How to Minimize Trouble

How to Minimize Trouble

Employment law by Janet Leiser | Senior Editor

With 100,000 employees, OSI Restaurant Partners Inc. Chief Counsel Joseph Kadow says it's obviously impossible and impractical to even attempt to monitor the sex lives of employees to protect against sexual harassment complaints.

But the Tampa-based restaurant chain, which includes the Outback, Bonefish Grill and Carrabba's brands, does have a policy against sexual harassment, Kadow says. And any intimate relationship between a manager and subordinate must be reported to the company. If not, the manager is fired when company leaders learn of the affair - no exceptions.

In a panel discussion at the May 12 meeting of the CEO Council of Tampa Bay, Kadow and three other lawyers known for their expertise on labor law discussed a fictional case they say could happen in real-life. They gave advice on what to do when confronted with a similar situation.

Most importantly, the lawyers say, don't retaliate against an employee following a complaint. That could be more costly than the initial allegation.

When asked whether it was a good idea for a company to have employment practices liability insurance, Kadow says: "We have it. We have 100,000 employees out there in 1,200 locations. About 70% of them are under the age of 30. Yeah, we have it with high self-insurance. It's for catastrophic type situations."

Peter Zinober, founding partner of Zinober & McCrea PA, who defends companies in employment and labor disputes, says allegations in the "Love in Siberia" fictional case were taken from a federal lawsuit. The following is an excerpt from the case:

Vladimir Kosnov, a Russian immigrant founded a Tampa-based restaurant chain in 1991 that grew to include 60 establishments and more than 5,600 employees by 2006.

The company employed Tommy Touchmore as vice president of human resources. Touchmore was intimately involved with Veronica Voluptuous, director of training and development. After Voluptuous ended the 5-year affair, she received her first unsatisfactory job evaluation from Touchmore.

Voluptuous hired attorney Fred Fondle, who sent a demand letter to the CEO and president. The lawyer wants the recent review removed from his client's file and $500,000 in damages for her pain, suffering and emotional distress.

Touchmore, unaware of the complaint, demotes Voluptuous, who resigns. Her lawyer drafts a lawsuit asking for $3 million within 10 days or he'll file the complaint and send it to the news media.

The panelists agree the $3 million demand is extortion on behalf of the plaintiff's lawyer, who for this scenario was Chris Barker, managing partner of Barker, Rodems and Cook PA.

Kadow and Zinober say it's rare for an employee to make up an allegation of an affair. But the CEO and chief counsel should talk to Touchmore to hear his side.

"Is he going to say, 'Yes it was a consensual relationship with no harassment?'" Kadow asks. "If it was a consensual relationship, he'll probably give you the full 'Jimmy.' The full Jimmy is Jimmy Swaggart, 'I have sinned. I was wrong.'

"The problem is: What does this fact circumstance do internally to your company over the next month? What has been going on in your company is a failure to maintain integrity," Kadow adds. "You have an allegation of the VP of human resources having an affair with a subordinate and then retaliating against her."

But don't be too quick to fire Touchmore. The lawyers say it'd be best to place him on paid leave and obtain a sworn statement from him.

After all, he's the key defense witness, Zinober says. And it's not illegal for a manager to have an affair with an employee. But retaliation is illegal.

In this situation, Touchmore might say the most recent review was the first objective one, Zinober says, adding: "If you can't settle the case, that's a reasonable defense."

Whatever happens in the negotiations with the plaintiff's lawyer, Touchmore has to go eventually, Kadow says, adding: "As you can see this is all about cutting your losses, and there's no choice, no upside here."

Zinober says it's a good idea to hire outside counsel to investigate the allegation, and that investigator will likely be a defense witness if the case isn't settled.

It would also behoove larger companies to hire a public relations firm to help with damage control, Kadow says, adding: "We used to have a public relations firm, then we got so much practice, we don't really quite need them that much anymore."

"If you have a smart plaintiff's lawyer, the lawyer understands it's the threat of going to the media that's valuable," he adds. "Once they go to the media and they've given you the bad press then their leverage is taken away in negotiations."

The panelists say bad publicity doesn't last for long.

"Our experience with them has been they're big one-day splashes and then they go away until trial or something else happens," Kadow says. "Frankly there isn't a whole lot you can say other than express your commitment to a harassment-free workplace and the proper principles of employment."

But media coverage does impact the company in other ways, Kadow says, adding, "This is going to be the talk of the office for some time, there's not a damn bit of work that's going to get done."

As for fighting in court, Kadow says: "What do you win when you win? You get billed from Peter, who has done a great job defending you, and you've taken your company and your people through months of litigation in a case where we're kind of splitting hairs. To take to trial to prove we're good people ... is very expensive and very dangerous."