Understand Anti-Discrimination Laws and Sexual Harassment

Let’s now move on to our other main topic, which is discrimination. So I want to give you a briefing on the law of discrimination. And then we’ll get discrimination from a risk management perspective. Discrimination is an important theory because, number one, it is used in wrongful discharge cases. Often when somebody is fired without cause, and bring suit, they will allege that in addition to the theories relating to employment at will, there was discrimination. And there was discrimination in the firing. Or as we’ve just discussed there was defamation. But discrimination is also important because it goes way beyond firing. It relates to all aspects of the work environment. So what do we mean by discrimination?

Well, let me give you an example under US law. Although many of these, nowadays, apply around the world. Countries around the world have adopted most of these categories of discrimination, age, which some countries outside the US have not adopted. And by the way, when does age discrimination apply? Well, when you become an elderly person, defined as age 40 or older, you are protected by age discrimination, disability, genetic information, national origin, pregnancy, race, religion, and sex those are again very common around the world. And one question that often arises is, how global is the US law, even if there is no local law protecting some way? And here’s the rule, regarding the global impact of US law.

US anti-discrimination laws are generally global, in that they cover US citizens, employed by US companies around the world. Now a non-US citizen would not be covered, that’s the general rule. However, there is a foreign law defense that companies can raise, even US citizens are not protected if US law would violate local law. So how would you decide this case? We’ve got a situation where, let’s say you’re a US pilot working for a US company in Saudi Arabia. Some of your flights take you over a holy area. The law in Saudi Arabia says that you cannot fly over this area, unless you are Muslim. And if you are caught, you will be beheaded.

You’re company demands that you convert to Islam, if you want to continue working as a pilot. You refuse to convert. Number one, what type of discrimination could you assert against the company if you sued the company? And number two, would you win your lawsuit? Please hit pause and write down your answer.

Well, the answer is, that you would assert religious discrimination.

And then the question is would you win or lose? You would lose your case. In other words, you would have to convert to Islam under the company demands, if you wanted to continue working as a pilot because of the foreign law defense. Remember, local law trumps US law. And the local law here in Saudi Arabia, says that you cannot fly over this area unless you are Muslim.

So we’ve discussed the main categories of discrimination. But in the United States, we also have state laws that go beyond federal laws. So here’s some examples of common state laws. Anti-discrimination laws cover gender identity, marital status, military discharge status, parenthood, political activities, receipt of welfare, sexual orientation, and use of a lawful product, for example, no discrimination for using tobacco, and finally, weight. And then in addition to state laws, we also have local anti-discrimination laws. So in my hometown, Ann Arbor, Michigan, we’ve got some additional categories. There’s protection against discrimination on the basis of your arrest record, your educational association, your height, your HIV status, the source of your income, or whether you were the victim of domestic violence, or stalking.

So, we have a huge number of categories of discrimination. And what I want to focus on here, since there’s so many categories we can’t cover everything, I’d like to take a deep dive looking at sex discrimination. Now here again, sex discrimination can be used in a lawsuit against a company, claiming you were discharged on the basis of your gender. No sex discrimination is allowed in firing somebody. But here again, sex discrimination, like the other types of discrimination extends to all aspects of employment. For instance, no sex discrimination in hiring, in job responsibilities, in promotion, in pay, and so on. However, sex discrimination raises an interesting question. And that is, what exactly is sex discrimination? And does it include sexual harassment?

And then what is sexual harassment? Well it’s very clear, that sex discrimination does include sexual harassment. But until 1986, it was unclear as to what constitutes sexual harassment. And, in that year, in a leading case by the US Supreme Court, the court decided first of all, that sexual conduct is illegal when it is unwelcome. So if the sexual conduct, let’s say if a manager is welcome by the employee, then it is legal, unwelcome illegal. But then the court went on to say that there are two forms of illegality. One is so called quid pro quo sexual harassment.

And then second, and this is where the supreme court clarified the law, the supreme court said there is also hostile environment sexual harassment. Now quid pro quo harassment is economic harassment. I will give you this, that’s the quid. I will give you an economic benefit, in exchange for the quo, in exchange for sexual behaviors. If you sleep with me I’ll give you a promotion. If you sleep with me I’ll give you a raise. If you sleep with me I’ll give you a job. That’s this for that, quid pro quo. The classic example is the so-called casting couch, used by Hollywood directors, those cases are fairly clear cut.

But what the Supreme Court also did is to say, you can also have non-economic harassment, based on the psychological aspects of the workplace. This is called hostile environment sexual harassment. This is the Supreme Court’s definition of hostile environment sexual harassment. The Supreme Court said sexual misconduct is illegal, even when it is not linked to an economic quid pro quo, if the conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment. This 1986 Supreme Court case has become so important, that it has been adopted around the world by companies, and by other countries.

This is the way the economist put it, a Supreme Court ruling in 1986, made firms liable if they allow a hostile environment in which harassment is tolerated. This lead to near universal adoptions of codes of conduct by companies. And countries have also adopted the same approach as the Supreme Court. Here’s a fairly recent change in the French sexual harassment law. They revised their law in 2012, and under their definition, sexual harassment includes putting somebody in an intimidating, hostile, or offensive situation. That’s the same concept developed by the U.S. Supreme Court. Notice that in other countries, the penalties for sexual harassment can be much more severe than in the United States.

In the United States, basically, if you violate the law of sexual harassment, the company’s liable for damages, and might have to reinstate the employee. But in France, for instance, you’re subject to a possible 3 years in prison and a fine. So sexual harassment is important around the world. It’s a violation of company codes of conduct and a violation of law. And what we’re going to do next, is to look at a case study of how this law might affect company decisions and operations.