MANAGING CORPORATE CRISIS PRESENTED BY: E

MANAGING CORPORATE CRISIS

PRESENTED BY:EDWARD M. “TED” SMITH

AUTHORED BY:EDWARD M. “TED” SMITH

SHARON M. SCHWEITZER

JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION2200 ONE AMERICAN CENTER

600 CONGRESS AVENUEAUSTIN, TEXAS 78701

(512) [email protected]

A special thanks to Ted Smithof Jenkens & Gilchrist

for his substantial investmentof time spent preparing this paper.

.

AUTHOR’S NOTE

The authors have provided the reader with comments concerning the management of certain crisissituations in the workplace. The reader is advised that others may reach different conclusions andrecommendations due to their differing views of the law. This paper is intended as general information,and not as legal advice. For legal advice concerning a specific situation, the reader should seekindependent counsel.

Sharon M. Schweitzer

Senior Attorney, Labor & Employment, Technology Practice GroupJenkens & Gilchrist, A Professional Corporation2200 One American Center600 Congress AvenueAustin, Texas 78701(512) [email protected]

Practice Concentration & Experience

Ms. Schweitzer is Board Certified in Labor and Employment Law by the Texas Board of LegalSpecialization and has practiced labor and employment law since 1991. Schweitzer specializes inrepresenting start-up, high-tech and emerging growth companies in all aspects of the employer-employeerelationship, from training and advice to litigation and appeal. She represents a range of employers andtechnology companies and provides counsel on recruiting & retaining talent, non-competition agreements,non-solicitation, executive compensation and employment agreements. She has extensive experiencebefore the U.S. Departments of Labor & Justice, EEOC, Texas Commission on Human Rights, and TexasWorkforce Commission.

Ms. Schweitzer’s other professional experience includes the following: Attorney & President - LawOffice of Sharon M. Schweitzer, P.C.; Legal Counsel for Employee Relations & ADA Coordinator,Texas Comptroller of Public Accounts; Assistant Attorney General, Office of the Attorney General,Transportation division; Associate Attorney, Davis & Wilkerson, P.C.

Education

South Texas College of Law (J.D., 1989)University of Oxford, Oxford England (Summer Study Program, 1984)Ohio State University (B.A., 1984)

Professional Affiliations

Chair, Travis County Bar Association Technology & Computer Section 2000-01; State Bar of Texas,Member Labor & Employment Section, 1991 - present; American Bar Association Member, Labor &Employment Section, 1995 - present; United States Supreme Court; United States Court of Appeals forFifth Circuit; United States District Court - Western, Eastern, Northern & Southern Districts; TravisCounty Bar Association, Board of Directors, 2000-01, 1996-97, Chair, 1997-98 Labor & EmploymentSection; Chair, Bench Bar 2000; State Bar of Texas High Tech Litigation Conference, PlanningCommittee 1999-00; South Texas College of Law Employment Law Conference, Chair, 1998-00;University of Houston, Representing Start-Ups and New Companies Conference, Advisory CommitteeMember, 2000.

Edward M. ATed@ SmithAttorney, Labor & EmploymentJenkens & Gilchrist, a Professional Corporation2200 One American Center600 Congress AvenueAustin, TX 78701-3248Telephone: (512) 404-3519Telecopy: (512) [email protected]

Practice Concentration & Experience

Mr. Smith focuses his practice on employment and labor law. He specializes in representing employers inall aspects of the employer-employee relationship, from training and advice to litigation and appeal. Inparticular, Mr. Smith has significant experience in litigating and counseling clients regarding federal andstate employment statutes (including Title VII, the TCHRA, the ADEA, the ADA, the WARN Act, andthe NLRB), as well as wrongful discharge matters, individual employee rights issues, retaliation underworkers' compensation laws, and matters related to union and individual employee arbitrations.

Prior to joining Jenkens & Gilchrist, Mr. Smith served in the United States Army Judge AdvocateGeneral’s Corps, where among other aspects of his practice, he litigated federal labor and employmentclaims before the EEOC, the Merit Systems Protection Board, the Office of Special Counsel, and theOffice of Special Complaints. Thereafter he joined the national labor law firm of Littler Mendelson,where he litigated a full range of labor and employment issues in state and federal court, and also gainedexperience in representing employers in labor grievances, arbitrations, and union elections.

Education

University of Texas (J.D., 1994)University of Notre Dame (B.B.A., cum laude, 1991)Université Catholique de l’Ouest, Angers, France (1988-89)

Professional Affiliations

American Bar Association; Texas Bar Association; Dallas Bar Association; Travis County BarAssociation; Licensed to Practice in Western, Eastern, Northern and Southern Districts of Texas; Easternand Western Districts of Arkansas; United States Court of Appeals, Fifth Circuit and United States Courtof Appeals for the Armed Forces

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Table of Contents

EMERGENCIES/NATIONAL DISASTERS .......................................................................................1

Four-Step Plan................................................................................................................................1

Internal Resources ......................................................................................................................2

External Resources .....................................................................................................................3

Assess Vulnerabilities .................................................................................................................3

Executive Summary....................................................................................................................3

Emergency Management Elements ..............................................................................................3

Emergency Response Procedures.................................................................................................3

Support Documents ....................................................................................................................4

Establish a Training Schedule ......................................................................................................4

Coordinate with Outside Organizations........................................................................................4

Maintain Contact with Other Corporate Offices............................................................................4

Implement The Plan....................................................................................................................4

Conduct Training, Drills and Exercises ........................................................................................4

Training Activities......................................................................................................................4

Employee Training.....................................................................................................................4

Evaluate and Modify the Plan......................................................................................................4

WORKPLACE VIOLENCE................................................................................................................4

National Statistics...........................................................................................................................5

Statistics in Texas ...........................................................................................................................5

Industries .......................................................................................................................................7

Cause of Fatalities ..........................................................................................................................7

Worker Demographics ....................................................................................................................7

Workplace Violence Prevention / Preparation...................................................................................9

Warning Signs of Potentially Violent Individuals........................................................................ 12

Personal Conduct to Minimize Violence..................................................................................... 13

Do........................................................................................................................................... 13

Do Not..................................................................................................................................... 13

Reporting Procedures................................................................................................................ 13

Prepare a Threat Management Plan ............................................................................................ 14

Addressing Violent or Threatening Incidents .............................................................................. 14

Evaluate Security After a Threat................................................................................................ 14

Managing the Aftermath of an Incident.............................................................................................. 15

Trauma Plan............................................................................................................................. 15

Support Prosecution of Offenders .............................................................................................. 15

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CONCLUSION................................................................................................................................ 15

Table of Authorities

CASES

Akins v. Estes, 888 S.W.2d 35, 42 (Tex. App. – Amarillo 1994), affirmed in part, reversed in part.............................7

Deerings West Nursing Center v. Scott, 787 S.W.2d 494 (Tex. App. - El Paso 1990, writ denied) ...............................7

Dickinson Arms – REO, L.P. v. Campbell, 4 S.W.3d 333 (Tex. App. – Houston [1st Dist.] 1999) ................................8

Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472 (Tex. 1995)..........................................................................7

Exxon Corp. v. Tidwell, 867 S.W.2d 19, 21 (1993)............................................................................................................8

Ghazali v. Southland Corp., 669 S.W.2d 770 (Tex. App. - San Antonio 1984, no writ) ................................................8

Golden Spread Council, Inc. v. Akins, 926 S.W.2d 287 (Tex. 1996) ................................................................................7

Guidry v. National Freight, Inc., 944 S.W.2d 807 (Tex. App. – Austin 1997, no writ)..................................................7

Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354 (Tex. 1998)...................................................................................8

Horton v. Montgomery Ward & Co., 827 S.W.2d 361, 366 (Tex. App. – San Antonio 1992, writ denied) ..................8

Houser v. Smith, 968 S.W.2d 542, (Tex. App. – Austin 1998, no writ) ...........................................................................7

Porter v. Nemir, 900 S.W.2d 376 (Tex. App. – Austin 1995, no writ).............................................................................8

Prescott v. CSPH, Inc., d/b/a Domino’s Pizza, 878 S.W.2d 692, 695 (Tex. App. – Amarillo 1994, no writ)...............8

Read v. Scott Fetzer Co., 990 S.W.2d 732 (Tex. 1998) .....................................................................................................7

FEDERAL CASES

H.E. Butt Grocery Co. v. National Union Fire Ins. Co., 150 F.3d 526 (5th Cir. 1998) ....................................................7

Lewis v. Continental Airlines, Inc., 80 F.Supp.2d 686, 696 (S.D. Tex. 1999) .................................................................8

Sanders v. Casa View Baptist Church, 134 F.3d 331 (5th Cir. 1998)................................................................................8

OTHER SOURCES

Guidelines for Employers, International Association of Chiefs of Police, www.theiacp.org..........................................9

James M. Clash and Rob Wherry, “Shattered, Not Broken,” Forbes Magazine, October 15, 2001 ..............................2

Jodi Wilgoren, Indiana Factory Shooting Leaves 2 Dead and 6 Hurt, N.Y. Times, December 7, 2001 .......................5

Emergency Management Guide for Business & Industry, Federal Emergency Management Agency, September 23,1996 ..................................................................................................................................................................................1

Employers Respond to Disaster : Addressing the Effects of Responses to the Events of September 11, 2001, Bureauof National Affairs, Inc., September, 2001....................................................................................................................1

Steve Kaufer and Jurg Mattman, Workplace Violence: An Employer’s Guide, Workplace Violence ResearchInstitute, 2001...................................................................................................................................................................5

ACTS

Federal Fair Credit Reporting Act (FCRA) (15 U.S.C.A. § 1601 et seq.) ........................................................................9

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MANAGING CORPORATE CRISIS

In the wake of the events of September 11, 2001in New York, Washington, D.C., andPennsylvania, employers throughout the countryare re-evaluating their ability to handle a crisissituation in their own workplace.1 A corporatecrisis may take many forms – fire, naturaldisaster, explosion at a manufacturing plant, oran incident of workplace violence. Regardlessof the form, each of these scenarios share acommon theme: the company has experiencedan unforeseen and extraordinary event thatplaces the company in jeopardy of meeting thedemands and expectations of its customers,shareholders and employees. In addition, theseevents further place the company in a position offacing potential litigation and legal liability.

This paper addresses some of the considerationsthat companies face in preparing for, andresponding to, corporate crisis. For purposes ofthis discussion, corporate crisis is divided intotwo categories: emergencies/natural disastersand workplace violence.

EMERGENCIES/NATIONAL DISASTERS

The Federal Emergency ManagementAgency (“FEMA”) has established a step-by-step approach to emergency planning, responseand recovery for companies of all sizes. 2 Tostart with, for any crisis management program tobe successful, it is imperative that the programreceive support from the corporation’s uppermanagement. In “making the case” for a crisismanagement program, the following aspectsmay be emphasized:

- Facilitates compliance with regulatoryrequirements of Federal, State and Localagencies.- Enhances a company’s ability torecover from financial losses, regulatory

1 See Employers Respond to Disaster : Addressingthe Effects of Responses to the Events ofSeptember 11, 2001, Bureau of National Affairs, Inc.,September, 2001.

2 See Emergency Management Guide for Business &Industry, Federal Emergency Management Agency,September 23, 1996.

fines, loss of market share, damages toequipment, products or businessinterruption.- Reduces exposure to civil or criminalliability in the event of an incident.- May reduce insurance premiums.- Helps companies fulfill their moralresponsibility to protect employees, thecommunity and the environment; andenhances a company’s image andcredibility with employees, customers,suppliers, and the community.

Four-Step Plan

FEMA suggests the following four-step plan increating an emergency management program:

1. Establish a planning team.2. Analyze capabilities and hazards.3. Develop the plan.4. Implement the plan.

Establish a Planning Team

In order to be successful, there must be anindividual or group in charge of developing theemergency management program. Dependingupon the size and make-up of the company,input from each of the following functional areasmay need to be considered:

- Upper Management- Line Management- Labor- Human Resources- Engineering and Maintenance- Safety, Health and Environmental

Affairs- Public Information- Security- Community Relations- Sales and Marketing- Legal- Finance and Purchasing

Analyze Capabilities and Hazards

This step entails gathering information aboutcurrent capabilities, possible emergencies andhazards, and then conducting a vulnerability

Managing Corporate Crisis Chapter 14

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analysis to determine the facility’s capabilitiesfor handling a crisis. The planning team shouldfirst review current internal plans and policies,including:

- Evacuation plan- Fire protection plan- Safety and health program- Security procedures- Insurance programs- Plant/Office closing policies- Employee manuals- Hazardous materials plan- Risk management plan

It is then necessary to determine the criticalproducts, services and operations of thecompany in order to assess the impact ofpotential emergencies and to determine the needfor backup systems. Areas to review include:

- Company products and services, aswell as the facilities needed toproduce them.

- Products and services provided bysuppliers, especially sole sourcevendors.

- Lifeline services such as electricalpower, water, sewer, gas,telecommunications andtransportation.

- Operations, equipment andpersonnel vital to the continuedfunctioning of the facility.

Once the critical products, services andoperations are identified, the team should assessthe resources, both internal and external,currently available to the company to addresspotential crisis situations.

Internal Resources

Internal resources and capabilities that may beneeded in an emergency include:

- Personnel: fire brigade, hazardousmaterials response team, emergencymedical services, security,emergency management group,evacuation team, public informationcontacts

- Equipment: fire protection andsuppression equipment,communications equipment, first aidsupplies, emergency supplies,

warning systems, emergency powerequipment, decontaminationequipment

- Facilities: emergency operatingcenter, media briefing area, shelterareas, first-aid stations, sanitationfacilities

- Organizational capabilities: training,evacuation plan, employee supportsystem

- Backup systems: arrangements withoutside facilities to provide for:

(1) Payroll(2) Communications(3) Production(4) Customer services(5) Shipping and receiving(6) Information systems

support(7) Emergency power(8) Recovery support

The necessity of planning and maintainingbackup systems was dramatically highlighted bythe tragic terrorist attacks on the Pentagon andWorld Trade Center.3 Fiduciary Trust Co.International, located in the World Trade Center,manages $44 billion securities for pension plans,endowments and wealthy individuals. Despitebeing located at “Ground Zero”, Fiduciary wasup and running one business day after thebombing due to a comprehensive disasterrecovery plan that had been in place for 14years.

Under the plan, Fiduciary had previouslyestablished an alternate “recovery site” in NewJersey containing back-up computers, servers,telephones and fax machines. Within hours ofthe attack, employees of Fiduciary were able toback up the Company’s portfolio system, scanthe trust and accounting books into the newsystem, and re-establish use of the Federal wiresystem so that they could transfer funds directlyfrom the recovery site. Although no backupsystem can in any way mitigate the terriblehuman toll suffered by Fiduciary (87 employeeswere lost), the emergency plan did enable theCompany to avoid financial ruin.

3 James M. Clash and Rob Wherry, “Shattered, NotBroken,” Forbes Magazine, October 15, 2001.

Chapter 14 Managing Corporate Crisis

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External Resources

External resources that may be needed in anemergency include the following:

(a) Local emergency managementoffice

(b) Fire Department

(c) Hazardous materials responseorganization

(d) Emergency medical services

(e) Hospitals

(f) Local and State police

(g) Community service organizations

(h) Utilities

(i) Contractors

(j) Suppliers of emergency equipment

(k) Insurance carriers

Assess Vulnerabilities

The next step is to assess the vulnerability of thespecific facility, and the probability andpotential impact of each emergency. Below aresome factors to consider:

(1) What types of emergencies haveoccurred in the community, at thisfacility and at other facilities in thearea?

(2) What may happen as a result of thefacility’s location?

(a) Proximity to flood plains,seismic faults and dams

(b) Proximity to companies thatproduce, store, use ortransport hazardousmaterials

(c) Proximity to majortransportation routes andairports

(d) Proximity to nuclear powerplants

(3) What may result from a process orsystem failure?

(4) What emergencies can be caused byemployee error? Are employeestrained to work safely? Do theyknow what to do in an emergency?

(5) What types of emergencies mayresult from the design orconstruction of the facility? Doesthe physical facility enhance safety?

(6) What emergencies or hazards areyou regulated to deal with?

Next, it is necessary to rate the likelihood ofeach emergency’s occurrence, as well as thelevel of impact on the Company. This is asubjective consideration, but useful nonetheless.Use a simple scale of 1 to 5, with 1 as the lowestprobability and 5 as the highest.

Develop The Plan

FEMA suggests that any plan include thefollowing basic components:

Executive Summary

The executive summary gives management abrief overview of the purpose of the plan; thefacility’s emergency management policy;authorities and responsibilities of key personnel;the types of emergencies that could occur; andwhere response operations will be managed.

Emergency Management Elements

This section of the plan briefly describes thefacility’s approach to the core elements ofemergency management, which are:

(a) Direction and control

(b) Communications

(c) Life safety

(d) Property protection

(e) Community outreach

(f) Recovery and restoration

(g) Administration and logistics.

Emergency Response Procedures

The procedures spell out how the facility willrespond to emergencies. Whenever possible,develop them as a series of checklists that can bequickly accessed by senior management,department heads, response personnel andemployees.

Specific procedures might be needed for anynumber of situations such as bomb threats ortornadoes, and for such functions as:

(a) Warning employees and customers


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(b) Communicating with personnel andcommunity responders

(c) Conducting an evacuation andaccounting for all persons in thefacility

(d) Managing response activities

(e) Activating and operating anemergency operations center

(f) Fighting fires

(g) Shutting down operations

(h) Protecting vital records

(i) Restoring operations

Support Documents

Documents that may be needed in an emergencyinclude:

Emergency call lists

Building and site maps

Lists of major resources (equipment,supplies, services) that could be needed inan emergency, mutual aid agreements withother companies and government agencies.

Establish a Training Schedule

Have one person or department responsible fordeveloping a training schedule for your facility.

Coordinate with Outside Organizations

Meet periodically with local governmentagencies and community organizations. Informappropriate government agencies that you arecreating an emergency management plan.

Maintain Contact with Other CorporateOffices

Communicate with other offices and divisions inyour company to learn:

(a) Their emergency notificationrequirements

(b) The conditions where mutualassistance would be necessary

(c) How offices will support each otherin an emergency

(d) Names, telephone numbers and pagenumbers of key personnel

Implement The Plan

Implementation means more than simplyexercising the plan during an emergency. Itmeans acting on recommendations made duringthe vulnerability analysis, integrating the planinto company operations, training employeesand evaluating the plan.

Conduct Training, Drills and Exercises

Almost everyone who works at or visits thefacility requires some form of training. Thismay include periodic employee discussionsessions to review procedure, technical trainingin equipment use for emergency responders,evacuation drills and full-scale exercises.

Training Activities

Training may take many forms:

a. Orientation and Education Sessions.b. Tabletop Exercise.c. Walk-through Drill.d. Functional Drills.e. Evacuation Drill.f. Full-scale Exercise.

Employee Training

General training for all employees shouldaddress:

a. Individual roles and responsibilities

b. Information about threats, hazardsand protective actions.

c. Notification, warning andcommunications procedures.

d. Means for locating family membersin an emergency

e. Emergency response procedures

f. Evacuation, shelter andaccountability procedures

g. Location and use of commonemergency equipment

h. Emergency shutdown procedures

Evaluate and Modify the Plan

Conduct a formal audit of the entire plan at leastonce a year.

WORKPLACE VIOLENCE

The events of September 11, 2001 in New York,Pennsylvania and Washington, D.C., only


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further highlight a growing area of concern forU.S. employers.

On December 6, 2001, a few hours after arguingwith a co-worker, an angry employee openedfire at a small factory in Goshen, Indiana, killingone worker and wounding six others, twoseriously, before committing suicide.4 Thisshooting was only the latest of about a dozendeadly workplace attacks in the last six years,including the killing by a co-worker of sevenpeople at a Massachusetts Internet consultingfirm in December of last year.5

According to the U.S. Department ofJustice, more than 2 million persons sufferviolence or threats of violence at the workplaceor while on duty each year. A recent survey ofFortune 1000 corporate security professionsfound that workplace violence is considered themost significant security threat to Americanbusiness today. Employers paid $36 billionannually due to violence in the workplace. Thisviolence results in three deaths daily plusthousands of injuries, according to both theWorkplace Violence Research Institute and theJustice Department. 6

National Statistics

According to the U.S. Department of Labor’smost recent Census of Fatal OccupationalInjuries, workplace homicides accounted formore than one in ten of all deaths at theworkplace in 2000. In fact, the number of job-related homicides increased for the first time insix years - from 651 in 1999 to 677 in the year2000. Homicide was the third leading cause ofdeath in the workplace, behind transportationaccidents and fatal contact with objects andequipment. For those workplace homicideswhere the motive could be ascertained,homicides in which the motive was robberyincreased from 255 cases in 1999 to 291 cases in2000.

Statistics in Texas

4 Jodi Wilgoren, Indiana Factory Shooting Leaves 2Dead and 6 Hurt, N.Y. Times, December 7, 2001.

5 Id.

6 Steve Kaufer and Jurg Mattman, WorkplaceViolence: An Employer’s Guide, Workplace ViolenceResearch Institute, 2001.

According to results of a study released August14, 2000 by the Texas Workers’ CompensationCommission fatal work injuries in Texasincreased 22% from 1999 to 2000.7 This studyis a result of an occupational study conducted byTWCC in cooperation with the U. S. Bureau ofLabor Statistics. A total of 572 fatal workinjuries occurred in Texas in 2000. The chartson the following page reflect the fataloccupational injuries in Texas by severalcategories.

7 See www.twcc.state.tx.us.


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Fatal Occupational Injuries in Texas, 1991-2000

Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

TotalFatalities

530 536 529 497 75 514 459 523 468 572

Fatal Occupational Injuries, by industry, Texas, 1995 –2000

Industry 2000 1999 1998 1997 1996 1995

TOTAL FATALITIES.................................... 572 468 523 459 514 475

Construction.................................................... 151 120 143 108 94 93

Retail and Wholesale Trade ........................... 95 46 45 40 64 54

Transportation and public utilities ................. 76 65 99 74 73 76

Services ........................................................... 75 70 68 49 61 70

Agriculture, Forestry and Fishing .................. 41 39 36 43 45 48

Government 46 37 30 36 34 24

Manufacturing 43 43 49 41 61 45

Mining 37 16 24 40 43 28

Finance, insurance, and real estate 8 9 11 8 11 8

Fatal Occupational Injuries, by event, Texas, 1995 – 1999Event or exposure 2000 1999 1998 1997 1996 1995

TOTAL FATALITIES 572 468 523 460 514 475

Transportation incidents 216 204 213 210 205 200

Highway incidents 135 130 122 116 125 111

Worker struck by vehicle, mobile equip. 22 29 29 37 24 32

Contact with objects and equipment 91 68 77 73 72 65

Struck by object 53 35 41 36 41 39

Assaults and violent acts 101 71 79 63 103 86

Homicides 82 59 60 47 84 74

Exposure to harmful substances or environments 64 54 74 57 50 49

Contact with electric current 34 35 42 38 31 33

Falls 76 55 59 40 50 57

Fall to lower level 73 51 57 36 45 52

Fires and explosions 21 16 21 17 32 17

Other 0 0 0 0 2 1

Note: Totals for major categories may include subcategories not shown separately. Illnesses or diseases, including heart attacks, andaccidents that occur outside the scope of employment are not included in the totals.


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Industries

The construction industry recorded the highestnumber of occupational fatalities in 2000 (151total), with falls being the most common causeof construction deaths. Retail and wholesaletrade experienced the second highest number offatalities, with grocery store, restaurant, anddrug and liquor store employees most affected.Homicide was the leading cause of death in thetrade industry. Following retail and wholesaletrade, transportation and service industries hadthe next highest frequency of fatalities.

Cause of Fatalities

Assaults and violent acts were the secondleading cause of death behind transportationincidents. There was a 42 percent increase inassaults and violent acts from 1999 to 2000,which was the largest increase of any fatal eventcategory. A majority of occupational homicides(62 percent) were motivated by robberies, withretail workers being the most likely victims.

Worker Demographics

Males accounted for 93 percent of the totaloccupational fatalities – half of them werebetween 25 and 44 years of age and almost aquarter worked in the construction industry.Women between 45 and 54 years of ageemployed in retail and wholesale trade industriesaccounted for the highest number of fatalities fortheir gender group.

POTENTIAL LEGAL LIABILITY

Employers face a variety of legal liability issuesin the context of workplace violence, includingclaims for:

• negligent hiring of employees;• negligent retention/supervision of

employees;• premises liability; and• respondeat superior liability.

Negligent Hiring

An employer may be held liable for the violentacts of its employees if the employer wasnegligent in hiring someone who the employerknows, or by exercise of reasonable care shouldhave known, was unfit or incompetent. 8

8 Golden Spread Council, Inc. v. Akins, 926 S.W.2d

Importantly, liability in this regard is not limitedto employees on the company’s active payroll,but also may extend to volunteers and other“non-traditional” employees. 9 Moreover, unlikethe doctrine of respondeat superior, liabilityunder negligent hiring extends to intentional actscommitted by the employee outside the scope ofemployment.10

To establish a claim for negligent hiring, aplaintiff must prove the following elements:

(1) the employer employed the offender(or the offender was acting as an agent oremployee of the employer);

(2) the employer knew, or should haveknown through a reasonable investigation, thatthe offender was unfit for his/her position withthe company;

(3) a third party was injured to whomthe employer owed a duty of care;

(4) the injury to the third party wasproximately caused by the offender.11

To establish proximate cause, a plaintiff mustprove that the employee’s tortious conduct wasreasonably foreseeable, and:

(1) the injuries were caused byemployment of the incompetent or unfitemployee, and

(2) the injuries were related to theemployment of the incompetent or unfitemployee.12

287 (Tex. 1996); Doe v. Boys Club of GreaterDallas, Inc., 907 S.W.2d 472 (Tex. 1995); H.E. ButtGrocery Co. v. National Union Fire Ins. Co ., 150F.3d 526 (5th Cir. 1998).

9 Akins v. Estes, 888 S.W.2d 35, 42 (Tex. App. –Amarillo 1994), affirmed in part, reversed in part,Golden Spread Council, Inc. v. Akins, 926 S.W.2d287 (Tex. 1996).

10 Doe v. Boys Club of Greater Dallas, Inc., 907S.W.2d 472 (Tex. 1995).

11 See, e.g., Read v. Scott Fetzer Co., 990 S.W.2d 732(Tex. 1998); Guidry v. National Freight, Inc., 944S.W.2d 807 (Tex. App. – Austin 1997, no writ).

12 See, e.g., Houser v. Smith, 968 S.W.2d 542, (Tex.App. – Austin 1998, no writ); Deerings West NursingCenter v. Scott, 787 S.W.2d 494 (Tex. App. - El Paso1990, writ denied).


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Negligent Retention/Supervision

Even if an employer is not negligent in its pre-employment investigation and hiring of anemployee, liability may nevertheless arise underthe theory of negligent retention where anemployer fails to investigate, discipline orterminate an employee who the employerknows, or should have known, was unfit for theposition.13 As with a claim for negligent hiring,an employer may be held liable under a theoryof negligent retention even where the violent actoccurs outside of the employee’s scope ofemployment.

Premises Liability

It is a well established legal tenet that employershave a nondelegable duty of ordinary care toprovide a safe work place for their employees. 14

Some Texas courts have extended this theory toinclude liability for incidents of workplaceviolence where there were known risks orhazards from which the employer failed toprovide adequate protection.

For instance, a Houston court of appeals uphelda $341,000 verdict against an apartmentcomplex that failed to prevent the car-jackingand murder of a visitor to the complex. 15 Theapartment complex was located in a high-crimearea where there had been similar crimescommitted prior to this incident. Similarly, aSan Antonio court reversed a summaryjudgment in favor of an employer because therewas sufficient evidence that the employer failedto provide adequate security at a conveniencestore for its employees, and failed to takepreventative measures to avoid potentialrobberies and violence.16

13 See Hoechst-Celanese Corp. v. Mendez, 967S.W.2d 354 (Tex. 1998); Sanders v. Casa ViewBaptist Church , 134 F.3d 331 (5th Cir. 1998); Porterv. Nemir, 900 S.W.2d 376 (Tex. App. – Austin 1995,no writ).

14 See, e.g., Exxon Corp. v. Tidwell, 867 S.W.2d 19,21 (1993).

15 Dickinson Arms – REO, L.P. v. Campbell, 4S.W.3d 333 (Tex. App. – Houston [1st Dist.] 1999).

16 Ghazali v. Southland Corp., 669 S.W.2d 770 (Tex.App. - San Antonio 1984, no writ).

Intentional Torts (Respondeat Superior)

Generally, employers are not held liable forintentional torts committed by their employeesunder a theory of respondeat superior (orvicarious liability). Texas courts have differedwith regard to the elements whereby anemployer could potentially be liable for theintentional acts of an employee. In oneworkplace violence case, the court held that itwould have to be proven that the employer hiredthe offender with the desire, or substantiallycertain belief, that the offender would attack thevictim.17 In another case, the court determinedthat the employer would only be liable if theemployer requested or directed an employee toassault another individual, and either 1) theemployer intended to cause the harm; or 2) theemployer had a substantially certain belief thatthe employee would be harmed.18 Finally, onecourt has ruled that in order to be vicariouslyliable for an assault, the employer must have“directed, encouraged, or otherwise ‘assented to’any assault or battery that may have occurred.”19

Occupational Safety and Health Act

In addition to these potential state law claims,the Occupational Safety and HealthAdministration (OSHA) has responded to theincrease in workplace violence by citingemployers who fail to adequately protectworkers from acts of criminal violence occurringin the workplace. Section 5(a)(1) of theOccupational Safety and Health Act iscommonly referred to as the “general dutyclause.” This section requires employers toprovide employees with a workplace free fromrecognized hazards that cause, or are likely tocause, serious physical harm or death.

In order to establish a violation of the generalduty clause, OSHA must show:

(1) a condition or activity in theworkplace presented a hazard to employees; 17 Prescott v. CSPH, Inc., d/b/a Domino’s Pizza, 878S.W.2d 692, 695 (Tex. App. – Amarillo 1994, nowrit).

18 Horton v. Montgomery Ward & Co., 827 S.W.2d361, 366 (Tex. App. – San Antonio 1992, writdenied).

19 Lewis v. Continental Airlines, Inc., 80 F.Supp.2d686, 696 (S.D. Tex. 1999).


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(2) the cited employer, or theemployer’s industry, recognized the hazard;

(3) the hazard was likely to causedeath or serious physical harm; and

(4) feasible means existed toeliminate or materially reduce the hazard.

Workplace Violence Prevention / Preparation

The International Association of Chiefsof Police (IACP) prepared the followingguidelines for employers to help minimize theimpact of workplace violence and threats.20

1. Conduct Pre-Employment Screening

Employers who conduct effectivebackground checks can often improveproductivity and reduce the number of personnelprone to exhibiting violent behaviors.

• Prior to hiring any applicant, checkreferences and inquire about any priorincidents of violence. In addition,conduct thorough background checksand consider using drug screening tothe extent practicable.

• Also, evaluate the need for screeningcontract personnel who work at yourfacility. Vendors and serviceorganization whose personnel makefrequent visits or spend long periodsof time working at your facility shouldcertify that those individuals meet orexceed your company’s safety andsecurity requirements. Conversely,contractors who assign personnel towork at other organizations’ facilitiesshould also consider the company’ssafety and security policies andpractices.

Fair Credit Reporting Act

Use of pre-employment screening checks mustcomply with the Federal Fair Credit ReportingAct (FCRA) (15 U.S.C.A. § 1601 et seq.).Under the FCRA, employers must obtainconsent for any inquiries and follow strict

20 Guidelines for Employers, InternationalAssociation of Chiefs of Police, www.theiacp.org

procedures for obtaining and considering suchinformation. Personal information concerningapplicants or employees must be keptconfidential. In addition, where a backgroundcheck will involve interviews withacquaintances and neighbors concerning theapplicant's lifestyle, this must be disclosed andthe applicant furnished, upon request,information concerning the nature and scope ofthe investigation.

The FCRA requires employers take certain stepsif background checks are to be used.

1. Before conducting a background check,an employer must first:

• Provide the applicant or employeewith clear and conspicuous writtennotice that a consumer report/creditcheck will be conducted; and

• Obtain written authorization from theapplicant or employee.

2. If the employer makes a decision to takean adverse action based in whole or inpart on the information contained in thereport, the employer must:

• Provide the applicant/employee with acopy of the report;

• Provide a written description of theapplicant’s rights under the statute(including the right to requestdisclosure of the nature, sources andrecipients of the credit report);

• Provide the applicant with oral, writtenor electronic notice of the adverseaction;

• Provide the name, address and phonenumber of the consumer reportingagency that furnished the report alongwith a statement that the consumerreporting agency did not make thedecision to take the adverse action andis unable to explain the specificreasons behind the decision;

• Provide notice of the applicant’s rightto dispute the accuracy of the report.

Employers who fail to comply with therequirements of the FCRA face monetarypenalties as well as legal action from theapplicants. Individuals who prevail on theseclaims may recover damages, court costs, and


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reasonable legal fees, as well as punitivedamages for deliberate violations of the FCRA.

Employment Discrimination Issues

In addition to issues under the FCRA,inquiries into an applicant's criminal history mayalso raise employment discrimination concerns.The Equal Employment OpportunityCommission (EEOC) has taken the position thatif information is sought on a job application,during an interview, or during the hiring process,it is assumed that the employer will use theinformation in making a hiring decision.Further, even if the inquiry is not discriminatoryon its face, the information requested may tendto screen out individuals who belong to aprotected class.

Employer Considerations:

(1) Does the business involve care forthe disabled, children or the elderly?

(2) Do employees have access to cash,weapons, drugs or residential dwellings?

(3) Does the employer have a duty toinquire about convictions?

(4) If no inquiry is made, is the risk ofnegligent hiring a consideration?

(5) Will the inquiry violate Title VII orthe TCHRA?

Disparate Impact

Some hiring requirements, such as a “notolerance” policy regarding any type of criminalrecord, may have a disparate impact on membersof a protected class. To be lawful, an employermust show that the hiring requirement:

(1) is job related, or it validly predictssuccessful job performance; and

(2) is required by business necessity, ornecessary to safe and efficient operation

Arrests

The EEOC has concluded that the use of arrestrecords as an absolute bar to employment has adisparate impact on some groups protected byTitle VII. Accordingly, arrest records aloneshould not be routinely used to denyemployment. Exclusion is justified only if itappears that the applicant, or employee actually:

(1) participated in the conduct forwhich s/he was arrested;

(2) the conduct indicates unsuitabilityfor the position in question; and

(3) the conduct was relatively recent.

Convictions

According to the EEOC, African Americans andHispanics are convicted in numbers that aredisproportionate to their representation in theU.S. population. The EEOC has thereforereasoned that barring individuals fromemployment based on conviction records willdisproportionately exclude certain groups. Dueto this adverse impact, an employer should notbase an employment decision on the convictionrecord of an applicant or an employee, unless thepractice serves a significant and legitimateemployment goal.

Employers should consult the EEOC’s PolicyGuidance on the Consideration of ArrestRecords in Employment at www.eeoc.gov. forfurther information.

Job Relatedness & Business Necessity

An inquiry about a felony conviction isgenerally permissible. However, an absolute baragainst hiring convicted felons could violateTitle VII. Employers should consider thefollowing factors to determine whetheremployment of a convicted felon would be job-related and consistent with business necessity.According to the EEOC, these factors include:

(1) The nature and gravity of theoffense or offenses;

(2) The time that has passed since theconviction and/or completion of the sentence;and

(3) The nature of the job held or sought.


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Examples of Job Relatedness

A few examples of how the EEOC has definedjob-relatedness may help explain this issue. Forinstance, the EEOC has determined that aconviction for gambling was too remote tojustify disqualification of a job applicant for theposition of mechanic. However, the EEOCfound that a conviction for robbery wassufficiently job related to justify the refusal tohire the job applicant as a custodialworker/janitor where the job involved issuanceof a master set of keys.

If an employer decides to rely on reports aboutcriminal histories of its job applicants, it may bebeneficial to monitor whether members ofprotected classes are rejected at higher rates. Ifsuch a result is noted, different hiring proceduresmay be necessary.

Evaluation of Criminal Records

Compliance with the EEOC guidelines for use ofarrest and conviction records requires aconsistent approach. Employers must developconsistent policies and procedures for criminalrecord checks, ensure that a system is in placefor the evaluation of these records, and setstandards for maintenance of such confidentialinformation.

2. Institute and Review SecurityProcedures

• Conduct security surveys at scheduledintervals to help determine whethermodifications should be made. Fourexamples of improvements that mightbe considered during a security surveyare:

a) Improved lighting in and aroundthe place of work (includingparking lots);

b) Arranging escorts for employeeswho are concerned aboutwalking to and from the parkinglot;

c) Having reception areas that canbe locked to prevent outsidersfrom going into the officeswhen no receptionist is on duty;and

d) When appropriate, having morethan one employee on thepremises.

• Use, maintain, and regularly reviewappropriate physical securitymeasures, such as electronic accesscontrol systems, silent alarms, metaldetectors, and video cameras in amanner consistent with applicablestate and federal laws.

• Limit former employees’ access to theworkplace as appropriate.

• Develop policies regarding visitoraccess within facilities. For example,if warranted, require visitors to sign inand out at reception, wear anidentification badge while on thebusiness premises, and/or be escorted.

3. Improve Internal/ExternalCommunications

Employees should have a means to alertothers in the workplace to a dangerous situationand to provide information requested byemergency responders.

• If appropriate, establish an internalemergency code word or phonenumber similar to 911.

• Place lists of contact persons, crisismanagement plans, evacuation plans,and building plans where they can bemade available to emergencyresponders. Keep important telephonenumbers in several places (includingoffsite locations), available to allappropriate managers and employees.

4. Establish Ground Rules for Behavior

Organizations that do not tolerate drugabuse or aggressive interaction lower the risk ofworkplace violence.

• Organizations should informemployees about policies concerningdrugs, violent acts, and possession ofweapons so that employees knowexactly what is expected of them.

• Implement procedures for yourorganization to become a drug-freeworkplace. This includes prohibitingunauthorized use or possession, or


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being under the influence of alcohol atwork.

• Disseminate to all employees a policyof zero tolerance to threats or actualviolence at the workplace. Forexample, discipline or terminate everythreat-maker if the complaint issubstantiated.

• Establish a policy applicable toeveryone employed by the companyor on company property, including thecompany parking lot, prohibiting thepossession of weapons which have notbeen authorized by your organization.

5. Employee and Manager Training

In order for policies and proceduresconcerning workplace violence to be effective,they must be implemented in conjunction withappropriate employee training.

• Train managers and other selectedindividuals on appropriate ways tohandle employee terminations,layoffs, and discipline. Examplesinclude appropriate use of EmployeeAssistance Program (EAP) counselorsand outplacement services; providingmanagers with sensitivity andaggression management training; and,when possible, assessing violencepotential of individuals prior totermination and taking appropriatemeasures such as hiring additionalsecurity.

• Suggest local police encourage victimsof threats and violence outside theworkplace to notify their employersabout incidents when warranted sotheir employers can take appropriatemeasures to help protect them andtheir coworkers from possible futureincidents of violence at the work site.It is recommended that employersreinforce this message to theiremployees. Upon notification,employers should providereceptionists and other front-linepersonnel having a need to know adescription or picture of the allegedoffender and inform them whatactions they should take in the eventthat individual seeks entry or contact.

• Have available for your employeesinformation about the potential forviolence in the workplace, how torecognize the early warning signs of atroubled or potentially violent person,how to respond to those individuals,and how to report such incidents

Warning Signs of Potentially ViolentIndividuals

Although there is no exact method topredict when a person will become violent, oneor more of these warning signs may be displayedbefore a person becomes violent. A display ofthe following signs are usually exhibited bypeople experiencing problems.

• Irrational beliefs and ideas

• Verbal, nonverbal or written threats orintimidation

• Fascination with weaponry and/or actsof violence

• Expressions of a plan to hurt himselfor others

• Externalization of blame

• Unreciprocated romantic obsession

• Taking up much of supervisor's timewith behavior or performanceproblems

• Fear reaction among coworkers/clients

• Drastic change in belief systems

• Displays of unwarranted anger

• New or increased source of stress athome or work

• Inability to take criticism

• Feelings of being victimized

• Intoxication from alcohol or othersubstances

• Expressions of hopelessness orheightened anxiety

• Productivity and/or attendanceproblems

• Violence towards inanimate objects

• Steals or sabotages projects orequipment


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• Lack of concern for the safety ofothers

Personal Conduct to Minimize Violence

The IACP recommends that employeesbe made aware of the following “do’s anddon’ts” regarding their daily interactions withpeople to de-escalate potentially violentsituations.

Do

• Project calmness: move and speakslowly, quietly and confidently.

• Be an empathetic listener: encouragethe person to talk and listen patiently.

• Focus your attention on the otherperson to let them know you areinterested in what they have to say.

• Maintain a relaxed yet attentiveposture and position yourself at a rightangle rather than directly in front ofthe other person.

• Acknowledge the person's feelings.Indicate that you can see he or she isupset.

• Ask for small, specific favors such asasking the person to move to a quieterarea.

• Establish ground rules if unreasonablebehavior persists. Calmly describe theconsequences of any violent behavior.

• Use delaying tactics which will givethe person time to calm down. Forexample, offer a drink of water (in adisposable cup).

• Be reassuring and point out choices.Break big problems into smaller, moremanageable problems.

• Accept criticism in a positive way.When a complaint might be true, usestatements like "You're probablyright" or "It was my fault." If thecriticism seems unwarranted, askclarifying questions.

• Ask for his recommendations. Repeatback to him what you feel he isrequesting of you.

• Arrange yourself so that a visitorcannot block your access to an exit.

Do Not

• Use styles of communication whichgenerate hostility such as apathy,brush off, coldness, condescension,robotism, going strictly by the rules orgiving the run-around.

• Pose in challenging stances such asstanding directly opposite someone,hands on hips or crossing your arms.

• Have any physical contact, finger-pointing or long periods of fixed eyecontact.

• Make sudden movements which canbe seen as threatening. Notice thetone, volume and rate of your speech.

• Challenge, threaten, or dare theindividual. Never belittle the person ormake him/her feel foolish.

• Criticize or act impatiently toward theagitated individual.

• Attempt to bargain with a threateningindividual.

• Try to make the situation seem lessserious than it is.

• Make false statements or promises youcannot keep.

• Try to impart a lot of technical orcomplicated information whenemotions are high.

• Take sides or agree with distortions.

• Invade the individual's personal space.Make sure there is a space of 3' to 6'between you and the person.

Reporting Procedures

All employees should know how and where toreport violent acts or threats of violence.

? Encourage employees to report andestablish avenues of communication sothey can do so without fear of reprisal orcriticism:

1. Incidents of threats, harassment,and other aggressive behavior;


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2. Conditions where employees aresubjected to excessive orunnecessary risk of violence; and

3. Suggestions for reducing risk ofviolence or improving negativeworking conditions, such asestablishing a telephone hot-line,identifying specific points ofcontact in the organization foraddressing those issues, having asuggestion box or computerbulletin board, or providing anombudsman.

? Establish a policy to assure that reportswhich are submitted from outside thecompany, concerning potentially violentpeople who are likely to be present atyour worksite are routed to theappropriate manager and theninvestigated.

Prepare a Threat Management Plan

It is important to prepare a threat managementplan so that when a threat occurs everyone willknow that there is a policy and will understandwhat to do. The plan might include:

? Designating a threat management team;

? Providing guidance concerning liaisonwith outside assistance;

? Providing guidance developed inconcert with local authorities forcollecting and preserving evidence,including interviews of involved parties;

? Managing of communications regardingthe incident, for example, mediarelations, internal communications, andpossible use of a rumor control desk;

? Managing the release of sensitiveinformation where appropriate;

? Assigning responsibilities for contactingthe families of victims;

? Managing clean-up and repairs;

? Making decisions about returning towork;

? Notifying customers and suppliers aboutchanges in orders;

? Providing employees and their familieswith information about their benefits;and

? Managing operations and trauma careafter the crisis.

The threat management team is a criticalcomponent of every successful threatmanagement plan.

Addressing Violent or Threatening Incidents

Use All Available Resources

When an incident occurs, bring together all thenecessary resources, which may include helpfrom outside the company.

? When a serious threat is made, consultthe sources available to you to helpevaluate the level of risk posed by thethreat-maker.

? When appropriate, obtain fitness-for-duty evaluations of employeesexhibiting seriously dysfunctionalbehaviors at the workplace.

? Maintain an internal tracking system ofall threats and incidents of violence.

? When a threat has been made or anincident has occurred, evaluate thesituation and, if warranted, notify thepotential victims and/or police.

Evaluate Security After a Threat

The threat management team should reviewrisks and determine what additional securitymeasures, if any, should be put in place after anincident.

? If warranted, provide increased work-site protection when serious threats ofviolence have been made. Suchprotection might include requestingadditional police patrols, hiring securityguards, and/or alerting organizations orpeople who might be affected.

? Consider the costs and benefits ofproviding increased protection tothreatened employees. This couldinclude changing their phone numbers,relocating them, loaning them a cellularphone, or providing them with a quick


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response distress button or informationabout where this device can be obtained.

? Seek guidance and training on whatprocedures should be taken to screenmail and packages after a threat hasbeen made or after a large-scale layoff.Contact the U.S. Postal Service or localpolice for guidance.

? After a violent incident evaluate thepotential for further violence at yourworkplace and reassess your threatmanagement plan.

MANAGING THE AFTERMATH OF ANINCIDENT

Trauma Plan

Helping employees with the psychologicalconsequences of workplace violence is thehumane thing to do. It also greatly helps toreduce financial losses caused by absence, lossof productivity among employees, and workers’compensation claims.

After a violent incident, provide information andoffer counseling services to employees and theirfamilies which may include:

? Providing a debriefing 24 to 72 hoursafter a serious incident of violence toinclude all affected employees so thatthe cause of the violence andexpectations can be discussed, a plan ofaction can be addressed, and thoseneeding further counseling can beidentified;

? Providing a group debriefing after aserious incident of violence forcoworkers in how to communicate withthe victim/coworker who is re-enteringthe job after absence; and

? Providing ongoing follow-up, as needed.

Support Prosecution of Offenders

To prevent further incidents from occurring andto show their support of the victims, employersshould support prosecution of offenders.

? Accommodate employees after a violentincident so they can make courtappearances and work with theprosecution.

? Cooperate with law enforcementauthorities to help identify and prosecuteoffenders through the use of any meansat your disposal, such as crime stoppers,rewards, and similar programs.

CONCLUSION

The ability to manage a crisis in the workplace,whether a natural disaster or incident ofworkplace violence, should be a concern ofevery employer. While many of the causes ofthese crises may not necessarily be controlled oreliminated entirely, recent statistics reflect thatan employer may take steps to help avoid orreduce some of their potentially devastatingeffects. This includes analyzing the potentialrisks, developing and implementing emergencyplans and programs, providing training tomanagement and employees, taking reasonableprecautions, and using common sense. Tomaintain a healthy, safe and productive workenvironment, and avoid potential legal liability,employers must take reasonable steps to reducethe risks and effects of these situations.


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