4. The morning after: Handle the office Christmas party with care. Let’s face it, the only thing more boring than going to a dry wedding reception is going to a dry office holiday party. After all, at the office party there are no family members celebrating the joyous event. New York’s Dram Shop Law actually pretty narrowly describes the circumstances when persons serving alcohol can be liable for subsequent accidents. In addition, New York Courts have been hesitant to impose liability on employers for accidents caused by their drunk employees. But obviously this does not mean that it’s party time. For what it’s worth, if I was organizing an office Christmas party I would (1) have it off the building’s premises so as to remove the threat of host liability (2) I would ask for volunteer spotters who agree to stay sober and make sure things don’t get out of control and (3) I would utilize Uber to offer free rides home to anyone who wants one.There is of course the ever-present danger of sexual harassment. There is no Christmas party exception to its prohibition which is why you can find scores of cases detailing office parties gone wild. In addition, keep in mind that New York law has removed any ambiguity with regard to your credit union’s liability for the acts of third-parties such as your favorite vendor during these get-togethers.

November 5, 2018 at 9:35 am Leave a comment

What You Can Learn From Harvey Weinstein

As you’re drinking your morning coffee, looking out over your staff and wondering how to squeeze a few more basis points of profit out of your credit union, it may seem like you don’t have much to learn from the downfall of The Weinstein Company, but that’s wrong. This is one of the watershed moments in sexual harassment law, much like the Anita Hill/Clarence Thomas testimony that lead to an infusion of female politicians and an increased emphasis on sexual harassment litigation.

The downfall of Weinstein and top executives at Fox News demonstrates that an environment that lets sexual harassment fester and go unchecked has the ability to take down a company. As a result, here are some key takeaways for Board Directors and top Executives:

  1. Selective ignorance is no excuse. While it isn’t realistic for a Board to know of all the actions taken by all its management officials, selective ignorance is no longer an excuse. What destroyed Weinstein’s company is not so much Weinstein’s actions, as repugnant as they are, but the reality that the Board either knew or should have known about his shenanigans and chose to do nothing about it. Your average credit union CEO is not a Hollywood mogul but when a Board member has enough credible information about misconduct, they need to investigate.
  2. A company’s culture starts at the top. Under NCUA regulations, examiners are responsible for determining whether a credit union has put adequate anti-discrimination policies and procedures in place (For example, take a look at Chapter 7 of NCUA’s Examiner Guide). And remember, that policies by themselves don’t go far enough unless you demonstrate that employees know, for instance, who they can reach out to if they have concerns about sexual harassment.
  3. Mad Men is no excuse. When the most recent allegations against Weinstein first surfaced in a New York Time’s article, one of his attorneys at the time, Lisa Bloom, described Harvey as acknowledging mistakes but explaining, “He is an old dinosaur and learning new ways.” This is what I call the Mad Men Defense. The TV show depicted a Madison Avenue ad firm in the 1960’s. Back then, the type of conduct engaged in by Weinstein would not have even raised an eyebrow. Fortunately, people have lost patience with the argument that individuals over the age of 50 shouldn’t be expected to know that sexual harassment is no longer acceptable.
  4. Sexual harassment is serious stuff. If allegations have the power to bring down successful companies, they certainly can damage your credit union.

Expect to see an increased emphasis on sexual harassment on the part of employees, not just employers. Now is a good time for your HR person to double-check those policies and procedures and make sure that everyone, including the credit union’s Directors, know the responsibilities they have and the roles they must play.

October 16, 2017 at 9:25 am Leave a comment

Eat, Drink and Be Merry. . .to a Point.

You are on the air with Henry, how can I help you?

Hi Henry!  I’m the newest person in our marketing department and my boss said with my enthusiasm I would be the perfect person to plan our holiday party, especially since the three previous people to plan it are either being deposed or have been fired.  I’m so excited!  Anyway, I have some questions that I’m supposed to ask you.

Q:  Some people think that having staff pass out on the dance floor is unprofessional and that we could get sued if one of our employees does something dumb on the way home. Should we stop providing alcohol?

A:  This question reminds me of my favorite toast, courtesy of Homer Simpson: “To alcohol! The cause of and solution to all of life’s problems.”  The safest answer is yes, but I am partial to the more equivocal response attributed to a 1920’s politician who, when asked if he was for or against whisky during prohibition, responded:

If by whisky, you mean the Devil’s brew, the Poison scourge, the bloody monster that defies innocence, dethrones reason, creates misery and poverty, yea, literally takes the bread out of the mouths of babes; if you mean the Evil Drink   that topples men and women from pinnacles of righteous, gracious living into the bottomless pit of despair, degradation, shame, helplessness and hopelessness —  then certainly I am against it with all my power. . .”

“But if by whisky, you mean the oil of conversation, the philosophic wine and ale that is consumed when good fellows get together, that puts a song in their hearts, laughter on their lips and the warm glow of contentment in their eyes; if you mean that sterling drink that puts the spring in an old man’s steps on a frosty morning; if you mean that drink, the sale of which pours into our treasury untold millions of dollars which are used to provide tender care for our little crippled children, our pitifully aged and infirm and to build our highways, hospitals and schools — then, Brother, I am for it.  This is my stand.”

Host liability for serving alcohol varies widely state to state with New Jersey and Massachusetts courts making a host liable for any injuries caused by a clearly intoxicated guest that they continued to serve and let drive home.   New York, in contrast, offers greater protection for the business hosting a party for its staff.  Its highest court explained that there is no cause of action against someone for negligently providing alcohol to an adult in New York State unless the alcohol is being served for a commercial purpose.  So, a bartender refilling the glass of a drunk employee can be sued, but the fact that the credit union paid for drinks doesn’t put it on the hook.

Does this mean it’s party time at the branch?  Not really.  For one thing, employers are responsible for an employee’s conduct while he or she is at the party and you don’t want to find out after the fact that Herb from accounting likes picking fights with bouncers once he gets a buzz.  And, of course, no matter what the law says you don’t want anything bad to happen.

My advice for you if you want to allow responsible drinking is to  pass out free tickets for one round or better yet pass out glasses of champagne for a single toast.  This way you get the point across about drinking responsibly without the credit union being too heavy handed.  I would also see if people would also be willing to act as designated drivers.

Q:  We traditionally treat the office Christmas party as if it’s a bachelor/bachelorette party — I swear some of our employees have more arms than octopi around the holidays; is there a problem with that?

A:  There is no office party exception to sexual-harassment rules.  This may seem obvious, but having skimmed through a fair number of cases on the subject recently, I’m taken aback by how many intelligently run companies treat harassment at the office Christmas party differently than they would harassment in the office.

For instance, if an employee comes to you complaining about a fellow employee’s conduct at the party, you have to respond to those concerns to the same extent as if the comments were made in the middle of the work day.  Recently, the federal District Court for Western New York refused to dismiss a lawsuit brought by an employee of the University of Buffalo who complained for at least two years about sexually aggressive conduct she was subjected to at office Holiday parties.  The University could not point to one example of adequate steps it had taken to address her concerns, even though the employee had told her immediate supervisor that she was so disturbed by the conduct that she was inclined not to go to any more office parties.

Q:  Can you believe they were silly enough to give me the Corporate Credit Card?  How much is too much to recognize our volunteers?

A:  I know your board members are selfless volunteers and you like to use this time  of the year to show them how much you appreciate their service.  But NCUA has made quite clear that anything more than a gift of nominal value runs afoul of NCUA laws and regulations about maintaining a volunteer board.

In the past, the legal opinions have authorized small deposits into the accounts of supervisory committee members; but prohibited providing board members free safe deposit boxes.

It may seem like it isn’t always clear where to draw the line, but if the gift is a token of appreciation such as a nice pen as opposed to the type of gift that grants a real benefit for board member service, such as a gold Rolex, you are going to be fine.

November 29, 2012 at 8:30 am Leave a comment

How To Handle Third-Party Harassment

Suppose an examiner or a member starts making one of your employees feel uncomfortable by greeting her with sexually charged innuendos and asking her out on dates. Is  the credit union  on the hook for this harassment since the examiner is not an employee of the credit union or under the control of the credit union?  The short answer is absolutely: 29 CFR 1604.11, promulgated by the EEOC,  provides that:

(e) An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing these cases the Commission will consider the extent of the employer’s control and any other legal responsibility which the employer may have with respect to the conduct of such non-employees.

For those of you who have been reading the trade press lately, you know that on November 7 NCUA will dust off its highest administrative appeals panel, the SRC, to hear an appeal of Ohio credit union Commodore Perry.  The credit union contends that it was punished  with a lower CAMEL rating by an examiner who found out that the credit union had complained to his regional office that he was sexually harassing and bullying staff members.  A subsequent investigation of the allegations by NCUA’s Office of Inspector General concluded that there was no harassment and the regional director denied the appeal.  I have no way of knowing what ultimately happened at the credit union, but, in addition to providing an important  example  on sexual harassment liability, the situation demonstrates yet again the need for a truly independent administrative appeals process.

A credit union shouldn’t have to make a Hobson’s choice between exposing itself to a sexual harassment lawsuit by failing to take appropriate action when confronted with a claim or risking retaliation by the examiner accused of the harassing conduct.  Similarly, I have no reason to doubt the integrity of any of the regulators involved in this dispute and no one should be placed in a situation where the decisions they make are inherently suspect.  A truly independent arbiter would not only give credit unions a disinterested set of eyes to review examiner determinations, but would give regulators the opportunity to show why their decisions were consistent with industry standards.  Unfortunately, since NCUA serves as judge, jury and executioner in the current process, its determinations are inherently suspect.


October 30, 2012 at 7:22 am Leave a comment

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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