CVS Pharmacy’s Code of Conduct & Ethics Hotline Featured in Recent Litigation

CVS Pharmacy recently lost a motion to dismiss a case alleging a hostile work environment caused by: (1) directions to use racial profiling against black and Hispanic store customers; and (2) an alleged barrage of racial slurs in the workplace.

In denying CVS Pharmacy’s motion, the court focused, in part, on the fact that a reasonable jury could find that CVS Pharmacy failed to adhere to its own Employee Handbook and Code of Conduct  (“CVS Handbook”) and possibly mishandled calls to its ethics hotline.

The CVS Handbook prohibits discrimination against CVS employees and customers on the basis of race and color (among other things).  CVS Pharmacy provides a copy of its CVS Handbook to its employees when they are hired and makes the CVS Handbook available on the company’s internal intranet portal.

In the event of discrimination, the CVS Handbook states that employees are “expected to report incidents of inappropriate behavior, unlawful discrimination, workplace violence, and workplace or sexual harassment as soon as possible after they occur.”  The CVS Handbooks describes a number of ways to report unlawful discrimination, including notifying employees that they may call the CVS Caremark Ethics Line at any time.

In seeking to have the case dismissed, CVS Pharmacy alleged that it had no record of a compliant of race discrimination from either of the two plaintiffs in the case.  Nonetheless, one of the plaintiffs testified that he called the ethics hotline on several occasions to report incidents of racial discrimination.  CVS Pharmacy’s records reflect that the plaintiff called the ethics hotline, however, CVS denied that the plaintiff’s reports to the ethics hotline included complaints of race discrimination.  The court found that the plaintiff’s testimony, that his complaints to the ethics hotline were ignored, raises questions regarding whether the hotline was a viable means of reporting racial discrimination.  The court further found that there was sufficient evidence to conclude that the protocol for handling discrimination complaints, as outlined in the CVS Handbook, was not followed by supervisors and that the written policy was thus “window dressing.”  In other words, there was a genuine issue of fact as to whether CVS’ policy had force.

The other plaintiff in the case, never called the CVS ethics hotline to report discrimination during her employment, but testified that she did call the hotline after her employment ended.

The plaintiffs asserted a theory that CVS has poor record keeping.  The court found this theory to be bolstered by several pieces of evidence, including the second plaintiff’s testimony that she called the hotline after her termination– a call for which CVS has no record–and evidence showing that CVS does not consistently document complaints of racial discrimination or escalate such complaints up the reporting chain, as required by the CVS Handbook.  In sum, the court concluded that “a reasonable jury could clearly find that CVS negligently ignored the complaints of racial discrimination by the plaintiffs.”

Although this case has yet to be resolved, the court’s opinion makes it clear that corporations must follow their own internal policies and carefully track and respond to calls to their ethics hotlines.

See Zaire Lamarr-Arruz & Mominna Ansoralli v. Cvs Pharm., 2017 U.S. Dist. LEXIS 157843 (U.S. District Court, Southern District of New York, September 26 ,2017).

 

 

Advertisements

For Whom does the Whistle Blow? Common Law versus Statutory Law

This week, the United States District Court for the Middle District of Tennessee dismissed a case against Wal-Mart that involved several calls to Wal-Mart Global Ethics. See Hall v. Wal-Mart Stores, 2017 U.S. Dist. Lexis 75208. The only cause of action that the ex-Wal-Mart employee brought against Wal-Mart, however, was a statutory claim under the Tennessee Public Protection Act (“TPPA”).

The TPPA gives a party a cause of action under its anti-retaliation provisions if the party engages in whistleblowing activities meant to protect the public good.

Wal-Mart alleged that the ex-employee failed to state a claim under the TPPA because her whistleblowing activities were merely private and proprietary and did not advance the public good. In what is an interesting opinion for ethics junkies, the court agreed with Wal-Mart and dismissed the ex-employee’s complaint.

While still employed by Wal-Mart, the ex-employee reported to Wal-Mart Global Ethics what she perceived to be her supervisor’s unethical conduct. It is unclear whether the supervisor’s conduct was actually unethical. After the ex-employee made the report, she received her first poor evaluation, which she claimed was in retaliation for her report to Wal-Mart Global Ethics.

There appears to have been some tension between the ex-employee and the supervisor. Whether the supervisor was unfairly targeting the ex-employee or simply frustrated with her performance is unknown. However, on one occasion, the supervisor got so frustrated with the ex-employee that he punched a box. Other employees saw this and reported it to Wal-Mart Global Ethics. The Hall v. Wal-Mart opinion certainly indicates that Wal-Mart employees at this particular store knew how to contact the ethics department—a sign of a good ethics and compliance program.

In reaching its conclusion, the Hall v. Wal-Mart court stated that the TPPA will protect a whistleblower from retaliation if it can be shown that the whistleblowing activity was to further protect the public good. Other courts have found that, under the TPPA, whistleblowing activity may serve a public purpose where, for example, the whistleblowing relates to unsafe working conditions, but not where it relates to racial discrimination in a single person’s pay. The Hall v. Wal-Mart court concluded that under the TPPA, blowing the whistle on discrimination against oneself is a private and proprietary interest that must be vindicated through means other than the TPPA.

While the TPPA is a statutory law that protects whistleblowers from retaliation in situations where the whistleblowing was meant to protect the public good, there are common-law retaliatory-discharge claims that do not require showing that the whistleblowing activity protected the public good at-large, however, the ex-employee did not assert a common law claim for retaliatory discharge.

Your Code of Conduct Encourages Employees to Report Violations. Are You Listening?

I remember reading the U.S. Supreme Court’s decision in Kasten v. Saint-Gobain  while I was practicing employment law at a private law firm.   Back then, I was focused on what the decision meant for employers.   I wasn’t reading the case through the lens of a compliance and ethics officer, so I didn’t hone in on the role of the employer’s code of ethics and business conduct until I recently reread the case.

Kasten is a Fair Labor Standards Act (“FLSA”) case.  The FLSA sets forth employment rules concerning minimum wages, maximum hours, and overtime pay; it contains a statutory provision that prohibits retaliation against employees who report a FLSA violation.

In Kasten, the employee alleged that his employer unlawfully retaliated against him after he repeatedly orally complained to his employer about unlawful timeclock locations.  It appears that the employee cited the employer’s code of ethics and business conduct as supporting justification for his complaints. It appears that the company’s code of ethics and business conduct (like many codes of conduct) obligated every employee to report suspected violations of any applicable law of which the employee becomes aware.

The employee alleged that he expressed his concerns over the placement of the timeclocks to his shift supervisor, his lead operator, human resources, and the operations manager. The employee alleged that this activity caused the company to discipline him and ultimately dismiss him.   [Note, in a separate legal action, a court held that the placement of the timeclocks violated the FLSA.]

The employer, however, denied that the employee made any significant complaints about the timeclock locations.  Rather, the employer alleged that it dismissed the employee because he failed to record his comings and goings on timeclocks.

While the sole issue that the U.S. Supreme Court decided in Kasten was whether an oral complaint in violation of the FLSA is protected conduct under the act’s anti-retaliation provisions, this case also highlights the need to vigilantly listen for employees who might be reporting a violation of the company’s code of conduct.  In Kasten, the U.S. Supreme court ultimately held that oral complaints are sufficient to trigger anti-retaliation protections, stating that to hold otherwise would prevent the effectiveness of things like hotlines, interviews, and other oral methods of receiving complaints, all of which are components of effective compliance and ethics programs.

Just Ethics & Chill Takeaway

Employers should listen carefully to their employees to discern whether what they are hearing could amount to an oral complaint related to violations of law, regulation, or internal policy.