The Scott Pelley Debacle

 

Just a relatively short comment regarding the Scott Pelley debacle at CBS. Regardless of how you feel about Mr. Pelley's criticisms of his management or his performance on 60 Minutes, this situation is a clear demonstration of one of the fundamental principles of employment relationships and also a demonstration of what I consider to be an iron law of employment legal advice.

A quick summary-Scott Pelley decided to take his complaints about CBS management to an employee town hall meeting, where he confronted his immediate supervisor and called the CBS News editor-in-chief, Bari Weiss, unqualified, and his immediate supervisor barely qualified. He wrapped his very public criticism in the words “you'll never be welcome here,” directed at his immediate supervisor. CBS fired Pelley for cause shortly thereafter.

Pelly's conduct was clear, direct, intentional insubordination; an open and personal denigration of management made in front of other employees. Under these circumstances, CBS had every right (and based on its relationship with its owner, an obligation) to terminate Pelley's contract.  That's the fundamental principle being demonstrated.

The iron law of employment advice is a little more nuanced. But it goes something like this-when you have a troublesome employee that you would like to get rid of, whose performance doesn't provide you with a clear basis for termination under the terms of his contract or otherwise, who gives you a drop-dead, bona fide, unrelated-to-anything-else, reason to fire him, take it. And take it immediately. Do not perseverate, do not pass Go, do not investigate any further than necessary to establish a good faith belief that the conduct occurred.  You, as an employer, have been given a gift-a reason to get rid of this person that is unlinked to any dubious basis and that provides a complete challenge to any allegations of discrimination or otherwise wrongful discharge.  

That's what CBS did, and from a legal perspective, it was the smart thing to do.

The "Mansfield" Firm Craters

A nice piece of news ends the week for HR Law Guy- Diversity Lab LLC, a for profit DEI consultancy, has shut down. The California-based company specialized in “certifying” law firms as properly diverse under its so-called Mansfield certification program.

From their earliest days, I've maintained that diversity, equity, and inclusion programs violate the most basic tenets of US anti-discrimination law.  Virtually every one of these programs, which rely on the concept of intersectionality (the idea that there is a sliding scale of righteousness in life decisions that is measured by individuals’  race, gender, sexual orientation, religion, and other protected categories), ultimately devolve into some kind of quota system using suspect classes as a determinant in hiring, firing, promotion or other employment decisions. 

Jumping on the post-George Floyd racial equity bandwagon, Diversity Lab set up a certification program for law firms requiring them to have candidate pools made-up of at least 30% of individuals with protected characteristics, and a “certification plus” program requiring firms to certify that they actually implemented the 30% employment goals in their final employment decisions.  These quota systems were called “Mansfield certifications”, and were embraced by a number of major law firms anxious to showcase their bona fides as true participants in the social justice movement.

There were two problems with this approach. The first was that it relied on using protected categories as a basis for employment decisions, in violation of federal and state laws. The second was that this type of coordinated and collusive conduct by businesses, even under the social justice umbrella, had the potential to run afoul of antitrust laws.  

These programs work fine under a federal administration that regularly turns a blind eye to bigotry of the proper kind. When a new administration that was actually focused on enforcing federal discrimination law came into office, things began to change quickly.  DOJ, the EEOC, and the FTC all began investigations into these protected factor based hiring systems. The end result was that law firms began backing away from Diversity Labs and rethinking their quota systems in an effort to avoid federal scrutiny. That was the end of the company.

I can’t be too upset about the result—the irony of law firms jumping on the discrimination train was almost too much.

Deli Platter Discipline

Personal use of company expense accounts or outright fraud on company expense accounts is not that uncommon and it usually results in severe consequences. Most businesses will not put up with employees who exhibit dishonesty in their basic financial dealings.  Even minor inconsistencies, under circumstances where there is little or no doubt about intent, can result in immediate termination for the most senior executives.  

But the same general rules that apply to any employee discipline situation apply here as well. Discipline that seems unfair or that is performed in a way that casts doubt on the employer's motives can have significant blowback.  

Such was the recent case of a California JP Morgan account manager who was terminated over a business expense of less than $700 for a deli tray that was ordered as part of a Super Bowl party. JP Morgan terminated the executive, a 20-year employee with major account responsibility, because the company believed he had expensed food for a private gathering for family members to his $10,000 personal corporate expense account.  

The circumstances surrounding the actual party are a little unclear. The executive invited a dozen people but only two or three actually showed up. The people who did show were related to the executive, although the key guest was registered on JP Morgan's potential client list and apparently was a bona fide business contact. Given the uncertainty, you would think that a company would think carefully before terminating a two-decade, recently promoted senior manager over an expense item that was less than 10% of his annual account expense. Apparently, that didn't happen. Instead, during the internal probe of the claim, the company began assigning the executive's clients to other brokers even before he was formally interviewed about the expense issue.

The executive's wrongful termination claim went before an arbitration panel under the FINRA (Financial Industry Regulatory Authority) rules for employment disputes.  The arbitrators took a dim view of the bank's actions, as evidenced by the $4.2 million award to the executive, as well as an order recommending the expungement of the bank's reason for termination and termination explanation in the official records.  

JP Morgan indicates it will appeal the arbitration decision, but that will be an uphill fight. I suspect there is some serious reflection about personnel decisions based on expense accounts taking place in the bank's human resources department as a result of this decision.