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« Hope springs eternal | Main | Do Your Employees have Free Will? »

The Supreme Court and Corporate Ethics

By Steve | June 23, 2008

A title as vast and presumptuous as this one cries out for a weighty book of several hundred pages. It will have to wait, because the Supreme Court decisions impacting organizations and workplaces merits more immediate attention from ethics and compliance practitioners. The key cases:

MetLife vs. Glenn
In this case, a corporation that both pays for and administers a benefit plan is found to have a conflict of interest that may weigh against the firm when deciding on the legality of benefits decisions. “The employer’s fiduciary interest may counsel in favor of granting a borderline claim while its immediate financial interest counsels to the contrary,” wrote Justice Breyer explaining the conflict. The conflict may be viewed less negatively if the firm has addressed it by “walling off claims administrators from those interested in firm finances, or imposing management checks that penalize inaccurate decision making irrespective of whom the inaccuracy benefits.”

Meacham v. Knolls Atomic Power Laboratory
The Court decided that the burden of evidence that an employment action was done for reasons other than age rests with the employer not the employee. In this case, 31 people were laid off by a federal laboratory; 30 were over the age of 40. The Court decision means that the laboratory—and other employers—must prove non-age related reasons for decisions such as this.

CBOCS West v. Humphries and Gomez-Perez v. Potter
These two cases are the most important of all for ethics and compliance officers, for they appear to recognize that U.S. civil rights legislation broadly prohibits retaliation against private and public sector employees for raising concerns about employment issues that may be viewed as discriminatory. In CBOCS, a black manager at a Cracker Barrel claimed he was fired for complaining about discriminatory treatment against other black managers. In Gomez-Pearce, an employee at a federal agency claimed he was retaliated against after she complained about age discrimination. Solid Court majorities in both instances recognized the rights of the plaintiffs.

In the face of these decisions, what can organizations do to protect themselves? The answer is simple, and no longer naïve: Do the right thing in the first place.

Ethics/compliance officers can and should be involved in making sure that their employer has reviewed structures for conflicts of interest, and put steps in place to reduce or eliminate them. (MetLife vs. Glenn) Ethics/compliance officers—not just employment attorneys—should be involved in thinking through large scale downsizing or layoffs, so that employees perceive fair criteria as guiding these difficult decisions. (Meacham v. Knolls Atomic Power Laboratory) And ethics/compliance officers not only have a critical role to play in fostering a culture of respect and non-discrimination, but in protecting from retaliation employees who have the courage to raise issues. (CBOCS West v. Humphries and Gomez-Perez v. Potter)

It is not every month that the Supreme Court provides so many ways for ethics and compliance professionals to demonstrate value. This is not a Midsummer Night’s Dream, it is the real thing. Take advantage of it.

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This blog contains personal reflections and commentary on corporate responsibility by the consultants of Ethical Leadership Group. It is intended to communicate short, timely items of interest to our clients and colleagues. We look forward to your comments. Please visit our Ethics and Compliance Blog for more general ethics and compliance issues.

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Corporate America's Hidden Risks
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