In House - The FindLaw Corporate Counsel Blog

Bosses Behaving Badly: Can You Stop a Crisis Before It Starts?

It's bad enough when low-level employees open the company up to litigation through thoughtless behavior. It's even worse when it's an executive. AT&T got a reminder of just how embarrassing, and potentially expensive that can be. The telecom company is facing a $100 million employee discrimination suit over racist texts and images allegedly sent by Aaron Slator, the company's (now former) president of content and advertising sales.

AT&T isn't the only company to have suffered from an high level employee's poor behavior. Is there anything, besides triage, that can be done to stop executives behaving badly before the lawsuits come in?

It's About Compliance

When we think of compliance, we often think of industry regulation -- not getting on the wrong side of the SEC, staying on top of antitrust laws, and the like. But, complying with anti-discrimination laws can be just as important. So, don't let it be shoved aside as something for just H.R. to worry about. When Ellen Pao, for example, sued her VC firm for sexual harassment, it came out that the company didn't even have any official policies or procedures to handle such complaints.

It's important that high level employees at the company are aware of what constitutes a hostile environment and how to avoid creating one -- not just because they're mistakes are so much more damaging, but because they are in the position to control and influence others.

Take Proactive Action

We don't know if AT&T's offending exec had a history of discriminatory behavior -- though he did allegedly send a racist image with the description that it was "an oldie but a goodie. But plenty of top brass can act irresponsibly for years before it finally catches up with them. In these cases, one wonders, where the hell is the GC?

Take Dov Charney, the founder and once CEO of American Apparel, for example. He lasted for years as a corporate "bad boy" -- though bad might be too sympathetic of a descriptor. Charney was sued for having a "teenage sex slave," for chocking employees, and for tossing slurs around at workers. More proactive action on behalf of the company's board and counsel could have checked Charney's behavior long before the company started to tank.

Be Ready for Damage Control

Of course, you can't anticipate everything. Having a plan in place to deal with crises as they arise can help keep an unfortunate situation from becoming a bona fide disaster. GC's should know how to respond when damaging accusations. This includes having a go-to team of employees who can work well on the fly and can help neutralize problems as they arise.

AT&T certainly did that, terminating Slator and reassuring the public that his actions weren't representative of the company. They might be in a better position if they'd been able to act before the lawsuit was filed, however.

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