Kent J. Schmidt

Transcript

Voiceover:

[00:00:03] Welcome to another episode of the SharkCast on litigation risks management, where we explore why business are so frequently sued and how to mitigate and navigate the dangers lurking in these risky waters.  Join us now as we welcome our host, Kent Schmidt, litigation partner at the law firm of Dorsey & Whitney.

Schmidt:

[00:00:25] Welcome to another episode of SharkCast.  Some of my favorite episodes of SharkCast already are with repeat guests, guests that are on one episode and come back, and the listeners, and now watchers of SharkCast will recognize at least the names and the voices of Aaron Goldstein and Nisha Verma, two of my partners here at Dorsey that practice in the challenging area of labor and employment advice, as well as litigation.  So welcome back, Aaron and Nisha.  Thanks for agreeing to come back for yet another episode of SharkCast.

Goldstein:

[00:01:08] It’s always great to be here, Kent.

Verma:

[00:01:11] Thanks, Kent.

Schmidt:

[00:01:13] In this episode, unlike some of the earlier conversations where we delve into new changes in the litigation and the regulatory landscape for employers, I think it would be helpful to have a conversation that is more about the evolving environment in which employers find themselves.  To state the obvious, we live in interesting times, but certainly very uncertain times.  The change in the administration in the US last year has brought significant societal changes.  It was brought about as a result of changes of Americans view of government and of social issues.  But it’s also caused, I think, some of those changes to continue.  And we’re seeing an increasing amount of uncertainty as to what employers are to do, including with respect to the challenges to DEI made by the administration, the EEOC, new decisions, including earlier this year, from the US Supreme Court on reverse discrimination and an increasing volatility and acrimony in the workplace between and among employees on social issues and political issues.  We’ve touched on some of these concepts before, but I think it’s helpful to revisit them with an understanding of not just what’s ahead in the landscape, but where we are today.  What are the changes that you are sensing are already in place, and how are employers supposed to handle this?  So, any opening comments before I start asking what I hope will be some tough but fair questions.

Verma:

[00:03:08] Yeah, I think Aaron and I, when we talk about this topic in the moment we’re in in history, we definitely talk about it as an era of grievance, and we’re not even saying that pejoratively.  But I think there is this sense of grievance that permeates kind of every level of the employment relationship right now.

Schmidt:

[00:03:29] Every day is Festivus for the Seinfeld fans out there.  It’s not just one day a year, it’s every day.  Right?

Goldstein:

[00:03:37] And if I can just sort of make that concrete, Kent.  I mean, when we talk about this topic, I like to say you kind of throw away the black letter law and the stuff you go to law school for and look at what’s going on socially in society.  What’s changed profoundly is what it’s like in the room when you’re an attorney in a mediation trying to get one of these cases resolved, right?  If you go back 10 years, 15 years, you had more of a sense of the mediator pushing back on things.  Like you just shouldn’t be able to sue for that sort of a thing or what were your actual damages, right?  All of that sort of social pressure against suing your employer is gone, and then what I’m sure we are gonna get into more, over the course of this conversation, that sort of the through line in all the social changes we’ve seen.  We’ve seen things move leftward quite a bit during, for example, the George Floyd period and the summer protests.  We see the backlash against DEI now, but the through line through all of this is no one is interested in making it harder for people to sue your employer.  It seems to be the one thing people on the left and people on the right agree on.

Schmidt:

[00:04:45] A unifying force is more litigation is a good thing for individual employees.  Well, speaking of unifying, not too long ago, the US Supreme Court came down with this decision in Ames vs. Ohio Department of Youth Services.  It is the clarifying decision relative to the standards for reverse discrimination.  Which one of you would like to take on this decision, and the reason I say that it ties into the concept of unifying is, as unusual as it is, this was a unanimous 9-0 decision on reverse discrimination.  What does this decision mean, not merely from a tactical standpoint, but from the atmospherics, the messaging, and the implications of the decision, even beyond its application by lower courts?

Verma:

[00:05:47] When we talked about this before, Kent, you used the word cement, and I think that’s right.  It cements this concept that individuals who, whatever the reason, that might feel like they had the rug pulled out from under them, were set up to fail, or were treated inherently unfairly in this very significant relationship in their life, which is the employment relationship, are gonna be willing to come forward, and they’re not going to let the fact that they’re not in a traditional minority group stop them.  And so, I would call this a bit of lagging indicator as many things that take a long time to get to the Supreme Court is.  Aaron and I, on a day-to-day basis, are consistently seeing absolutely no selectivity or hesitancy by any specific group or demographic in terms of coming forward and saying hey, I want more money from my employer even though I’m not working there anymore, or even though I won’t be working there anymore, because I don’t like the way that my employer acted in the past.

Schmidt:

[00:06:43] Were you surprised, either of you, were you surprised at this decision including that it was 9-0?

Goldstein:

[00:06:50] For me, I think the only thing that surprised me was who wrote it.  You actually had a liberal justice writing this opinion, which to me, it’s, you didn’t just kill the thing.  You drove a stake through its heart.  You burned it to ash, and you, you know, blew it in the wind.  This idea that we’re gonna have different levels of proof for different groups bringing claims, and again it feels like a change in some ways, but really it’s just more, going further down the road, of knocking down barriers to sue your employer.

Goldstein:

[00:07:25] This was ultimately a doctrine then the circuits in which it applied made it harder for non-minority plaintiffs to sue.  You need to have some initial showing that this one of the unusual employers who actually has prejudice against the majority, and what they said is we’re gonna knock down that barrier.  And I think it’s emblematic of a lot of the strategy we’ve seen pushing back against DEI.  It’s not so much we need to make it harder for folks, who feel like they’ve been wronged, to sue in one category.  We just need to make it just as easy for everybody to sue.  If you look at the President’s Executive Order on DEI, when the President created a False Claims Act claim for people bringing claims, he didn’t limit that to Caucasian employees, probably legally couldn’t.  Almost certain he legally couldn’t, but he had no problem creating a whole new cause of action for the folks he wasn’t advocating for as long you could also make it easier for the people he was advocating for to sue their employer.

Schmidt:

[00:08:32] Could you just break that down a little bit further so we make sure that all of our listeners understand.  False Claims Act and DEI, what is the connection, and we don’t want to get too wonky here, but…

Goldstein:

[00:08:46] Sure.

Schmidt:

[00:08:47] …what’s the essence of that?

Goldstein:

[00:08:48] So put really simply, the False Claims Act says that the government can sue you if you lie in the context of a government contract.  You say something that’s inaccurate.  You make some sort of a material misstatement to the government.  So, if I lie about my ability to fulfill, you know, a weapons contract for the military, right.  I lie about our capabilities.  I can get sued.  You can get sued for up to three times the value of the contract, and under something called the qui tam action, an individual citizen can bring suit on behalf of the government and get paid kind of a headhunter fee, right, a finder’s fee for bringing the suit.  And what the President did is, in this executive order, he said it is now gonna be required in every government contract that you state to the government in all material respects you are compliant with anti-discrimination laws.  So, what that does is it takes anti-discrimination laws and plugs the False Claims Act into it.  So now you’re not just suing for your lost wages or maybe a little emotional distress damages.  You’re suing for three times the value of all your government contracts.  So, if you’re a company that’s got million dollars a year in government contracts, that’s $3 million.

Schmidt:

[00:10:02] That’s

Goldstein:

[00:10:03] It’s existential, right, and there’s a lot of questions.  I’m not a government contract lawyer.  A lot of questions about how those cases would actually play out, but given the dollars involved, you can’t, you cannot brush that aside.

Verma:

[00:10:16] The backdrop is that the, that change was implemented in an executive order that was clearly and explicitly stated to target what the administration calls the scourge of DEI.  Meaning the executive orders taken together indicated to private companies and federal contractors, and of course federal employees, that any action that fell under the previous umbrella of diversity, equity and inclusion is discriminatory and will be prosecuted by the government.  What is interesting and what ties on to this, ties to this overall consideration of more litigation, more grievance, more plaintiffs, more people asserting themselves, is the FCA provision created a hook for potentially people upset about federal contractors with DEI programs to be able to go after them, but it didn’t exclude anybody that’s just upset about what they feel is discrimination that we may have previously called in the traditional manner by that federal contractor.  It created a, it’s creating a new set of plaintiffs in the overall tenor and purpose of the order, but it’s not removing anybody.  And one thing we talked about when all of this was coming out is that we may have employees who are in traditionally minority groups that didn’t really necessarily feel a significant amount of interest in advocating or asserting themselves with respect to a specific issue with their employer, but seeing these orders come through creates an increased level of distrust when distrust is already there with institutions today, including your employer, causing maybe employees to see grievances where they don’t, they would not have before.  So, I can see this kind of deepening the divide between employers and their employees of traditional groups and their employees of what we would have called minority groups before.

Verma:

[00:12:16] I don’t see anybody sitting on the sidelines now saying this is a message to me that I should just keep my head down, do my best, and if there’s something I don’t like keep quiet about it and maybe I’ll just find another job.  I’m not seeing that.  Like there’s no mean for that basically.  I don’t see that coming from anywhere.

Schmidt:

[00:12:36] Sounds like more litigation to my ears.  So not a reduction of rights, or reduction in litigation, but just broadening the pool of potential plaintiffs.  You mentioned the word grievance a few times in what you just said, Nisha, and that’s a word we hear a lot.  In fact, I’ve heard the phrase grievance culture, that we’ve become a grievance culture.

Verma:

[00:13:00] Mm-hmm.

Schmidt:

[00:13:01] And it’s nonpartisan.  Grievances on the right.  Grievances on the left.  Elections, I think today, are driven by who wins the grievance contest.  Grievances against employers by employees is really what we’re talking about here.  Then you overlay the grievance culture with the social media phenomenon that we’re experiencing today, and you see more and more, you know, we’ve the phrase airing aggrievances, but publication aggrievances in a very broadly dispersed platform.

Schmidt:

[00:13:48] How are employers to manage, if at all, their employees’ posts on LinkedIn?  We’ll stick with LinkedIn since it’s the most dominate, purely professional platform.  Let’s say you have an employer whose employee is doing a lot of posting on LinkedIn that the employer doesn’t find flattering, whether about the employer or about social issues, and they try to curb the employee’s ability to post on those things on LinkedIn.  What are the guidelines and limitations on that?

Verma:

[00:14:30] I think that’s a risky area.  I think if I was talking to an employer, I’d tell them to think this one through significantly and probably let it go.  Probably what I’d tell them because people understandingly have strong feelings these days and we don’t really know which way some of these posts are gonna be received.  I think if there’s gonna be an effort to curb that sort of behavior, it needs to be very much tied to the individual’s position, and there needs to be some backdrop or context indicating that that social media posting is going to be externally perceived on behalf of the employer.  Kind of like a parent authority framework that you might use if you are looking just to agency theory because, and the reason that I think that it’s so risky and just may not be worth this particular fight is because in several of the states that I do work in, including California but also Utah, Aaron can chime in on Washington and Oregon.  What an employer can’t do is punish an employee for one, off duty conduct, and two, their political activities or believes outside of work.  But the issue is that as soon as we get into the content of somebody’s speech it indicates that if an employer takes action with respect to that speech, it opens the question, is it because they said something political or is it because of the political take that they had.  I also think, and I’ve talked about this with Aaron many times, but I think the morphing definition of political is really gonna create some issues for employers.  One concept that I’ve brought up before is what’s the difference between MADD, Mothers Against Drunk Drivers, and Moms Demand action, right?  Like, if you have a employer is that is doing a fundraiser for Mothers Against Drunk Driving, but simultaneously doesn’t want their employee posting about Moms Demand Action, how does the employer explain why one’s political and one’s not political?  They’re both a group of citizens taking some action to change the law that governs the conduct in which we all live in.  So, deciding whether something’s political or not is very much is too subjective, I think, to really find a thick line in these points.

Schmidt:

[00:16:54] And that’s what’s challenging about LinkedIn is, you know, if you’re posting on Facebook then it’s clearly, you know, your private account and this you is you speaking at personal capacity.  But let’s suppose you’re maybe not the CEO, but the CFO of a major public company and you’re posting not on Facebook or your private Twitter account.  You’re posting about something that is political or some, a conflict in the Middle East, or something of that nature and you are, everything about the platform identifies you with the company.  Do I hear you saying there’s really nothing that the company can do to say hey, would you mind keeping your LinkedIn post to business-related issues and staying off those hot topics?

Goldstein:

[00:17:51] There is a line that I think you can draw.  It’s one where the person fails to state that this is their personal opinion and they’re not speaking for the company.  Companies are on pretty firm ground when they require employees not to make statements on behalf of the company or that could be construed as on behalf of the company, and so you can do that.  But I think that there’s kind of a meta point here that think it’s lost when we talk about the law and what companies are and are not legally allowed to do, and for me this became crystal clear during MeToo.  Companies were facing massive losses not because they were getting sued, but because the social medias storm that got kicked up.  They were losing so many customers, right?  And so, I think for a lot of employers, the calculus is less can I get sued, right?  If one person sues you and you gotta pay $500,000 to make that case go away, that’s one thing.  But if a core constituent of your customer base hates what your CFO just posted, I think there’s clients out there that who might just have fire the guy and then settle it, right.  Because if that’s what’s hurting their business, right?  If someone, if the CFO says something really offensive to a group that constitutes 90% of your income stream….

Schmidt:

[00:19:14] It reminds of what we call in contract law, efficient breach.

Goldstein:

[00:19:17] Yeah, exactly.

Verma:

[00:19:18] Yeah.

Schmidt:

[00:19:19] Breach and pay the penalty and still the penalty is less than the alternative.

Goldstein:

[00:19:26] That’s why I tell employers all the time when they want to enter into these non-disparagement agreements or these confidentiality terms and settlement agreements, I said that’s not gonna save you if the person says they tried to keep me quiet and I’m gonna tell my story, right?  That’s the worst thing you can do, and it’s also why you see savvy businesses not trying to shut down the bad post from employees.  They respond to the posts, and say, you know, we’re really sorry you had a bad experience.  Here’s what the experience was like from our perspective.  We’re happy to discuss further.  Right?  You don’t.  The era of keeping things quiet and shutting people up is over.

Verma:

[00:20:04] So over.

Goldstein:

[00:20:04] That is not a thing anymore.

Verma:

[00:20:05] So over.

Goldstein:

[00:20:06] Nothing stays secret.  Nothing stays quiet.  The only thing you can do is take one narrative and then combat it with a better narrative.  And that’s like the only thing Nisha and I do in our litigation.  The plaintiff has their narrative, and we can’t so no, that doesn’t make any sense, that doesn’t work.  We have to come up with a better narrative.

Schmidt:

[00:20:26] So let’s pivot and talk about jury trials.  Something that our friends in Europe and other jurisdictions around the country still scratch their head at that we have civil jury trials in the US.  Granted very few of our litigated matters ultimately make it to jury trial.  We have a lot of cases that go to bench, or go into administrative proceedings, or arbitration, but there’s still, with some frequency, reports of significant jury verdicts against employers from claims brought by employees.  In our current environment that becoming more divisive and volatile and distrust of institutions, distrust of expertise, how’s that impacting the decision of employer whether to roll the dice and take a case to jury?

Goldstein:

[00:21:26] I think it has a massive impact, and I think that you’d mentioned before, Kent, this layering of grievance culture off of other phenomenon, on top of other phenomenon, I think another piece there is conspiracy culture.  I think we live in a moment in time where everyone wants to have the hidden inside truth.  Right?  Whether you’re Joe Rogan, whether you’re, you know, Kennedy, whether, everyone, you know, the government is keeping it from you.  These things are actually good for you, or these things are secretly killing you.  Right?  Everyone wants to have that inside knowledge.  And what that means for employers in front of juries is juries are looking for every reason to buy the conspiracy theory.  They look like a nice employer.  They look like a great place to work, but they’re secretly all, I don’t know, I’ll pick something ludicrous, freemasons.  Right?  Like whatever it is.  There’s some sort of thing in there that people can hook up into and what that means for employers is, again, it’s not enough to have the better argument.  You need to fundamentally prove that the plaintiff’s version of events is impossible.  Right?  It’s almost beyond, beyond a reasonable doubt, and I think that’s what is very scary for employers.  And when you have no shared sense of what is real, what’s really going on out there, how do you know what a jury’s gonna do, how they’re gonna react?  There’s just no, there are very few shared concepts that as a employment litigator you can pull into and get your arms around.  There’s a few, I think, we’re gonna get into later, probably, about what employers can do about this world we live in, but it’s not easy.

Schmidt:

[00:23:10] Yeah.  Nisha, I know you and I have talked about the pros and cons of arbitration provisions and different contacts.  You know, commercial contracts, consumer agreements and you, I know, have always been a huge proponent of arbitration provisions, to the extent enforceable in the employment relationship.  I assume that the increasing volatility of jurors and the impact that our current cultural shifts have had on jurors make you all the more adamant that figure out a way to get employment claims to arbitrators.  Is that correct?

Verma:

[00:23:52] Yeah.  I think there’s a lot of benefits to arbitration as it relates to both parties.  I think if the plaintiff and their lawyers can get the case in front of an arbitrator faster and let’s just find out what the evidence is, get it heard in a conference room, with longer days, with more ability to get more evidence in, I think it benefits both parties in terms of being able to be put this, probably painful period in each of their lives, in the past.

Verma:

[00:24:20] I will say that I think a lot of the concepts we’re talking about in terms of looking for fundamental fairness, in terms of giving the employee every chance, in terms of having incredibly high expectations for organizations and employers, I think that translates into arbitration as well.  I think that is taken into account by arbitrators as well.  So, I don’t want to give anyone the impression that if they have an employee who wasn’t treated as well they deserved to have been treated, they can go to arbitration and win the whole thing.  I do want to make that point.  I think the interesting thing about some of the jury research that we’ve done and some of the data we’ve seen is that people, when they’re in that jury box, behave differently than they may tell you or tell their employer in their own job.  In the sense of okay, you may have CEOs, CFOs on this jury.  You may have people in very high-level positions that they know for their own company, if someone were to bring a claim like this, they’d be very upset and very defensive.  But when they’re talking about literally any other organization they become just as defensive, and just as distrustful, and basically believe that some ill intention conduct happened as much as anyone else.  I think we’re seeing, with respect to all levels of the workforce, there is that increase distrust, particularly if you’re talking about another company that, you know, you’re not running.

Schmidt:

[00:25:50] So let’s bring the conversation around to some practical guidance.  We’ve painted, I believe, a fairly bleak picture for employers, given all of these societal changes and shifting of the landscape.  How is an employer that is truly focused on litigation avoidance, which is my passion and a number of different contexts.  Besides the obvious things that, you know, compliance in the L&E space, how are they to adapt their practices and their culture in order to put themselves in a better position if claims are raised or reduce the risk of employee claims, including what we’ve talked about here, reverse discrimination?  Now that we’ve got this new, not new but an expanding subset and increasing likelihood of litigation claims.

Goldstein:

[00:26:54] About 15 years ago I came up with the slide and still goes into every single one of my employment trainings, my presentations to management about how to avoid liability, and it just says Goldstein’s Law, don’t be a jerk.  Right?  Because I saw so many cases were coming from one dumb email, one mean statement, something that allowed a jury to just say, this is that evil boss that I had five years ago.  Right?  And I think what’s happened is that Goldstein’s Law, don’t be a jerk, is just not enough.  It’s not even close, right.  That’s like a negative obligation.  Don’t be mean.  Don’t do anything bad.

Schmidt:

[00:27:35] Good employers…

Goldstein:

[00:27:36] Yeah.

Schmidt:

[00:27:37] …get sued regardless, right?

Verma:

[00:27:38] Yeah.

Goldstein:

[00:27:38] Yeah.  Don’t be a jerk isn’t enough, because as we’ve been discussing, you’ve gotta prove the negative.  Right?  And so, there’s a corollary to that which is if employers can constantly be demonstrating, in writing, that they’re invested in their employee’s success makes it very difficult for you to get sued.  And I’ll give kind of a short story example.  Right?  If you’ve got an employee who’s not performing well and that employee’s manager is saying look, I’ve noticed that your performance has slipped in the following ways, completely factually.  And they say, first of all are you okay?  Is everything okay with you?  They show some compassion.  And then they say next what can I do to help?  Can I get you some mentorship?  Do you need some time off?  You know, if there’s any possibility that there’s something else going on, here’s an EAP number.  You show some compassion and some support, and you just create a record where the employer is clearly committed to that employee’s success.  It’s not just about being nice.  It’s about clearly this employer wants his employee to do well.  Now when that employee turns around, quits or get fired, and claims they were being discriminated against in some way.  You hate white men, right?  Whatever it is.  Why on earth would someone who’s trying to get you out of here and discriminate against you spend all that time, energy, and money trying to make you successful?  And so, if you can create in writing that narrative, it’s the one thing in these mediations where I can get the mediator to sometimes say, you’ve got nothing.  Sure, you can make the other side spend fees, but you’re gonna lose.

Schmidt:

[00:29:15] Can I layer to Goldstein’s Law, Schmidt’s Law on that?  You know, I think I would add to that, and I’m sure that this is implied, but just to state it.  To do it with authenticity.

Goldstein:

[00:29:31] Yes.

Schmidt:

[00:29:31] I think sometimes employees can understand, this is an email that’s sent to me, kind of a CYA email from my boss because they want to make sure they’re papering the record, but, you know, I don’t know how to say this.  This isn’t sort of legal insight, but, you never know what someone is going through as an employee.  They may, what you’re seeing at the office in terms of performance or their inability to handle stress may be the tip of the iceberg.  And if you can convey that with a great deal of compassion and authenticity that will go much further because I think employees can sort of call inauthentic reach out when they see it.

Verma:

[00:30:25] And it just makes everything worse too.  Something I’ve been saying for years is unless you’re an Oscar winning actor, do not do a PIP with respect to somebody that you have already decided you’re going to terminate.

Schmidt:

[00:30:35] I am sorry.  I gotta stop you with the…

Verma:

[00:30:36] I know.  I’m sorry.

Schmidt:

[00:30:41] …and you used one a minute ago, Aaron.  I didn’t stop you.  PIP.  What did you use a minute ago, Aaron?  It was abbreviated?

Goldstein:

[00:30:49] Oh, PIP is a Performance Improvement Plan.

Schmidt:

[00:30:51] No, but you used another one a minute ago.

Goldstein:

[00:30:54] Oh shoot, Kent.  They just come so fast for me.

Schmidt:

[00:30:57] Was it EAP?

Goldstein:

[00:30:59] Oh yeah.  Employee Assistance Program.

Schmidt:

[00:31:01] Okay.

Goldstein:

[00:31:02] That’s the, you know, like the hotline for mental health crises.

Schmidt:

[00:31:06] I said we weren’t gonna have a wonky discussion and then you guys start…

Goldstein:

[00:31:10] Here we go.

Schmidt:

[00:31:11] …interjecting your, so I’ve gotta stop those and make sure we understand.  So, and then the PIP is what?

Verma:

[00:31:17] Performance Improvement Plan.

Schmidt:

[00:31:19] Okay.

Verma:

[00:31:19] Which is an external manifestation that if the performance improves, you will continue working here.  If you…

Schmidt:

[00:31:28] Oh, I get those every week from the firm.

Verma:

[00:31:34] If an employer is putting, if there is already a decision that this person’s relationship with this organization will not be continuing, it is so offensive and will be taken as offensive by the jury or arbitrator or mediator or anyone else that sees the situation, to string the person along by giving them the indication, especially when they can see that it’s just papered, that if they improve they’ll be able to stay, with the understanding that this was always just a extra cover in case we get sued.  I think that being transparent and honest with somebody, if they’re future in the organization is unlikely to continue, is the, even if it’s painful, even if it might result in a little bit more severance than you wanna pay when you have that conversion, it is so much wiser than trying to create a paper trail that was never, a paper trail to support a narrative that was never true.

Goldstein:

[00:32:35] It’s the worst possible fact pattern when someone is given a Performance Improvement Plan, they meet the Performance Improvement Plan, maybe barely, but they do the things they were told they needed to do in order to keep their job, and then because the CEO doesn’t like this person they’re fired anyway.  And it always happens the same way.  HR comes in and says you can’t fire this person yet; we haven’t put them on a PIP.  And the CEO says well, you know what you’re doing so we’ll put them on a PIP.  And then they meet the requirements and the CEO says great, now I’m firing them anyway, and it’s almost definitive proof of wrongful termination in that type of case.  Forget winning summary judgement; you’re gonna lose at trial 99 times out of 100.

Schmidt:

[00:33:20] So as I hear this, I’m mindful of having too many metaphors.  And as those that I’ve interacted with over the past number of years understand, this sort of metaphor I always go to is sharks, and it’s part of the name of this podcast and the cover of my book, etcetera.  But I think that we’re talking about the metaphor of tightropes here, because it is a balancing act.  So, it’s sharks and tightropes, isn’t it?

Goldstein:

[00:33:54] Well, it’s sharks, tightropes, with a gale-force wind blowing you this way and that way, and there’s no net.  You know, it really is darn near impossible for employers because we really do live in an era where more and more people feel like if you’re following the rules and putting your head down, you’re a sucker.  Right?  Like, being a good company employee really means you’re a sucker.  And I actually think employers just really need to resist the cynicism.  Right?  I’ve been doing this for over 20 years, and I can feel real cynical sometimes, but my advice to employers is still build real relationships with your employees.  Like you said, Kent, it’s authenticity.  Don’t pantomime caring about your employees, actually care and do the things that a caring person would do, and it still comes through kind of paradoxically, given all of that background cynicism, when you do demonstrate caring, when it does come through it’s so refreshing to people that I really think you can, things can go a long way.  And last point, if you demonstrate real caring about employees, they’re so much less likely to wanna sue you in the first place, and if you’re authentic.

Verma:

[00:35:06] You know what?  Even if they do, even if they do sue you, we’ll deal with it.  Right?  But what’s most important is that we went into this relationship with the right intention and the most productive intention, and we tried to have a productive relationship.  All of the things we’re saying does not mean you won’t get sued.  You probably will, and by somebody who from the minute that their foot crossed the threshold of your facility was gonna sue you, on their very first day.  But if we have acted with our own values, implemented best practices, we will be able to defend that lawsuit, and the fact that we have to defend that lawsuit should not cause leadership or C-suite or anyone else to get so defensive about this employment relationship overall, generally that it hurts your relationship with the rest of your employees.  Right?  What we don’t wanna see is just because all of these efforts sometimes will still result in one person suing, that we don’t keep trying.  I think there is so much value in striving for perfection, knowing that it’s impossible.  I think that keeps you so much ahead of so many other organizations, and it’s always worth it.

Schmidt:

[00:36:17] Sticking with the pragmatic and prophylactic concepts, which I think is always where we have to end up in these discussions after we wring our hands for a bit.  It strikes me that a number of years ago the phrase DEI audit was not in anyone’s vocabulary.  Doing a DEI audit.  It was all about implementing the DEI.  And I have enough awareness of the labor employment realm that you live in, that I keep hearing the phrase and advice to do a DEI audit.  Let’s, for a moment, set aside the government contracting employees that have the False Claims Act risk that we’ve talked about.  Just a private employee that’s running a professional services firm or a products, making and selling products in the private sector, or a real estate company.  What is the, what is a DEI audit and what is the compelling reason to do a DEI audit?

Goldstein:

[00:37:28] Companies have their employee handbook.  Companies have their publicly facing statements, and that’s the easy stuff.  Right?  You can say those are commitments to equal opportunity survive scrutiny by the EEOC, the Equal Employment Opportunity Commission currently.  The risk a lot of employers face, and when this whole backlash against DEI substantiated and these Executive orders came up, the thing that woke me up like in the middle of the night was what kind of emails are floating around HR departments about the hiring decisions that they have made over the last five years.  There was so much pressure to achieve diversity by any means necessary.  You gotta ask yourself, did someone in my HR department say something that could be construed as reverse discrimination?  Right?  And the only way to go through and get your hands around what a plaintiff or even the EEOC might think about your records, is to have someone who knows how this works, go through those records and then give you a sense.  Right?  And even better, give you an opportunity to take maybe some of these unfortunate emails and come up with an explanation for why they’re there.  I mean, I’ve represented so many employers where there’s a bad email, like a horrifically bad email.  One was in an anti-trust case that I was involved with, but there were other emails that helped explain the bad email and showed that this was more of like a contemplation and not something that the company actually did.  Right?  And so that audit allows you to kind of prepare and get your defense ready before you even get that EEOC charge claiming, you know, violations of anti-DEI rules that have now come into being.

Schmidt:

[00:39:19] Give me an example, either one of you, of something that would come out in a DEI audit that would be of great concern to you.

Goldstein:

[00:39:28] Well, I’ll go first.  I know these emails exist out there.  I’ve seen them occasionally.  You’ve got someone in the recruiting department that says hey, we got enough white men, we’re not hiring this guy, period.  Like, that email is instanced, like, discriminatory failure to hire.  Right?  Now, the good news for some of these claims is if that candidate went across the street and got a job that pays just as well, there’s probably not any lost wages and if they were unaware of that email, maybe at some point you’ll be able to sue for emotional distress for that sort of thing, but is at least challenging.  But I think it’s those types of emails, which I think are pretty, they’re not gonna be as rare as you think, especially in parts of the country that were really concerned about achieving equity by any means necessary.

Schmidt:

[00:40:21] Yeah.  Written in a, written in an era where no one would really think twice, at least in some circles, about writing such an email.

Goldstein:

[00:40:29] An era that’s like three years old and a million miles away.

Schmidt:

[00:40:34] Yeah.  Nisha, do you have anything to add on the DEI audit overview?

Verma:

[00:40:39] Only that the administration is taking the position that programs that, even if they’re not necessarily indicating an overt preference but are designed to get more minorities in the door, are still gonna be of scrutiny and could be challenged.  So, I think it’s very possible that we had employers that are changing the zip codes where they’re recruiting, or actually digging into the racial makeup of those zip codes before going ahead and entering that area to recruit.  And, you know, I hope those employers will be able to come up with defenses around the challenges relating to that.  But it’s that broad with respect to the administration’s position.  As soon as the new EEOC acting chair was put into her position, the first announcement was that eradicating illegal DEI is number one priority.  And we’ve seen guidance since then with respect to what we can see were obviously well-meaning programs to meet the moment in 2020 during a period of social unrest and social change, that on its face excluded some employees, or were targeted toward bringing certain employees in, and therefore are going to be scrutinized, if not challenged.  That’s not to say that it’s all over, you’re gonna lose everything, just give up.  But it is to say you have to know what those look like in the eyes of today’s EEOC, and you have to be able to articulate those defenses early, because if you get a letter from the EEOC or you get another federal agency like we’ve seen knocking on your door right away to talk about your DEI, you don’t wanna be taken off guard.  You wanna be able to explain exactly why everything we’re seeing here should pass Title VII muster.

Schmidt:

[00:42:28] Yeah, I think the takeaway for me from this whole conversation is that employers have to be very, very nimble and the approaches and the mentality and the steps that were taken in litigation avoidance four or five years ago are not what needs to be done today, and it calls for adapting and changing and understanding those litigation risks with greater clarity.  In light of all of these extraordinary changes that are taking place in the landscape on all the matters we’ve talked about, and even more, this has been a really terrific conversation with both of you.  We’re now to the point in the podcast where as you, as veterans of the SharkCast podcast know, we talk about the Deeper Dive.  And this afternoon I’d like to ask each of you, I know you’re both avid readers, and I wanna hear what you either have read or are hoping to read, is on your reading list for the summer.  Bonus points if it has nothing to do with the law and is just pure pleasure reading.  That’s what summer’s for.  And again, it could be either something that you hope to get to or something that you’ve recently finished.

Goldstein:

[00:43:52] You wanna go first, Nisha?  I’ve got mine.

Verma:

[00:43:54] I completely forgot about this part of the program.  I don’t know how because I’ve been on this show many times.  So, I will let you go first.

Goldstein:

[00:44:05] Alright.  So, my wife just got done reading Ina Garten Be Ready When the Luck Happens, and was just describing to me that this whole concept, and it is so fundamental to I think how companies and people can be successful in life.  Successful people, successful companies do not come up with grand strategies that they just magically execute and bend the universe to their will.  I really feel like success has a lot to do with taking advantage of lucky instances when they happen.  Surely, the way I look at litigation.  And so I’m really excited to read that book and hear more about it.

Schmidt:

[00:44:44] It’s such a fascinating concept, and it rings true.  It really does.

Verma:

[00:44:51] So I will first start with a book that I recently read that I enjoyed.  I am a member of the Reese Witherspoon book club, so I very often grab those because you don’t have to think too much before grabbing them.  And there’s a book called Yellowface that was a monthly pick at some point.  And it is, all I will say is that it is so interesting in today’s time when we’re talking about things like cancel culture and DEI and minority voices, and it obviously was written before today’s time, but it snaps so much in focus in terms of today’s time.  And then I also understand that there’s a book that was recommended to me that has the word agitators in it, but it’s about how connecting the right people is really the, kind of the best marketing strategy.

Schmidt:

[00:45:37] Excellent.  I’ll just share my own book recommendation.  I don’t know if this is of interest to either of you, but I just finished a book a couple weeks ago called How the Irish Saved Civilization by Thomas Cahill.  It’s really about the impact of Irish culture that it permeates culture today, far beyond what you might be able to imagine both politically and socially and religiously, and it was fascinating to see how things that we take for granted today are traced back to a very small island in the northern Atlantic, and some of the thoughts and ideas that are sometimes overshadowed by things like the Renaissance and the British Empire and the Great Enlightenment thinkers in France.  So, it was a fascinating read and it sort of opened up a whole new world of Thomas Cahill, who has a lot of great works.  So, I’m onto another one of his books now as well.

Goldstein:

[00:46:45] Pick that one up.

Schmidt:

[00:46:47] As always, I’d like to thank our extraordinary team at Dorsey for making this another podcast of SharkCast possible today.  For more resources on this and other litigation risk, go to litigationrisk.com, where more information can be found, including a book on managing litigation risk, written by yours truly.  Thanks again to our guests, Aaron and Nisha.  And until next time my friends, this is yet another reminder that there are a lot of sharks swimming out there in the murky and chilly waters, so swim safely.

Voiceover:

[00:47:23] This podcast is not legal advice and does not establish an attorney-client relationship or create any duty of Dorsey & Whitney LLP or those appearing in this podcast to anyone.  Although we try to assure that the content of this podcast is accurate, comprehensive and reflects current legal developments, we do not warrant or guarantee those things.  The opinions expressed in this podcast are the opinions of those appearing in the podcast only and not those of Dorsey & Whitney.  This podcast is considered attorney advertising under the applicable rules of certain states.