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At Breon & Associates, we often try to educate business owners about the importance of thorough internal investigations of deviant behavior within their organization. Not only can such steps root out bad behavior that violates company policy and undermines morale but a highly professional internal investigation can also insulate management from liability arising from subsequent litigation over disciplinary steps the company takes to enforce its policies. A recent case that made it to the U.S. Court of Appeals for the Sixth Circuit illustrates this point dramatically.

In McLaughlin v. Fifth Third Bank, two female employees who were fired for violating the bank’s vault-security protocols sued the bank for sex discrimination, because three male employees who were also implicated were not fired as well. Here are the facts from the court’s opinion:

Like many banks, …Fifth Third Bank, Inc. has a ‘dual control policy’ to govern entry to its cash vaults. To open a cash vault, two different employees must turn two different keys; both must remain present during the transaction; and then both must sign a logbook to record their participation. In January 2013, Fifth Third learned that employees at its busy Newport, Kentucky location were habitually violating this policy. Fifth Third opened an internal investigation and reviewed security video to identify any possibly offending employees.

The security video showed that two female employees, Kelly McLaughlin and Janet Raniero, violated the policy and “both admitted to investigators that they had violated bank policy.” The bank fired “McLaughlin, Raniero, and another female employee….” But McLaughlin and Raniero sued, alleging “three male employees—Randall Dreyer, Blake Hoover, and Joseph Durrett—also violated the dual-control policy but …[only] received performance counseling.” However, the video did not show “two of the three male employees” violating the policy and those two “did not admit to violating the policy.” As for the third, the video did show him violating the policy, but bank management found “mitigating circumstances” that argued against firing him: “a superior had bullied him into the violation, he complained about being forced to do it, and he refused to do it again when asked by McLaughlin, who was not his superior and described him as a ‘by-the-book guy.’

Although McLaughlin and Raniero contended that the bank “should have either fired the men as it did the women or ordered the women to receive performance counseling as it did the men…” They argued that the bank’s “failure to treat men and women equally shows that Fifth Third was using the dual-control policy violations as a pretext for engaging in sex discrimination,” in violation of Title VII of the Civil Rights Act of 1964. Ms. Raniero “also brought a claim for age discrimination under the Age Discrimination in Employment Act.

When the case went to trial in the district court, the bank moved for summary judgment and the judge granted the motion. What this means is, in the opinion of the judge, even if all the facts the women had alleged were true, those facts did not prove the elements necessary to establish the bank had committed unlawful discrimination. The trial court dismissed the lawsuit with prejudice, and the plaintiffs appealed, urging the higher court to reverse the trial judge’s decision so the trial could happen. However, the Court of Appeals found there was a reasonable basis for treating the employees differently. The panel of judges affirmed the trial court’s decision, ending the controversy.

So, let’s recap the ways Fifth Third Bank’s internal investigation served the company’s interests:

  • Identified employees who were violating company policy and put the bank at risk of losses due to theft and scandal
  • Provided a basis for terminating three noncompliant employees
  • Provided a basis for reinforcing company policy through discipline and retraining
  • Sent a strong message against bullying compliant employees to violate company policy
  • Stopped what could have been an expensive lawsuit by providing the evidence to win a summary judgment

Businesses can benefit from internal investigations aimed at discovering and stopping deviant workplace behavior. Contact Breon & Associates today to find out how we can help you mitigate this risk.

Contact Breon & Associates in Harrisburg

Consult Breon & Associates for knowledgeable, individualized assistance in preparation and filing. With offices in Harrisburg and South Central PA, Breon & Associates provides business, accounting and tax services throughout Pennsylvania, New York, North Carolina and Florida. Call us at 1-888-516-8476 or 717-273-8626, or contact one of our offices online to schedule an appointment.

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