SEXUAL HARASSMENT, DINE EQUITY & PEANUTS

peanutsThe EEOC has been settling lawsuits at a frenzied pace of late, some for the monetary equivalent of peanuts.

This week, the EEOC settled for $1 million a sexual harassment case filed against IHOP restaurants in New Mexico that are owned and operated by Fahim Adi.  The EEOC says the case is the second-largest litigation settlement ever reached by the EEOC’s Albuquerque Area Office.  An EEOC press release says:  “At least 22 women are expected to receive relief through the decree.”

If it  is only  22 women and they split full amount of the award equally among themselves  – without any deductions by the EEOC for fees and costs – they will each get about $45,454.

I submit that this is not a large amount of money for women – some were teenage girls – whom the EEOC says were subjected to sexually offensive conduct by Lee Broadnax, then manager of the defendant’s IHOP restaurant. The EEOC doesn’t go into details but says Broadnax’ illegal conduct included sexual comments, innuendo and unwanted touching (i.e., otherwise known as battery).

Some of the women were forced to quit their jobs because IHOP did nothing when they complained.  People who work as servers at a pancake house generally are not well-to–do and this is not an economy where jobs are easy to find.  Some of the victims were pretty college girls en route to a better future but others were mature women (including several members of a minority group).

One wonders how many IHOP  employees were forced to tolerate abuse because they had children to feed at home and no other options?

The figure of $1 million particularly pales when one considers the IHOP brand is owned by Dine Equity, Inc., which is based in Glendale, California and also owns the Applebee’s Neighborhood Grill & Bar brand.

According to Nation’s Restaurant News  magazine, Dine Equity had $7.9 billion in food service sales in 2011, making it  the ninth rranked in the United States for  “systemwide foodservice sale.”  For the quarter ending Sept. 30, 2012, DineEquity’s net income almost quadrupled to $58.7 million.  DineEquity operates almost entirely through subsidiaries and over 400 franchisees, which operate 1,842 Applebee restaurants and 1,535 IHOPs  around the world.

Dine Equity  vigorously enforces any encroachment upon the the IHOP brand.   One wuld hope that Dine Equity also would vigorously enforce the human rights of employees in IHOP and Applebee restaurants.  What could Dine Equity do?  For one thing, Dine Equity could train franchisors to follow  discrimination laws and respond appropriately to complaints. Dine Equity also could get rid of franchisors that tolerate hostile work environments and fail to respond to discrimination complaints.  Now that would get their attention!

Don’t get me wrong. If the EEOC had not taken on this case, it is quite possible that some of these victims would not have gotten anything at all (except, possibly Post Traumatic Stress Syndrome).  Courts seem to be utterly unsympathetic to victims of employment-related discrimination these days, which is probably why it is so prevalent in society. Poor people can’t afford to hire lawyers and pay court costs.  But lets get real – $1 million is  not exactly a windfall for people who likely suffered emotional trauma and stress and whose lives were completley upended by an IHOP franchisor.

In addition to the monetary relief, the decree prohibits the defendants’ IHOP restaurants from further discriminating or retaliating against its employees and requires IHOP to implement policies and practices that will provide its employees a work environment free of sex discrimination and retaliation. The defendants must also provide its employees in Bernalillo and Sandoval County IHOPs with anti-discrimination training and notice of the settlement.

In this case, the IHOP franchisor ignored the women’s sexual harassment complaints. Training cannot solve an employer’s lack of motivation to protect its workers from sex discrimination.

Great Policy; No Follow-Through

The best policy in the world won’t protect you without follow-through.

That’s the lesson of a decision by the Seventh Circuit  Court of Appeals  in a Wisconsin sexual harassment case, Equal Employment Opportunity Commission v. Management Hospitality of Racine, Inc., et al., No. 10-3247 (Jan. 9, 2012,).

The defendant, a company owned by Salauddin Janmohammed  which operates 21 International House of Pancakes restaurants, had a “zero-tolerance”  anti-harassment policy in place, anti-harassment training, and a policy of investigations of complaints.

What it didn’t have was follow-through. Or, in the words of the Court, “the policy and complaint mechanism were not reasonably effective in practice.”

According to the Court:  “the presence of a sexual harassment policy is encouraged by Title VII [but] the mere creation of a sexual harassment policy will not shield a company from its responsibility to actively prevent sexual harassment in the workplace.”

The Court upheld an award of $105,000 to two teenage servers at an IHOP operated by the defendant in Racine.  Katrina Shisler and Michelle Powell said they were sexually harassed in 2004 and 2005 by an IHOP assistant manager in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq.

Normally, an employer can advance the so-called Faragher/Ellerth affirmative defense in a Title VII case sexual harassment claim involving a hostile work environment. This allows the employer to escape liability for damages if:

 (a) it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and

 (b) “the plaintiff employee unreasonably failed to take advantage of any protective or corrective opportunities provided by the employer or to avoid harm otherwise.”

The Court said the  Faragher/Ellerth affirmative defense was not available to the Management Hospitality because both teens had complained to managers about sexual harassment  and the managers did nothing.  The company did not begin investigating until a private investigator hired by an attorney for one of the teenager began asking questions.

The Court said a rational jury could have found that the sexual harassment occurred “every shift,”  was “highly offensive,” and included “physical touching.”

The Court said a rational jury also could conclude that the employer failed to follow its own policies by discouraging  employees from reporting complaints, providing inadequate anti-harassment training to supervisors, and failing to “promptly” investigate the complaints.

The EEOC filed suit on behalf of the two teenaged servers. A jury awarded one of the servers $1,000 in compensatory damages and the other $4,000 in compensatory damages and $100,000 in punitive damages.

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