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NYC Bosses Can’t Ask Prospective New Hires This Sensitive Question

(Washington Post, with permission from Jena McGregor)

In a vote Wednesday, April 5, 2017, NYC approved legislation that will ban employers from asking job applicants about what they make in their current or past job and could have far-reaching consequences beyond the city as employers try to standardize their practices. It’s an idea that’s starting to spread: In passing the measure, New York City joins Massachusetts, Puerto Rico and the city of Philadelphia — where the local Chamber of Commerce filed a lawsuit against that measure Thursday — in banning the question from job interviews. More than 20 other city and state legislatures have introduced similar provisions.

The measure, aimed at tackling pay inequity, prohibits employers from asking the candidate’s current or former employers about salary, as well as querying public records for it, although applicants can volunteer the information if they choose. The city’s Public Advocate, Letitia James, said it would affect about 3.8 million workers when it takes effect in six months and extends the prohibition to private employers. New York City Mayor Bill de Blasio (D) and Gov. Andrew M. Cuomo (D) had earlier passed orders that would ban salary history details from public-sector jobs.

The thinking behind the new law is that when employers ask about an applicant’s salary history, they can end up perpetuating any discrimination that women or people of color may have faced in the past. When employers ask about current or previous salary, they can hear a number that “anchors” them, and then offer to pay some percentage more on a figure that could already be too low. “Being underpaid once should not condemn one to a lifetime of inequity,” James said in a statement.

Although the measure is for New York-based employees, employees well beyond New York could feel the effects, say equal pay advocates and employment lawyers. Fatima Goss Graves, president-elect of the National Women’s Law Center, said in an email that the measure “stands to transform the way that companies operate around the country,” she said. “So many companies operate in multiple jurisdictions. If a company changes its practices in New York, it is likely to also make changes around the country.”

Melissa Osipoff, a labor and employment attorney with Fisher & Phillips, agreed that companies like to homogenize things as standard as a job application. With so many companies doing business in New York, “I think what we’ll see is companies that do business in New York City just eliminate that from their applications entirely,” she said. “This will have wide-ranging influence.”

Meanwhile, nearly 20 states, the District of Columbia and two cities (San Francisco and Pittsburgh) have introduced legislation that includes a provision against salary history information, according to data from the NWLC. At the federal level, the newly reintroduced Paycheck Fairness Act also calls to ban the question, and Rep. Eleanor Holmes Norton (D-D.C.) plans to reintroduce a bill from 2016 that did, too.

Some business groups have opposed the measure. Kathryn Wylde, president and chief executive of the Partnership for New York City, said in a statement that “closing the gender pay gap is important” and most major employers are already taking steps to correct the problem. “Inserting the city government into the relationship between employer and potential employee is potentially disadvantageous to both,” she said. “Politicians are eager to demonstrate their contribution to popular causes, which is about all this legislation accomplishes.”

It’s also possible the measure in New York could face legal challenges. On Thursday, the Greater Philadelphia Chamber of Commerce filed litigation against the law in that city. “The ordinance is a broad impediment to businesses seeking to grow their workforce in the city of Philadelphia,” the chamber said in a statement, citing a violation of employers’ First Amendment rights.

But other companies have begun privately ending the practice of asking the question on their own. James’s office said that several New York-based companies, including Kickstarter, Peeled Snacks and BBMG were among those who had already prohibited the question.

Others are weighing the concept. Cindy Robbins, who leads human resources for the cloud computing giant Salesforce, said in an interview this week that it’s a shift her staff has discussed training their recruiters to make. “For example, instead of asking what current compensation is, ask what is the expectation they have around compensation,” she said. “That changes the tone around negotiation.”

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As a boss, I’d definitely like to know a potential employment candidate’s previous salaries as it provides me with insight into employee performance.  Forcing employers to operate in the dark can only be bad for business as many small to medium sized businesses can not afford a high employee turnover rate and the less we know about a new hire, the more difficult it is to employ that person to his/her maximum capability.

BNI Operatives: Situationally aware.

As always, stay safe.

Profile Of An Employee Thief.

employee theft

The vast majority of annual losses that result from criminal activity in business and government entities are not caused by shoplifters or burglars in the United States. It is employee-thieves disguised in many forms who commit their crimes, which are, unfortunately, often discovered long after their various schemes begin. (We recently worked a case involving a medical clinic with 120 employees, 27% of which possessed a significant criminal history.  The average for a company this size is 2- 3 %.  In next week’s Part II of this series on employee theft, we’ll go more in depth with the details of this particular entity’s setup, causal factors and how we resolved the issue.)

Their many schemes are identified as occupational fraud by the Association of Certified Fraud Examiners, or ACFE.

Based upon the Gross World Product, the ACFE estimates that global losses from fraud may be $3.5 trillion.  No entity is exempt and just about any employee can be engaged in some form of fraudulent activity and theft, be it office supplies, time, gasoline, telephone calls, cash, assets, food, liquor, artwork hanging on the walls, bed sheets, pillows and blankets, dishes, narcotics, credit cards, checks, information, and whatever else is available for the taking. They pad time sheets and expense reports, submit false medical claims, forge mortgage documents, submit phony bills to clients and customers, and just about anything else that you can imagine.

The businesses or entities most at risk

The businesses most at risk to internal fraud and theft, in the order of losses from highest to lowest, are banking and financial services, government, and public administration, and the manufacturing sectors. Small employers (fewer than 100 workers) are more commonly victimized than larger companies because they usually cannot afford strong anti-fraud measures. They’re also often not in a financial position to absorb losses and  keep their business going as a viable entity.

Shocking statistics about losses

Businesses, globally, experience losses of about 5% a year from schemes committed by employees. The average  loss was about $400,000, and in one-fifth of businesses that were surveyed in the ACFE study, the loss was at least $1,000,000. In the least costly forms of fraud, the cost to business was about $120,000.

In about 87% of the cases the assets was the leading cause of losses. While financial statement fraud accounted for only about eight percent of all cases, it had the highest median loss of about $1,000,000 per occurrence. Finally, corruption and various phony billing schemes made up about one third of all cases but more than fifty percent of the dollar losses, for an average of $250,000.

Many cases will never be discovered in time and therefore, the actual amount of the losses may never be known . In cases that are referred to law enforcement, 55% of the offenders plead guilty, 19% of prosecutions are declined, and 16% are convicted at trial.

Profile of an employee-thief

ACFE reports analyzed a number of factors to identify the thieving employee: gender, personal credit history, education, criminal history, employment history, job duties and responsibilities, lifestyles and other influences in the employee’s life and concluded that long-term employees are the most suspect because of their knowledge of the inner workings of the entity and understanding of the controls that they must circumvent.

As a general rule, occupational fraud is carried on by men and women who fit into the following profile:

  • College educated employees are most likely to steal, those with high school degrees are second, and those with either graduate degrees or some college are least likely to commit criminal thefts;
  • Most who engage in fraud are first time offenders within the criminal justice system. The vast majority (87%) have never been charged or convicted of a fraud related offense, and almost the same percentage (84%) have never been punished or terminated by an employer for fraudulent conduct. Only five percent had prior offenses or had been charged but not convicted;
  • Two-thirds of the crimes are committed by men 31 to 60 years old. The highest concentration is between the ages of 36 and 45;
  • More than 75% of frauds occur in six departments: accounting, operations, sales, executive upper management, customer service, and purchasing;
  • The more authority an employee has, the larger the losses will be, with a median value by owner/executives of $573,000;
  • Losses caused by managers averaged $180,000 and by employees, $60,000;
  • The longevity of employment is related to the amount of losses. This is because the longer a person is employed the more he or she is trusted and is subjected to less scrutiny; and they have a better understanding of the system. Consider Bernard Madoff and the number of years he was able to defraud investors;
  • Employees who commit fraud during their first year (fewer than 6%) will cause an average of $25,000 in losses. Almost half the losses (42%) are caused by employees who have worked from one to five years. Those that worked for the company more than ten years caused a median loss of $229,000.

Now that you understand the make-up of a company thief, next week we instruct on loss prevention.

BNI Operatives: Situationally aware.

As always, stay safe.

 

Who Am I Dealing With?? Watching Your Back(ground) Checks.

Lately, we are requested quite often to research the backgrounds of prospective employees, personal and business partners and corporate entities.

With our now internet-enabled reach (not just to locate web-based information but to network with other investigative specialists), we are able to access nationwide data as to the personal, work and credit backgrounds of potential new hires.  We have gained the ability to likewise perform these background search services on a global basis for those seeking new business alliances, products and services.   Today, given the mobility and globalization of people and companies, often the backgrounds of the those with whom we might form potential partnerships are, at best based on hazy anecdotes and very basic, publicly available information.  Unfortunately, these types of non-professionally investigated histories can easily be manipulated, i.e., by net savvy perception managers.  For this, and many other reasons (personal security, access and information verification, to name several) we will always steer people away from the alleged “free” searches available online.  If one is serious about researching a potential employee or partner’s background, get it done right — by an experienced, highly rated private investigator.

Below we outline several types of background searches, their information yield and best applicability situations.

Basic Background Check, Individual:

Primary Uses:  Prospective new hires, subject identification, tenant verification.

Should yield:

  • DOB & Alias Names
  • SSN Verification
  • Address History (20 yr)
  • Address Summaries
  • Others Residing w/Subject
  • Possible Phone #s Associated w Subject (landline/mobile)
  • Email Addresses
  • Nationwide Criminal Profile (Includes State & Nationwide Criminal Databases, National Warrant Databases, Department of Correction Records, Nationwide Sex Offender Check)
  • Property Transactions
  • Civil Judgments, Tax Liens, & Evictions
  • Bankruptcies
  • Registered Vehicles *
  • DL Information *
  • Voter Registrations
  • Hunting & Fishing Permits
  • Professional Licenses
  • Possible Work Affiliations
  • Relatives & Associates

*In available states.

Recommendation: If the new hire will have access to accounting and or client information, we also suggest obtaining a release to conduct a standard asset search.

Comprehensive Background Check, Individual:

Primary Uses:  Prospective partners, major settlement/award cases, potential private care (nannies, housekeepers, home nursing aides…) and personal/business financial services providers (attorneys, accountants, brokers…)

Should yield:

  • All of the above plus :
  • Credit check (obtain authorization)
  • Financial background (to include but not limited to assets, banking information,  involvement in fraud investigations)
  • Professional background (to include but not limited to being a named party in any legal action, professional sanctions, industry rating)
  • Verified (in person/voice) and thorough reference checks

These are basic searches to conduct in the above referenced circumstances.  Of course, no two files will ever be the same and each search should be geared towards individualization.  A good professional investigator will know where to look and when to dig deeper.

As always, stay safe.

When Is It “A Bit” of Sexual Harassment in the Workplace??

Breaking: Verdict In Alexandra Marchuk v. Faruqi & Faruqi

We’ve been eagerly awaiting the verdict in Marchuk v. Faruqi, the high-profile sexual harassment lawsuit filed by Alexandra Marchuk against her former firm and one of its most prominent partners, Juan Monteverde. Trial started on January 12. The jury got the case on Tuesday and deliberated for about eight hours over three days.

And now the jury has spoken. Here’s a report from Law360 (sub. req.):

A New York federal jury on Thursday found Faruqi & Faruqi LLP and partner Juan Monteverde partially liable for creating a hostile work environment in a closely watched sexual assault case that has cast a harsh spotlight on the securities boutique.

An eight-member jury found Faruqi and Monteverde liable on former associate Alexandra Marchuk’s New York City law hostile work environment claims and partially granted her request for damages. She sought $2 million in damages. She was awarded $90,000 plus punitive damages to be determined later.

The economic damages — back pay, front pay, compensatory damages — are probably disappointing for Marchuk. But who knows what the punitive-damages award might bring?

On the bright side for the defendants, Monteverde and Faruqi were cleared of federal and state law claims of creating a hostile work environment. Recall also that Judge Alvin Hellerstein narrowed the case by dismissing various other claims, including Marchuk’s defamation and retaliation claims.

As of now, until we get the punitives, the outcome can’t be called as a huge win (or loss) for either side. This makes some sense given that both sides had their strengths and weaknesses at trial. But if the punitives turn out to be modest, then chalk this up as a defense victory — big headlines, small damages.

UPDATE (4:35 p.m.): Per Max Stendahl of Law360, who has been doing a great job covering the trial, the jury has reached a verdict on punitive damages. We’ll update as soon as it’s announced.

UPDATE (4:45 p.m.): From Max Stendahl: “Jury awards $45,000 against partner Juan Monteverde, $5,000 against Faruqi [as a firm].”

UPDATE (4:55 p.m.): Said one observer to me just now, “So all of that, and she ends up with $140k?

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And now, the EEOC regs:

The U.S. Equal Employment Opportunity Commission


Questions and Answers on Employer Liability for Harassment by Supervisors

Title VII of the Civil Rights Act (Title VII) prohibits harassment of an employee based on race, color, sex, religion, or national origin. The Age Discrimination in Employment Act (ADEA) prohibits harassment of employees who are 40 or older on the basis of age, the Americans with Disabilities Act (ADA) prohibits harassment based on disability, and the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits harassment of an employee based on genetic information. All of the anti-discrimination statutes enforced by the EEOC prohibit retaliation for complaining of discrimination or participating in complaint proceedings.
The Supreme Court issued two major decisions in June of 1998 that explained when employers will be held legally responsible for unlawful harassment by supervisors. The EEOC‘s Guidance on Employer Liability for Harassment by Supervisors examines those decisions and provides practical guidance regarding the duty of employers to prevent and correct harassment and the duty of employees to avoid harassment by using their employers’ complaint procedures.

1. When does harassment violate federal law?

  • Harassment violates federal law if it involves discriminatory treatment based on race, color, sex (with or without sexual conduct), religion, national origin, age, disability, genetic information, or because the employee opposed job discrimination or participated in an investigation or complaint proceeding under the EEO statutes. Federal law does not prohibit simple teasing, offhand comments, or isolated incidents that are not extremely serious. The conduct must be sufficiently frequent or severe to create a hostile work environment or result in a “tangible employment action,” such as hiring, firing, promotion, or demotion.

2. Does the guidance apply only to sexual harassment?

  • No, it applies to all types of unlawful harassment.

3. When is an employer legally responsible for harassment by a supervisor?

  • An employer is always responsible for harassment by a supervisor that culminated in a tangible employment action. If the harassment did not lead to a tangible employment action, the employer is liable unless it proves that: 1) it exercised reasonable care to prevent and promptly correct any harassment; and 2) the employee unreasonably failed to complain to management or to avoid harm otherwise

4. Who qualifies as a “supervisor” for purposes of employer liability?

  • An individual qualifies as an employee’s “supervisor” if the individual has the authority to recommend tangible employment decisions affecting the employee or if the individual has the authority to direct the employee’s daily work activities.

5. What is a “tangible employment action”?

  • A “tangible employment action” means a significant change in employment status. Examples include hiring, firing, promotion, demotion, undesirable reassignment, a decision causing a significant change in benefits, compensation decisions, and work assignment.

6. How might harassment culminate in a tangible employment action?

  • This might occur if a supervisor fires or demotes a subordinate because she rejects his sexual demands, or promotes her because she submits to his sexual demands.

Our opinion? (Not that anyone asked but if that’s the criteria, the Bulletin would be a weekly blank page.) Defense win.  Let’s face it – $140,000 for all of the effort that undoubtedly went into the case to arrive at this trial level?  No clear “message” was sent to employers in similar situations other than “Gentlemen, mind your manners”.  

I find it interesting that the partners fined were found “partially guilty” of creating a hostile work environment.   Were there other supervisors who were more culpable for allowing a sexually harassing environment to exist but had not been named? <tongue boring a hole through cheek> We’ll await the actual trial transcripts and report back.

For employers/supervisors:  Keep it in your pants/under your skirt and your hands (among other body parts) to yourself and mind your words.  Seems simple enough, doesn’t it?  Yes, a charged environment is highly competitive and there can be raging egos and through-the-roof biochemistry surges but check your bank account first and be mindful of the firm’s reputation.

BNI Operatives:  Street smart; info savvy.

As always, stay safe.

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