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By:  La Toya Palmer – 5/6/14

As we all know from recent news, Los Angeles Clippers’ suspended-for-life owner made outrageously bigoted and racist remarks that have been widely and continuously broadcast in the news media. Employers and human resource departments should learn two lessons from this debacle.

First, this should be a lesson to any company or organization harboring their own internal “Donald Sterlings” in their midst. I’m talking about those rogue executives or managers known for their “off-color,” racist, sexist or other disparaging remarks, who get a pass because of their title, or because they have such a unique or rare skill set that others within the organization don’t want to deal with the problem they present. The Sterling incident shows how an organization can be impacted when such conduct is exposed, and could be used as a “teaching moment” to remind those individuals to keep their thoughts to themselves.

The second lesson revolves around the NBA’s inability to expel Sterling at its will. Rather, the league can only remove him from the league upon a three-fourths vote by the owners, who may or may not expel him because they too may have behind the scenes vulnerability in the form of young mistresses, impolitic statements or conduct that would bring scorn upon them if exposed. A mere employer would assert its at-will clause and excise Sterling, solving an image problem and solidifying a legal defense against any racial harassment claims. The NBA cannot. The Michigan Supreme Court has spoken to the situation where a harasser cannot be removed from the organization in a case known as Radtke v Everett: In such circumstances, the employer is stripped of the defense that it remedied the problem through prompt remedial action, up to and including discharge. Dr. Everett was a 50% shareholder of a veterinarian practice and owners cannot be “fired.” His practice thus did not have the “we fired the harasser” defense. Other organizations cannot “fire” the harasser, including public employers when the harasser is an elected official. The only way to prevent lawsuits in those situations is preventing comments that could be perceived as harassment.

Should Sterling’s behavior come as a surprise? As the media frenzy continues to swarm around Sterling’s most recent comments, others are coming forward with equally disturbing and not so secret stories. As defense attorneys, we might have taken the first red flag with a grain of salt. Sterling was sued by and settled with the U.S. Justice Department and a non-profit human rights group alleging housing discrimination. However, because many housing discrimination cases are based on “testers” who then receive damages recovered, we fear that the system can be manipulated to ensure such recoveries. But testimony in that case claimed that Sterling said the blacks living in his building smelled and were unclean, so the allegations qualify as a red flag. Sterling was also sued by former Clippers’ executive Elgin Baylor, who alleged he was underpaid as a general manager and fired after 22 seasons because he was African-American. Several disturbing stories came out of the lawsuit. Baylor alleged that Sterling would bring women in the locker room to “look at those beautiful black bodies.” However, a jury rejected Baylor’s case. In that light, the litigation is no more of a red flag than the high percentage of cases that P&C gets dismissed for our clients.

With all of these “smoking guns” surfacing during Sterling’s tenure, the NBA should have taken steps to address what was glaringly obvious. They had a serious problem in their group of owners. If the NBA had taken a “where there is smoke, there is fire” approach, it might have avoided its current PR disaster or even reformed Sterling’s behavior.

Still the lesson to be learned is that Sterling’s current comments and past transgressions are a plaintiff attorney’s dream and a management labor and employment lawyer’s and HR professional’s nightmare. Racist comments in the workplace are often cited as evidence of a hostile work environment and can turn a jury against the employer. Not to mention, the negative effects such comments can have on employee morale, customer and public perception, to name a few.

Business owners can protect themselves from this type of unpopular scrutiny and ridicule by having robust policies and procedures in place that deal with negative behaviors as soon as they surface. Business owners should:

  • Have a complaint process in effect with an in-house process where reports of discrimination are made to an identifiable person that acts as the gatekeeper and who responds to each and every complaint.
  • Ensure that all aspects of the investigation are well documented. In the event of a lawsuit, you want to make sure that you have all your documentation in order.
  • Have a written discipline policy in place-Employees should know what to expect when an investigation occurs. Sometimes this may include suspending a person with or without pay pending the conclusion of an investigation. The investigation may even end up with the termination of the employee who made the offensive remarks, although lesser measures are possible for initial transgressions.
  • Have an anti-retaliation provision, where those making complaints or participating in the investigation will not have their complaint or participation held against them.

If you have any “Donald Sterlings” peppered throughout your organization, there is no better time than now to address the problem head on. Better now than later, when a former employee sues you with a “slam dunk” case of racial discrimination or harassment.