Fox’s Handling Of O’Reilly Complaints — A Cautionary Tale

Fox’s Handling Of O’Reilly Complaints — A Cautionary Tale

By: Ann Fromholz
Originally published by Law360 on April 24, 2017.

When a major star and moneymaker has a history of sexually harassing employees, the company may have to choose between protecting the star and handling the employee complaints appropriately.

For any responsible company, there is no choice but to handle the complaints properly.

In this case, the company went the other way, which should serve as a lesson to other companies because Fox did not eliminate the problem, it only allowed it to fester in a way that ultimately ruined the star, further eroded the company’s reputation and left far too many victims along the way.

As the situation recently came to a head, Bill O’Reilly, the subject of the complaints — which saw payouts of at least $13 million to at least five employees — dug a deeper hole for himself as well as the network by making Trumpian statements — proffering alternative facts to suggest no such scandal existed.

“In my more than 20 years at Fox News Channel, no one has ever filed a complaint about me with the human resources department, even on the anonymous hotline,” O’Reilly wrote on his website as the news of sexual harassment allegations against him grew.

To be fair, any company can have a Bill O’Reilly in its midst. The question is whether the company does the right thing once it realizes what’s going on. As a workplace investigator who routinely gets called in when HR departments have a complaint that’s too hot to handle, I can recognize how, in Fox’s case, the company went outside the lines. As word surfaced that O’Reilly was making unwanted sexual advances toward female colleagues, Fox acted more like a wingman than a policeman.

A company’s duty to investigate possible sexual harassment starts well before a lawsuit is filed. It starts before a formal internal complaint is filed. The duty to investigate possible harassment, and to take steps to stop the harassment if it does exist, begins when the company is “on notice” of the potential harassment.

Courts have made clear that an employer is on notice when it knows or should know of harassment. [See Nichols v. Azteca Rest. Enters., 256 F.3d 864, 875 (9th Cir. 2001); Fuller v. City of Oakland, 47 F.3d 1522, 1528 (9th Cir. 1994)]. The Equal Employment Opportunity Commission guidance on investigating harassment provides that, “[a]s soon as management learns about alleged harassment, it should determine whether a detailed fact-finding investigation is necessary.” The employer then has an “obligation to take prompt effective steps that will end current harassment and deter future harassment by the harasser or others.” [See Nichols, 256 F.3d at 875, 47 F.3d at 1528.]

When is a company like Fox News on notice of potential harassment? Articles about O’Reilly, former Fox News chief Roger Ailes, and the culture at Fox News report that other Fox News executives were well aware of O’Reilly’s (and Ailes’) conduct. The company, therefore, was on notice and should have investigated the possible harassment by O’Reilly and Ailes, and the existence of a “culture of harassment” when it first learned about it, regardless of whether or when anyone complained.

Picking the Right Investigator

After Wendy Walsh, a Los Angeles talk show host and former frequent guest on “The O’Reilly Factor,” complained of harassment by O’Reilly, Fox News parent 21st Century Fox asked Paul Weiss Rifkind Wharton & Garrison LLP to investigate. Paul Weiss is the same firm that investigated the sexual harassment complaints against Ailes in 2016.

The EEOC guidance on harassment investigations provides that “[a]n employer should set up a mechanism for a prompt, thorough, and impartial investigation into alleged harassment.” Companies often are inclined to hire the employment lawyers who regularly represent them when the need for an investigation arises. However, such a choice can invite allegations that the investigators are not impartial and that they have a conflict of interest. In addition, if the company’s regular law firm conducts the investigation, that firm might be precluded from representing the company if litigation arises and the investigation is called into question. Therefore, a company should consider hiring an independent investigator, a lawyer who is trained and experienced in workplace investigations, but who has not represented the company in the past.

Walsh’s lawyer, Lisa Bloom, is less than satisfied with the choice of Paul Weiss as investigator. She alleged that, because Paul Weiss has represented Fox News before, the firm has a conflict and should not serve as the investigator. She asked that Fox News assign the investigation to someone else. Fox News declined to do so.

There are many factors that go into choosing the right investigator for the job. Impartiality is an important one, but the appearance of a conflict of interest evidently did not carry significant weight to Fox News when it made the decision to hire Paul Weiss, perhaps because the statute of limitations has run on Walsh’s claims and she cannot sue [Nichols v. Azteca Rest. Enters., 256 F.3d 864, 875 (9th Cir. 2001); Fuller v. City of Oakland, 47 F.3d 1522, 1528 (9th Cir. 1994)].

A Big Star or Rainmaker Should Not Be Immune From Discipline

The New York Times reported — in an article that led to O’Reilly’s eventual departure on April 19 — that Fox News paid $13 million to five women who made claims of sexual harassment against O’Reilly. But his harassing conduct apparently went beyond those cases. Since that New York Times article, numerous other women have come forward with reports of harassment by O’Reilly.

The EEOC guidance, and case law, require an employer to take “immediate and appropriate corrective action, including discipline, whenever it determines that harassment has occurred.” The corrective action “should be designed to stop the harassment … and ensure that the harassment does not recur.

We do not know whether Fox News took any corrective action with O’Reilly as it paid out millions because of his conduct. We do know that the corrective action, if there was any, did not have the required effect of stopping the harassment.

At least one woman who complained to Fox News about O’Reilly says that she was told the network would not do anything because O’Reilly made too much money for the network. The New York Times reported that, from 2014 to 2016, “The O’Reilly Factor” generated more than $446 million in advertising revenues for Fox News. O’Reilly was the highest earner for the network.

This is not the first time an employer has decided not to take action against a superstar employee, even when that person repeatedly has engaged in clearly harassing conduct. Nineteen years ago, a jury awarded a secretary named Rena Weeks nearly $4 million for harassment she suffered at the hands of a powerful partner at the law firm Baker & McKenzie [Weeks v. Baker & McKenzie, (1998) 63 Cal. App. 4th 1128]. The conduct that the partner directed at Weeks was not isolated. The case included assertions that the partner had harassed as many as 10 other women before, and that — like Fox News — the firm turned a blind eye to this conduct.

The decision not to discipline an employee because they’re a star, because they make a lot of money for the company, or because they are powerful runs counter to the legal requirement. A company should hold every employee, from entry level to senior executive, to the same strict policy against harassment. If an investigation finds that harassment has occurred, the company should take action to stop that harassment and ensure it does not happen again, regardless of who the harasser is. Failure to do this likely exposes the company to increased liability.

The case of Fox News and Bill O’Reilly most likely is not finished, but it already should serve as a cautionary tale to employers who are concerned with legal compliance and with keeping their workplaces safe for all workers.

When do you need an outside investigator?

When do you need an outside investigator?

By: Ann Fromholz
Originally published by the Los Angeles Daily Journal on March 3, 2017.

Many employee complaints can seem very sensitive. Lewd stares, blatant harassment, allegations of criminal conduct.

At what point should HR or inside counsel assign the investigation of an internal grievance to an outside investigator?

A key criterion is bias. If there is a reasonable possibility that opposing counsel in trial could argue that the investigator was biased, take it outside.

There can be an appearance of bias when an employer uses an investigator who is – or who appears to be – vested in the investigation. In some cases, employers use an internal investigator who is involved in some way with the incidents being investigated.

If the investigator witnessed an incident that is part of the investigation, he or she cannot be an impartial investigator; he or she is now a witness. Similarly, employers often use an internal investigator who is in the reporting chain of the person being investigated. In this case, the investigator may be susceptible to pressure and may not be able to be neutral. Finally, an investigator may have supervisory authority over witnesses or the accused, which will affect the perception of their credibility and, thus, the credibility of the investigation itself.

Even if an internal investigator who is in the reporting chain with the accused employee or with witnesses is impartial, a jury may still believe that the investigator could not remain neutral. Likewise, employees who might complain to the employer and must rely on the employer to keep the workplace free from harassment may perceive that the employer is not taking steps to eliminate harassment if they believe that the person who investigates misconduct is motivated to find that misconduct does not exist.

If this happens, employees will be unwilling to bring complaints to the employer’s attention and to subject themselves to an investigatory interview. To this end, the guidance from the Equal Employment Opportunity Commission provides that a person accused of wrongdoing “should not have supervisory authority over the individual who conducts the investigation and should not have any direct or indirect control over the investigation.” In other words, the investigator should have no stake in the outcome of the investigation.

The EEOC advises employers to select an investigator who can conduct a “thorough and impartial investigation” with no stake in its outcome. The EEOC guidance also advises that the investigator be “well-trained in the skills required for interviewing witnesses and evaluating credibility.” Finally, the EEOC advises that, during the investigation, “[t]he alleged harasser should not have supervisory authority over the individual who conducts the investigation and should not have any direct or indirect control over the investigation.” These factors become very important if the investigation becomes part of the employer’s defense of a lawsuit.

If an employee is fired because the investigation determines that he or she engaged in misconduct, the employer likely will choose to make the investigation part of its defense of the case. Likewise, if the employer declines to act because the investigation found no misconduct, the complaining employee may sue, and the employer again may choose to incorporate the investigation into its defense.

The investigator must fully understand both the claims and the implications of the investigation. In most cases, an investigator will use the company’s internal policy, and not the law, as the standard to determine if there was a violation. The investigator also must understand the standard to which his or her investigation is held. In California, courts have held that the investigation must be adequate under the circumstances, give notice of the claimed misconduct and a chance for the offending employee to respond, and must reach a reasoned conclusion.

Not only must the investigator have the skills and training to conduct the kind of investigation that’s needed under the circumstances, but the investigator must be able to testify as a competent, unbiased and qualified investigator. The investigator will be subjected to rigorous cross-examination. Often, if the investigator is untrained, or under-trained, in conducting workplace investigations, the cross-examination can destroy the credibility of the investigation by demonstrating – or even implying – that the investigator lacked sufficient training and did not know what he or she was doing.

Often, the facts and circumstances weigh in favor of hiring an outside investigator. If the level or position of the employee being investigation, or of witnesses or others involved in the investigation, create a dynamic that would make it difficult for an internal investigator to be – or appear – impartial, the employer should retain an outside investigator. In addition, many small and medium-sized businesses simply do not have anyone internal who is trained and qualified to conduct an investigation. In some cases, the complaining party or the accused retain counsel, which increases the complexity of the investigation.

In other cases, the complaint alleges criminal conduct. In all of these cases, the employer is well-advised to retain an outside investigator. Some investigations are so complex that an employer needs to look outside to find someone capable. The investigation may touch on legal questions involving surveillance, employee privacy, recording communications, defamation, and confidential company information. More and more investigations require the investigator to understand the legal nuances surrounding social media evidence and electronically stored information. Most often, an outside investigator has this capability and expertise.

An outside investigator also is more likely to have experience testifying at deposition and trial and, therefore, is less likely to stumble under cross-examination. When the employer elects to engage an outside investigator, it is important that the investigator should not be the lawyer – or in the law firm – who will defend the company if the investigation results in litigation. Hiring the same person – or firm – to do the investigation and defend the lawsuit invites all manner of problems, from potential conflicts of interest to an appearance of bias (especially if the representation is an ongoing one) to problems maintaining the attorney-client privilege. An employer’s usual outside counsel, however, often is an excellent resource to refer the employer to a qualified third-party investigator.