Cost of Workplace Misconduct

There is a tendency for organizations to underestimate the all-in cost of workplace misconduct.

The sum total of all of these costs is a decline in the company's market capitalization. When the market learns about allegations of workplace misconduct or ethical lapses, the stock price reacts accordingly. The valuation of a company can fall by, literally, billions of dollars in a day depending on the facts. Shareholders are beginning to hold executives (and Board members) accountable when these situations arise.

02 Brand Impairment

In today's media (and social media) age, the impact that one complaint can have on a company's reputation can be devastating. Every employee has a bullhorn and can alert the marketplace to bad behaviors without the organization having a filter.

03 Client Losses

Many companies (and consumers) are increasingly proactive in 'taking their business elsewhere' in the event of misconduct or unethical business behaviors. This can be extremely damaging and costly.

04 Lost Productivity

When bad workplace behavior occurs, one of the most substantial ramifications is a decline in employee productivity. Not only do the employees involved in the situation become less effective, but the 'water cooler' chat kicks in and productivity declines.

05 Employee Turnover

Employees who have been subjected to bad behavior are more likely to look for other opportunities. When these issues become endemic within an organization, overall turnover rates increase.

06 Difficulty Recruiting

Just as turnover increases, Glassdoor reviews suffer and the organization finds itself having more difficulty attracting new recruits. This is a particularly big issue if the misconduct has generated attention in the media.

07 Fines

Fines from regulators are the most direct and quantifiable costs of workplace misconduct and business ethics lapses. Surprisingly, in many cases fines represent a small percentage of the overall cost.

08 Litigation Expenses

Litigation expenses are another direct cost of bad workplace behaviors and unethical business practices. Depending on the circumstances, these costs can be covered by insurance.

09 Insurance Premiums

Employment practice liability insurance (EPLI) and Directors & Officers insurance premiums are increasing substantially in the post-#metoo era. Additionally, more insurers are denying claims, resulting in much higher out-of-pocket costs for companies with issues.

Cost of Workplace Misconduct - Litigation

SELECTED PUBLICLY-ANNOUNCED SETTLEMENTS & AWARDS

This table below reflects publicly-available data relating to announced settlement amounts and awards. It is critical to understand that these costs typically reflect a small portion of the overall costs these organizations incur when workplace misconduct and business ethics issues arise. The market capitalization losses that shareholders suffer can reach billions of dollars.

Announcement Date	Organization	Dollar Amount	Type	Category	Source	Comments
11/12/2019	Nabors Corporate Services and C&J Well Services	$1,200,000	Discrimination	Workplace Conduct	EEOC	Discriminated against black workers, subjecting them to a hostile work environment, denying them high paying jobs, and retaliating against those who complained.
11/8/2019	Breakthru Beverage Group Illinois	$950,000	Discrimination	Workplace Conduct	Bloomberg Law	Discriminated against sales employees based on national origin or race.
10/19/2019	La Cantera Resort & Spa	$2,625,000	Discrimination	Workplace Conduct	Law.com	Discriminated against Hispanic banquet staff and subjected them to a hostile work environment by prohibiting them from speaking in their native language, Spanish.
10/15/2019	Walmart	$5,200,000	Discrimination	Workplace Conduct	Disability Scoop	Walmart failed to accommodate an employee with a developmental disability.
10/1/2019	Ford Motor Company’s Kentucky Truck Plant	$540,000	Discrimination	Workplace Conduct	Auto News	Failed to hire applicants due to their disabilities.
9/27/2019	Barclays	$6,000,000	FCPA / UKBA	Business Ethics	Compliance Week	Barclays hired relatives of government officials in order to influence them.
9/23/2019	Entertainment Benefits Group	$925,000	Discrimination & Sexual Harassment	Workplace Conduct	Bloomberg Law	Classwide disability bias, sexual harassment.
9/19/2019	Mercy General Hospital	$570,000	Discrimination	Workplace Conduct	Sacramento Bee	Fired an employee suffering from vision loss.
9/18/2019	Marquez Brothers	$2,000,000	Discrimination	Workplace Conduct	Business Journal	Black, white and Asian non-Spanish-speaking job applicants were passed over for less qualified Hispanic applicants.
9/17/2019	UPS	$2,250,000	Discrimination	Workplace Conduct	HR Dive	Refusal to provide light duty as an accommodation to pregnant workers violated the Pregnancy Discrimination Act (PDA).
9/10/2019	Connections CSP	$550,000	Discrimination	Workplace Conduct	EEOC	fired employees with disabilities who needed additional unpaid leave beyond the required 12 weeks under the Family and Medical Leave Act (FMLA).
8/29/2019	Hudson City Savings Bank	$1,000,000	Retaliation	Workplace Conduct	National Law Review	Woman was retaliated against after reporting gender discrimination.
8/22/2019	Deutsche Bank	$16,000,000	FCPA / UKBA	Business Ethics	Wall Street Journal	Deutsche Bank hired relatives of government officials in order to influence them.
8/20/2019	LA Times	$22,000,000	Discrimination	Workplace Conduct	Washington Post	A former L.A. Times sports columnist was awarded $15.4 million ($22mm including interest) in age-related discrimination case.
8/9/2019	Juniper Networks	$11,700,000	FCPA / UKBA	Business Ethics	Compliance Week	Juniper Networks' Russian subsidiary secretly funded leisure trips for customers, including government officials.
8/6/2019	Dartmouth College	$14,000,000	Sexual Harassment	Workplace Conduct	CNN	Female students were routinely subjected to rape and sexual harassment.
7/22/2019	Microsoft	$16,000,000	FCPA / UKBA	Business Ethics	SEC	Microsoft subsidiaries improperly handled funds in regards to foreign government officials.
6/20/2019	Jack in the Box	$15,400,000	Discrimination	Workplace Conduct	My News LA	Discriminated against and harassed a manager because of her age and a physical disability.
6/20/2019	Walmart	$282,000,000	FCPA / UKBA	Business Ethics	Reuters	Walmart failed to sufficiently investigate corrupt practices by its subsidiaries.
6/13/2019	Pogo Mine	$975,000	Sexual Harassment	Workplace Conduct	Alaska Public Media	Underground miner was discriminated against because she is a woman.
6/10/2019	New Mexico Corrections Department	$700,000	Discrimination and Retaliation	Workplace Conduct	KRWG Public Media	State prison workers were discriminated against because of their age and faced retaliation after reporting the allegations.
6/5/2019	JPMorgan Chase	$5,000,000	Pay Violation	Workplace Conduct	Xpert HR	Chase employee was wrongfully denied equal paid parental leave.
5/14/2019	Pape Material Handling	$650,000	Discrimination	Workplace Conduct	Fresno Bee	Allowed ongoing harassment of its Latino employees. Harassment included mocking employees’ accents and using derogatory ethnic slurs.
4/29/2019	Hologram USA (Alki David)	$11,000,000	Sexual Harassment	Workplace Conduct	LA Times	Jury awards Chastity Jones in her claims of sexual impropriety.
2/20/2019	IHOP	$700,000	Sexual Harassment and Retaliation	Workplace Conduct	Business Insurance	Employees at the Glen Carbon and Alton, Illinois, restaurants were routinely sexually harassed by co-workers and managers, including offensive sexual comments, groping, physical threats and, in one instance, an alleged sexual assault.
2/14/2019	Essence Business Group	$11,000,000	Sexual Harassment	Workplace Conduct	Workplace Litigation Report	Supervisors harassed female employees on multiple occasions.
2/14/2019	Fanatics Retail Group Fulfillment	$4,900,000	Discrimination and Retaliation	Workplace Conduct	Florida Times Union	A black employee was called a racial slur on his first day at work. When he complained later that black employees weren’t treated equally, the suit said, Perkins was told he’d never be promoted.
2/2/2019	KFC	$1,500,000	Discrimination	Workplace Conduct	Xpert HR	Supervisor actions were designed to discriminate against employee needing to breast feed.
1/30/2019	Teva Pharmaceutical	$6,000,000	Discrimination	Workplace Conduct	Workplace Litigation Report	Teva Pharmaceutical discrimination against employee based on age and national origin.
1/30/2019	Atlantic Capes Fisheries and BJ's Service Co.	$675,000	Sexual Harassment and Retaliation	Workplace Conduct	Seafood Source	Sexual harassment was perpetrated by managers, line supervisors, and co-workers. Allegations include unwanted touching, solicitations for sex, and crude comments.
1/6/2019	Keyways Vinyard	$11,000,000	Sexual Harassment and Retaliation	Workplace Conduct	National Law Review	Two former employees claimed they were sexually harassed and retaliated against for complaining about the harassment.
12/31/2018	CBS	$9,500,000	Sexual Harassment	Workplace Conduct	New York Times	Settlement for Eliza Dushku over misconduct on ‘Bull’ set
12/16/2018	Polycom	$16,000,000	FCPA / UKBA	Business Ethics	Radical Compliance	Polycom subidiaries facilitated improper payments to government officials.
12/10/2018	Cato Corporation	$3,500,000	Discrimination	Workplace Conduct	Charlotte Observer	Discrimination against pregnant employees and workers with disabilities.
12/6/2018	Family Healthcare Network	$1,750,000	Discrimination	Workplace Conduct	Fresno Bee	Implemented “rigid” practices and refused to accommodate the staff with appropriate leave, or failed to rehire them after leave.
11/19/2018	Vantage Drilling	$5,000,000	FCPA / UKBA	Business Ethics	Globe Newswire	Vantage Drilling lacked sufficient internal accounting controls in relation to the heightened risk of conducting business in Brazil.
11/12/2018	United Technologies	$13,900,000	FCPA / UKBA	Business Ethics	SEC	United Technologies subsidiary Otis Elevator Co. made unlawful payments to Azerbaijani officials.
10/16/2018	Sherwood Food Distributors	$3,600,000	Discrimination	Workplace Conduct	Cleveland Plain Dealer	Discriminated against a class of female applicants at its warehouses in Cleveland, Ohio and Detroit, Michigan by refusing to hire them for entry-level positions because of gender.
9/28/2018	Stryker	$7,800,000	FCPA / UKBA	Business Ethics	FCPA Blog	Stryker’s internal accounting controls were not sufficient to detect the risk of improper payments in foreign countries.
7/5/2018	Credit Suisse	$30,000,000	FCPA / UKBA	Business Ethics	SEC	Sought to win business by hiring and promoting individuals connected to government officials as part of a quid pro quo arrangement.
4/30/2018	Panasonic	$280,000,000	FCPA / UKBA	Business Ethics	CNN	Offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC in obtaining and retaining business from the airline.
4/25/2018	Fidelity National Financial	$2,200,000	Sexual Harassment & Retaliation	Workplace Conduct	My News LA	Employee alleged during legal team retreat a manager followed her back to her room and attempted to kiss her multiple times without her consent. After reporting the behavior to Fidelity management, she suffered further harassing behavior and had to go on leave under orders from her doctor. The heads of the legal department provided no support to her. She was let go from her job in November of 2015.
4/23/2018	Dun & Bradstreet	$2,000,000	FCPA / UKBA	Business Ethics	FCPA Blog	Two Chinese subsidiaries used third-party agents to make unlawful payments to obtain data vital to Dun & Bradstreet’s business.
3/26/2018	Kinross Gold	$995,000	FCPA / UKBA	Business Ethics	MarketWatch	Found to have awarded a lucrative logistics contract to a company preferred by Mauritanian government officials, despite concerns that the company was a high-cost provider with poor technical capabilities, in contravention of Kinross Gold’s bidding and tendering procedures. Kinross Gold also contracted with a politically-connected consultant to facilitate contacts with high-level Mauritanian government officials without conducting required, heightened due diligence. In addition, the company paid vendors and consultants without ensuring the payments were consistent with policies prohibiting improper payments.
3/21/2018	Family Dollar Stores	$45,000,000	Discrimination	Workplace Conduct	National Law Review	Fifty female managers alleged that the company had paid them less than similarly situated male store managers.
3/19/2018	United Airlines	$1,500,000	Discrimination	Workplace Conduct	Westword	United Airlines lost a decision after firing two senior flight attendants for a minor infraction to make an example based on their tenure.
3/9/2018	Elbit Imaging	$500,000	FCPA / UKBA	Business Ethics	Wall Street Journal	Paid millions of dollars to third-party offshore consultants and a sales agent purportedly for their services related to a real estate development project in Romania and the sale of a large portfolio of real estate assets in the U.S. Elbit and Plaza made these payments even though they lacked evidence that the consultants and the sales agent had actually provided the contracted for services.
3/8/2018	Beverly Fabrics	$2,600,000	Sexual Harassment & Workplace Bullying	Workplace Conduct	Jury Verdict Alert	Plaintiff was subjected to sexual harassment by a male coworker who tormented plaintiff with homosexual slurs, spreading false rumors about plaintiff, making highly inappropriate physical contact and gestures towards plaintiff, and targeting plaintiff's heterosexual identity by using "sex" as a tool of harassment against plaintiff. Plaintiff reported the coworker's actions to his supervisors, whom plaintiff believed already knew of the conduct, ignored it, and allowed it to continue.
3/6/2018	Domino Sugar	$13,400,000	Discrimination & Sexual Harassment	Workplace Conduct	New York Daily News	Employee alleged she had endured sexual discrimination and harassment by a supervisor at the sugar refinery.
2/15/2018	UCLA	$13,000,000	Discrimination	Workplace Conduct	CBS	UCLA oncologist alleged she was forced to take another job after complaining about discriminatory treatment based on her gender.
1/28/2018	Sybron / Kavo Kerr / Danaher	$31,000,000	Discrimination	Workplace Conduct	KFI AM 640	Employee subjected to comments such as ``you are outdated,'' ``we need younger workers here,'' ``you are part of the old culture'' and ``dumb female.'' In addition to age discrimination, the jury found true causes of action for age harassment, wrongful termination and retaliation.
1/4/2018	Asian American Drug Abuse Program	$4,500,000	Discrimination	Workplace Conduct	National Law Review	AADAP failed to accommodate her disability, and acted with malice, oppression, and/or fraud.
12/8/2017	Washington DC Metropolitan Transit Authority	$6,500,000	Discrimination	Workplace Conduct	Law 360	MTA's Metrorail's criminal background check policy disproportionately discriminated against African Americans.
9/12/2017	State of New Jersey	$11,800,000	Discrimination	Workplace Conduct	Employment Law Firm Blog	Failure to accommodate a disability, discrimination based on a disability, and discrimination based on a perception of a disability under the NJLAD.
7/7/2016	Fox News (Roger Ailes)	$20,000,000	Sexual Harassment, Discrimination & Retaliation	Workplace Conduct	CNBC	Employee Gretchen Carlson alleged Ailes fired her because she refused to have sex with him. Ailes made comments of a sexual nature towards Carlson, calling her a “man hater” who tried to “show up the boys.” Ailes asked Carlson to turn around in his office so he could view her “posterior,” as well as told her he has “slept” with three former Miss Americas but not with her.
7/5/2017	Metropolitan Life	$32,500,000	Discrimination	Workplace Conduct	Insurance Business	Firm alleged to have maintained “a racially biased corporate culture and stereotypical views about the skills, abilities, and potential of African Americans that affect personnel.”
6/29/2017	McWane, Inc.	$16,600,000	Discrimination	Workplace Conduct	The Press Enterprise	Employee was discriminated against because of his race and that his employer failed to prevent his mistreatment.
6/15/2017	Los Angeles Department of Sanitation	$17,400,000	Discrimination, Retaliation, andWorkplace Bullying	Workplace Conduct	New York Post	Employee alleged he endured repeated harassment by supervisors, who falsely perceived that he was gay. He was subjected to verbal abuse, hazing and a bullying campaign in which his portrait was altered to show him in a same-sex relationship with a subordinate.
2/16/2017	Bureau of Prisons	$20,000,000	Sexual Harassment and Discrimination	Workplace Conduct	Quartz	Bureau of Prisons agreed to pay women who were sexually harassed by inmates at prison in Florida.
1/31/2017	Lockheed Martin	$51,400,000	Discrimination	Workplace Conduct	National Law Review	Employee alleged he was selected for layoff at 66 while two other employees holding same title, both significantly younger, were allowed to keep their jobs. He also alleged that the company had a practice of giving younger workers better reviews and raises to keep them at the company, while older workers were given lower ratings and raises since they “had nowhere else to go.”
1/18/2017	United States Secret Service	$24,000,000	Discrimination	Workplace Conduct	CNN	Alleged that the federal agency denied job opportunities because of race.
1/3/2017	Wells Fargo Advisors	$35,000,000	Discrimination	Workplace Conduct	Advisor Hub	Alleged that African American brokers and trainees were denied business opportunities, excluded from high-producing teams because of their race.
8/28/2013	Merrill Lynch	$160,000,000	Discrimination	Workplace Conduct	Reuters	Alleged to have segregated the workforce, including policies that steered black brokers into clerical positions and reassigned their accounts to white workers.
8/10/2012	Washington D.C. Department of Parks & Recreation	$3,500,000	Sexual Harassment & Retaliation	Workplace Conduct	Washington Post	Employee alleged her supervisor began to harass her by asking her on dates and whether she “had a man.” When she rebuffed the supervisor’s advances, the harassment intensified, the lifeguard’s attorneys alleged. She reported the behavior to a half-dozen supervisors but the harassment did not stop. Shortly after filing a written complaint in October 2006, she was fired.
6/29/2012	Yellow Transportation and YRC, Inc.	$11,000,000	Discrimination	Workplace Conduct	EEOC	Based on consent decree. Subjected African-American employees to a racially hostile environment and discriminatory terms of employment.
6/13/2012	ArcelorMittal	$25,000,000	Discrimination	Workplace Conduct	Industry Week	Federal court jury awards $25 million in damages to a steel plant employee.
3/2/2012	Mercy General Hospital	$168,000,000	Sexual Harassment	Workplace Conduct	ABC News	Federal court jury awarded former cardiac surgery physician assistant $125 million in punitive damages, $39 million for mental anguish and $3.5 million for lost wages and benefits.
12/8/2011	Dr. Pepper	$18,300,000	Discrimination	Workplace Conduct	Twin Cities Pioneer Press	Jury award based for allowing a manager to discriminate against older delivery drivers and for disability discrimination by failing to accommodate a driver’s disability.
7/6/2011	Verizon	$20,000,000	Retaliation	Workplace Conduct	EEOC	Verizon unlawfully denied reasonable accommodations to hundreds of employees and disciplined and/or fired them pursuant to “no fault” attendance plans.
6/10/2011	Aaron's, Inc.	$45,000,000	Sexual Harassment & Retaliation	Workplace Conduct	Reuters	The plaintiff alleged that a manager sexually harassed and assaulted her during her employment at Aaron's Rents.
5/3/2011	UBS Financial	$10,600,000	Sexual Harassment & Retaliation	Workplace Conduct	Bloomberg Law	Employee complained of harassment in 2008, then UBS fired her. Alleged harassment by her supervisor had been ongoing for six years. Complainant alleged supervisor “repeatedly made inappropriate comments about Ingraham’s breast size”, called her into his office to “view sexually offensive emails on his computer”, repeatedly “talked about the size of his genitals”, and asked her about her sexual fantasies.