Introduction

Welcome to the inaugural edition of Culture@Work, where we'll report on trends and key legal, regulatory, and compliance developments related to workplace culture and conduct. In each edition, we will provide an industry spotlight, highlight salient enforcement guidance and actions, and analyze an Equal Employment Opportunity Commission (EEOC)-identified harassment risk factor. Join us for Culture@Work to catch up on the latest developments.

This inaugural edition includes the following developments and headlines:

• Legal, regulatory, and compliance developments:
  • The EEOC issued its new Enforcement Guidance on Harassment in the Workplace, replacing five older sets of guidance related to the same topic and highlighting the importance of implementing a Human Resources (HR) compliance program
  • The EEOC finds underrepresentation in the tech workforce and sector 
  • The U.S. Department of Justice (DOJ) updated its guidance on compliance programs to reflect the use of artificial intelligence (AI) and its relevance to workplace conduct compliance 
  • Charges filed by the Securities and Exchange Commission (SEC) highlight the importance of fully disclosing potential conflicts 
  • The EEOC posted "key recommendations industry leaders can take to combat harassment in construction"
• Industry spotlight: Investigations into misconduct on campus continue to grab headlines
• Risk factor spotlight: As we head into holiday party season, we focus on the risks presented by workplaces that tolerate or encourage alcohol consumption

Before we dive in, it's worth taking a moment to discuss the end of the EEOC's fiscal year (FY) and how the recent election might impact the its agenda and activities. The EEOC FY wrapped up on September 30, 2024, and saw the filing of 110 lawsuits. Of particular note, the agency filed five "sexual harassment cases on behalf of teenage workers under Title VII of the Civil Rights Act of 1964" and five "cases under the Pregnancy Workers Fairness Act," which went into effect on June 27, 2023

Looking ahead to the next Trump administration, we expect that the three Biden appointees will remain the majority on the five-member Commission until 2026. However, President-elect Trump will be able to appoint a new chair, replace the general counsel, and appoint a commissioner to fill a currently empty seat. We will cover significant policy and strategic developments as they arise.

Regardless of regulators’ enforcement priorities, we expect that individuals will continue to raise concerns regarding company culture and to report allegations of harassment and discrimination. Employers should encourage their employees to speak up and plan to swiftly investigate those concerns.

EEOC's New Enforcement Guidance on Harassment in the Workplace Highlights the Importance of Workplace Conduct Compliance

In April 2024, the EEOC issued its new Enforcement Guidance on Harassment in the Workplace, which consolidates and replaces five older sets of guidance related to the same topic. In this newest iteration, the EEOC's guidance highlights the importance of implementing a workplace conduct compliance program to help mitigate the risk of workplace misconduct and address it when it occurs. To this end, the guidance focuses on six compliance elements that are essential to effective compliance programs: 

1. Instituting a policy against harassment
2. Delivering related training to employees that is tailored to the work environment and supplemented by targeted training for managers and supervisors
3. Extending protections against harassment to apply to misconduct by third parties 
4. Establishing processes for reporting concerns, investigating complaints, and implementing discipline and other corrective actions, when appropriate, to ensure workplace conduct expectations are enforced
5. Monitoring the work environment to assess adherence to the organization's anti-harassment policy, understand employees' perceptions, and identify trends 
6. Assessing and mitigating a workplace's individualized harassment risks (we spotlight one common risk here)

Implementing an effective workplace conduct compliance program that includes these elements will enable employers to proactively mitigate the risk of workplace misconduct, protect employee safety and well-being, and strengthen values-based culture. Employers with strong workplace conduct compliance programs will be poised to show their commitment to the development of a positive workplace culture where employees are engaged, trust their leadership, and feel supported in raising concerns. In the event misconduct does occur, a workplace conduct compliance program designed to detect and prevent misconduct in the workplace will facilitate the implementation of appropriate corrective action, which can be a critical consideration in assessing and defending against liability. These same considerations may also help mitigate the risk of reputational damage.

The EEOC Focuses On Underrepresentation in the Tech Workforce and Sector

In September 2024, the EEOC released its High Tech, Low Inclusion: Diversity in the High Tech Workforce and Sector 2014-2022 report. The report assessed both the "high tech force," which "consist[s] of workers in 56 science, technology, engineering, and mathematics (STEM) occupations regardless of industry," and the "high tech sector," which is composed of "industries where there is a high concentration of high tech workers" but where many workers may not be engaged in STEM occupations. The document builds on the EEOC's strategic focus on industries that benefit from federal investment, as set out in its Strategic Enforcement Plan (SEP) for FY 2024-2028 and where women and workers of color are underrepresented. The SEP specifically calls out the high tech and STEM industries, as well as construction and manufacturing, which we discuss further below. 

In its September report, the EEOC found significant underrepresentation of female, black, and Hispanic workers in the high tech workforce and sector when compared with those groups' participation in the U.S. workforce as a whole, raising concerns regarding barriers to entry. The EEOC explained that discrimination may be a contributing factor to this underrepresentation: 

The magnitude of the underrepresentation for some demographic groups, particularly for women and Black workers, combined with research and the EEOC's experience enforcing anti-discrimination laws, suggest that discrimination likely contributes to the relatively low employment of women, Black workers, Hispanic workers, and older workers in high tech.

In conjunction with the release of the report, EEOC Chair Charlotte A. Burrows emphasized that high tech employers should "self-assess and address any discriminatory barriers limiting employment opportunities and to implement proactive policies to increase inclusion."

SEC Charges Highlight the Importance of Fully Disclosing Conflicts of Interest

In September 2024, the SEC announced settled charges against a former Board member of consumer-packaged goods company Church & Dwight Co, Inc., stemming from the former director's alleged "failure to disclose information to [the] Board of Directors that was relevant to the Board determining whether [he] met the criteria to be an independent director." Both New York Stock Exchange (NYSE) and NASDAQ stock exchange rules require boards of listed companies to determine whether directors are independent. As the SEC explained in its complaint, "[w]hether a director is 'independent' is material to shareholders because shareholders expect independent directors to exercise autonomous judgment in their decision making that is free from any conflicts of interest."

In this case, the former director had previously been appointed as the company's chief executive officer (CEO) and served as a non-independent director and non-executive Chairman of the Board for over a decade. According to the complaint, the former director mentored a senior executive, shared confidential information with the executive regarding the CEO succession process, and paid over $100,000 for international travel expenses for the executive and his spouse. In violation of Exchange Act Section 14(a) [15 U.S.C. SS 78n(a)] and Exchange Act Rule 14a-9 [17 C.F.R. SS240.14a-9], he allegedly hid this "close personal friendship" with the executive from the company, including when he submitted questionnaires used by the company to evaluate his independence. The SEC contends that based on his answers to these questionnaires, the Board determined he was an independent director and therefore the company's 2021 and 2022 proxy statements, reflecting that determination, contained material misstatements. The former director agreed to injunctive relief, a five-year officer-and-director bar, and a $175,000 penalty.

This case is an important reminder to boards and individual directors of the importance of comprehensive (and accurate) disclosures of affiliations and the many types of relationships that can cause conflicts of interest. 

The EEOC Publishes Promising Practices for Preventing Harassment in the Construction Industry, Offers Lessons for Other Workplaces

In June 2024, the EEOC released Promising Practices for Preventing Harassment in the Construction Industry, which "identifies promising practices for industry leaders to help prevent and address harassment in the construction industry." The document furthers the EEOC's strategic focus on construction and manufacturing, as set out in its FY 2024-2028 SEP. The EEOC explains its focus on the construction industry:

While workplace harassment is an issue in all sectors and industries, it is prevalent on many construction jobsites, and some of the most egregious incidents of harassment investigated by the EEOC have arisen in the construction industry. The nature of the construction industry includes a number of risk factors that may increase the likelihood of harassment, including workforces that are primarily male, workplaces where there is pressure to conform to traditional stereotypes, and decentralized workplaces. These factors may be exacerbated by the presence of multiple employers on a worksite, and the cyclical, project-based nature of construction.

In considering the "specific challenges and opportunities in the construction industry," the document provides recommendations that industries and workplaces with similar risk profiles can apply, including those with homogenous workforces, where there is pressure to conform to traditional stereotypes, and which are decentralized. 

The EEOC highlights a few key principles for the construction industry for mitigating risk: leadership and accountability (including "treating harassment prevention holistically" and "including anti-harassment measures in contract bids"); comprehensive and comprehendible policies; an effective and easily accessible reporting process; and effective training. The construction industry – like all industries – is well served by customizing mitigations to the specific needs and risks of each workplace. Importantly, the EEOC has put the industry on notice that it is paying particular attention.

DOJ Updates Guidance on Compliance Programs to Reflect Use of AI

On September 23, 2024, the DOJ released an updated version of its guidance to prosecutors on the Evaluation of Corporate Compliance Programs (updated ECCP). The most substantive revisions in the DOJ's updated ECCP focus on corporate use of data and technology, covering six main issues (discussed further here). Some of the issues concern the risks created by emerging technologies, while others target a company's use of technology as part of its compliance program and controls. Given the prevalence of the use of AI in the workplace, including in areas such as recruiting, companies should be mindful of DOJ expectations as they evolve on the use of these emerging technologies.

Three sets of revisions focus on technology risks. First, in the section on Risk Assessments, the DOJ added questions designed to evaluate how a company is leveraging technology, including emerging technology such as AI, and whether a company has considered the risks of such technology. The updated ECCP states: "Where relevant, prosecutors should consider the technology—especially new and emerging technology—that the company and its employees are using to conduct company business, whether the company has conducted a risk assessment regarding the use of that technology, and whether the company has taken appropriate steps to mitigate any risk associated with the use of that technology." In short, companies should include emerging technology in their enterprise risk management (ERM) and more specific compliance risk assessment processes, adjusting their programs and controls to address the risks identified. One way to tackle this is to categorize areas where AI or related technologies are deployed, such as: 

• The use of generative AI by employees in their day-to-day activities
• In-house development of AI tools, such as for improving business processes or internal controls
• In-house development of new products or software in which AI is embedded
• The purchase of such products or software from external vendors 

Second, the DOJ added a section on the Management of Emerging Risks to Ensure Compliance with Applicable Law. In this section, the DOJ sets out 10 questions focused on compliance risk management for emerging technology, including AI. The questions include: "How is the company curbing any potential negative or unintended consequences resulting from the use of technologies, both in its commercial business and in its compliance program?" and "To the extent that the company uses AI and similar technologies in its business or as part of its compliance program, are controls in place to monitor and ensure its trustworthiness, reliability, and use in compliance with applicable law and the company's code of conduct?" 

Relatedly, the DOJ also added: "If the company is using new technologies such as AI in its commercial operations or compliance program, is the company monitoring and testing the technologies so that it can evaluate whether they are functioning as intended and consistent with the company's code of conduct? How quickly can the company detect and correct decisions made by AI or other new technologies that are inconsistent with the company's values?" These questions essentially frame AI as a combination of an employee, whose decisions would be subject to oversight for alignment with company values and policies, and an internal control or business process, which an effective program would typically monitor and test to confirm it is serving its intended purpose, again consistent with the company's values and policies. In both contexts, misuse of AI or its failure to follow company policies could create new risks that companies should consider and address. 

Third, the DOJ added an expectation that policies and procedures are updated to reflect the use of technology. The DOJ expects companies to monitor and implement policies and procedures "that reflect and deal with the spectrum of risks it faces, including changes to the legal and regulatory landscape and the use of new technologies." This last clause serves as a reminder that more regulation over AI and other emerging technologies is on the horizon and companies will need to monitor developments to keep up.

While the ECCP does not directly address workplace conduct compliance, companies would benefit from applying the DOJ's guidance to its use of AI in HR and other employment and workplace areas. For example, companies should assess how the company is leveraging AI in areas impacting human resources and employment decisions. Is AI being used in pre-screening of job applicants? Is AI used in connection with performance evaluations? How is AI used to monitor reporting and investigations trends? While AI can be beneficial in each of these areas, it is important to understand the risks associated with using AI in these spaces and to take steps to mitigate those risks. 

Industry Spotlight: University Athletics

Conduct on campus continues to draw headlines and push universities and colleges to publicly reckon with allegations of wrongdoing in their athletic programs and beyond. As described in greater detail in Miller & Chevalier's Ten Rules of the Road for Addressing a Crisis in Your University Athletics Organization, reports of misconduct have the propensity to spread like wildfire, quickly grabbing headlines and presenting challenges to address. Two recent investigations into university gymnastics and basketball programs bring this issue to the fore.

In August 2024, NJ Advance Media reported on allegations of "favoritism, bullying and revenge" by the head coach of Rutgers University's gymnastics program. The story also detailed dissatisfaction with how claims brought to the university's attention earlier were handled, including by the University's Office of Ethics and Compliance. The following September, Rutgers reportedly engaged an independent law firm to conduct an investigation into the allegations, with the university president saying that the university will make the recommendations public.

In November 2024, the University of Florida's school paper, The Alligator, reported that the university's men's basketball head coach was the subject of a Title IX complaint alleging sexual exploitation, sexual harassment, and stalking. The paper spoke to two former students who attested to the coach's misconduct and stated that other basketball program employees "were complicit" and "had knowledge" of the alleged misconduct. 

As reported, both the Rutgers and University of Florida allegations highlight the importance that individuals bringing forward allegations of misconduct place on the culture of an organization and the processes taken to address wrongdoing. Their stated concerns encompass not only a senior individual faulted with wrongdoing (in this case, coaches) and other university staff whom they view as failing to address their concerns, but also highlight the need for universities to devote attention and resources to these issues among athletic departments in particular. 

Risk Factor Spotlight: Workplaces That Tolerate or Encourage Alcohol Consumption – Holiday Edition

The EEOC's seminal Chart of Risk Factors for Harassment and Responsive Strategies denotes 12 risk factors that the EEOC has determined lead to an increased chance of harassment in the workplace. One of those 12 is "[w]orkplace [c]ultures that [t]olerate or [e]ncourage [a]lcohol [c]onsumption." Specifically, the EEOC has observed that since "[a]lcohol reduces social inhibitions and impairs judgment," workplaces that "tolerate alcohol consumption during and around work hours provide a greater opportunity for harassment." This includes consumption by third parties – workplaces in which alcohol is "consumed by clients or customers are also at higher risk of harassment." 

Keeping this in mind, the upcoming holiday season brings celebrations and good cheer but can also create workplace conditions that are ripe for harassment, discrimination, and other misconduct. The presence of alcohol at workplace gatherings, in particular, can lower employees' inhibitions and lead to inappropriate behavior.

Organizations planning and preparing for holiday festivities should consider the risks associated with these activities and how they can mitigate those risks. For example, organizations can:

• Implement targeted communication campaigns in the lead up to holiday festivities to remind employees that standards of behavior and conduct continue to apply in social settings
• Encourage employees, including through messaging from managers, to limit their alcohol consumption to moderate amounts
• Remind employees of the reporting channels available to them in the event of misconduct 

Happy holidays from your Workplace Culture and Conduct team at Miller & Chevalier!

Around the Office

• In October, Alejandra Montenegro Almonte, Katherine Pappas, and Ann Sultan presented to SCCE regarding "Workplace Misconduct Compliance and Investigations: What Board Members and Senior Leaders Need to Know." The webinar is now available on-demand. 
• Kathryn Cameron Atkinson, William Barry, and Nicole Gökçebay released Ten Rules of the Road for Responding to a Crisis in Your University Athletics Organization.
• Alejandra Montenegro Almonte appeared on the Great Women in Compliance podcast, detailing her practical approach to conducting workplace culture and conduct investigations and global ethics and compliance program enhancements.

Contributors: Ann Sultan, Katherine Pappas, Alejandra Montenegro Almonte, Nicole Gökçebay, Alexandra Beaulieu

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