Where Will You Spend Your Dollars?

The business media recently has been reporting the record level of litigation and settlement costs U.S. companies are paying for discrimination complaints brought before the Equal Employment Opportunity Commission (EEOC), and it poses an interesting question. “Where will you spend your dollars?”

While the number of complaints held steady in 2004 verses 2003, the monetary impact was up significantly overall to a record $420 million collected by the EEOC -- $168 million through litigation and $252 million through settlements and fines.

The payments to settle disability complaints rose to nearly $48 million, not including judgments obtained through litigation.

But there is even more to this alarming story as not all complaints wind their way through the government complaint processes. The U.S. Chamber Institute for Legal Reform reports small and medium-sized companies alone incur more than $88 billion in litigation expenses each year.

A few proactive steps could help curtail such losses, because most complaints stem from situations that could have been avoided in the first place. So what should you do? Here are a few ideas:

• Leaders and managers should know what discrimination laws prohibit and what they require. And then it goes without saying -- follow the law and fulfill the requirements appropriately and proactively.
• Create and support a nondiscriminatory culture in your business and ensure employees are fully educated regarding the laws and their responsibilities.
• Make compliance with anti-discrimination laws and company policies regarding them part of supervisors’ and managers’ performance evaluations.
• Be certain each person involved in hiring and firing decisions is well-versed in the laws and your pre-hiring, hiring, and employment practices.
• And if you have any questions about how to go about implementing such moves -- get help.

This is an era when the courts and laws directly influence our work settings and make it all the more important that both managers and employees understand their rights and responsibilities. Everyone has a role to play in creating and sustaining a culture of nondiscrimination, tolerance and acceptance, and building work relationships that help prevent the huge company losses being reported.

But in the end it is not just about complying with the law and reducing corporate and personal liabilities. Non-discriminatory, tolerant and accepting cultures create the kinds of positive employee-employer relationships required in order to attract and retain key talent and to improve customer service and business results overall.

If you have questions about where you are in creating such a positive environment for your business, or want to discuss ideas or actions you can take to get started, reply to this e-mail or contact us at info@merithr.com. You may also be interested in a brief Business Fitness Questionnaire to test the alignment of your customer, people and business practices. Misalignment can cause unnecessary expense including the types of avoidable settlement costs discussed in this article.