Dotted Line: How to conduct business in a world of discrimination and harassment claims
This feature is a part of "The Dotted Line" series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.
Sexual harassment and discrimination claims and lawsuits in business environments and the workplace have been at the forefront of national news during the past year, and the construction industry is no exception.
Last December, for instance, The Laquila Group, a contractor based in New York City, settled a $625,000 U.S. Equal Employment Opportunity Commission discrimination lawsuit after six African-American employees claimed they had been the targets of racial slurs. The six alleged that in addition to the denigrating comments, company foreman Angelo Sicchio made them use separate bathroom facilities on one project.
In May, Linda Dugue, a female carpenter, sued her former employer, Farmingdale, New York-based Pabco Construction Corp., alleging that she was fired because of her gender and that during her employment she and other women were not given the same opportunities for overtime work, training or career advancement. Dugue, who filed an official complaint with her union, said she was also the target of disparaging and condescending remarks claiming that women did not belong on construction job sites.
The case is headed for a jury trial, according to the latest documents filed with the U.S. District Court for the Southern District of New York, although a July letter from Pabco’s attorney to the court indicated that both sides were willing to resolve the issue through mediation.
Attorney Erik Ortmann with Kaufman Dolowich Voluck in New York said most construction cases he’s seen have been centered on gender discrimination or sexual harassment. Women, he said, tend to be isolated on a construction site, and don’t have as many mentors or the same support system as their male counterparts. Threats range from inadequate sanitary facilities to being assigned tasks with the goal of physical exhaustion. In at least one severe case recently, he said, women were put in physical danger by someone intentionally dropping a brick near their work position. Because there are so few women in the industry, Ortmann said, they can be more easily targeted.
Law firm Greensfelder's Kevin McLaughlin, an attorney who specializes in employment law and claims of discrimination and harassment, believes that the volume of claims in the construction industry is relatively on par with other industries, but noted that overall, awareness has increased due to high-profile media reports and the #metoo movement. “People as a whole are behaving better."
Lawyers interviewed for this story said that, while contractors should first and foremost try to prevent such behavior from happening in the first place, there are a number of things they can do to protect against or cover claims when they occur.
Settlements and insurance coverage
There are a number of ways contractors can protect themselves from both legitimate and false claims. Contractors can purchase employment practices liability insurance, and, according to Dan Hanson, senior vice president of management liability and client experience at Marsh & McLennan Agency, it can help relieve the emotional and financial burdens of a claim.
“It’s not a pleasant experience,” he said. “It’s so emotional.”
McLaughlin said management is often surprised and upset by employees' bad behavior because most construction companies invest in discrimination and harassment training.
At first, Hanson said, company executives facing a claim that they believe is unjust insist they’re going to stand on principal and not pay a penny. About three months later, when the resolve starts to crumble as the accusations fly, many of the same individuals who were against a settlement are ready for the process to end, he said. It’s not a reflection on whether the claim is valid or not, Hanson said: They’re just ready for it to be over.
Parties can reach a deal even if formal charges have not been filed with the authorities, and, in exchange for a check, those making a claim usually agree to not bring any further action against the contractor or its insurance company.
Employment practices liability insurance isn't something most small to midsize contractors think about, Hanson said. Margins are tight, and many construction firms think it's an extra policy they can do without. “We have to educate them on it and let them know they have exposure,” he said. After decision-makers see lawsuits hit close to home, they’re more easily convinced that this type of coverage is necessary.
Insurance agents and underwriters also often offer webinars and other training tools so that employers can educate their employees about what constitutes discriminatory or harassing behavior.
These policies, Hanson said, are less expensive than what contractors pay for workers’ compensation or general liability insurance but can have $15,000 to $25,000 deductibles. Of course, premiums can go up if underwriters see an uptick in claims, making the policies unaffordable for many contractors.
In-house policies and procedures
The best defense against discrimination or harassment is prevention. A contractor’s best tool is a robust employee policy, Ortmann said, which puts in place clear rules to foster a non-hostile work environment. Equally as important, he said, is to make sure any such workplace policy also includes a complaint mechanism and a clear outline of the potential disciplinary actions violators could face. “[Contractors] have to implement the policy and staff it with people who are going to be accountable," he said.
Follow-through is also critical, Ortmann said. If employees who engage in discrimination or harassment are not disciplined, then the policy could end up being just a stack of paper that can offer a company little in the way of protection from legal action.
In addition, a thorough complaint process could help contractors insulate themselves from liability, especially if an employee who feels he or she has been the target of discrimination or harassment fails to follow the guidelines for reporting such behavior.
And not every employee transgression is a fireable offense, McLaughlin said. If there's a physical element to the complaint, there could be no choice but to let the offender go. If an individual accused of harassment has verbally tried to establish a romantic relationship that is unwelcome, however, discipline, counseling and reintegration into the workforce is a possibility.
Employers, he said, should also make sure their anti-discrimination and harassment policies address potential retaliation against the person making a claim. "Those claims are prevalent as well," McLaughlin said, "and could be just as bad as the original claim."
Besides protection from employee claims, contractors need to protect themselves from subcontractors' discriminatory actions, which they can do through contracts. Anti-discrimination policies, Ortmann said, are usually part of public contracts and often included in private commercial contracts when dealing with large companies or institutions.
Sometimes contractors see these in their prime contract with the owner. In that case, the contractor would normally incorporate the requirements by reference — or explicitly — into contracts with subcontractors. "The general idea," Ortmann said, "is that contractors are expected to abide by applicable laws, including those designed to prevent discrimination.
At some point, McLaughlin said, depending on the size of the construction company, development and implementation of anti-discrimination and anti-harassment measures becomes a cost of doing business. It's almost inevitable that a large contractor will be faced with a claim at some point.
"The worst thing you can do is ignore this issue," McLaughlin said in the form of advice to all contractors. "If you take steps to put policies in place and train management and staff on how it's supposed to work, you're armed if it happens."
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