You might have been following the latest news on Ellen Pao, the interim CEO of Reddit, who just resigned her position last week. Ms. Pao was also the plaintiff in a high profile sexual harassment lawsuit against her former employer, the venture capital firm Kleiner Perkins. That lawsuit ended with a jury verdict for Kleiner,
A Victory for Kleiner Perkins Should Still be a Red Flag for All Employers – “It’s All About Your Culture”
As was discussed on Fox Business News’s Willis Report, Friday’s jury’s verdict in California rejecting Ellen Pao’s claims of gender discrimination and retaliation was undoubtedly a huge victory for the venture capital firm Kleiner Perkins. However, before employers start popping champagne corks, all companies should consider the lessons learned from this case.
A brief background: Ellen Pao, a junior partner at Kleiner, claimed that she had been harassed and discriminated against while employed there because she is a woman. Ultimately, she alleged that after she complained about this perceived discrimination, she was then terminated. She sought many millions of dollars in damages – and potentially multiples of that in punitive damages.
Some of the 24 days of testimony included tales of workplace romances, alleged sexual advances on business trips, and firm events which excluded women, like a high-end ski trip that was “men only.” The jury, however, also heard from other witnesses, including women at Kleiner, who said that the firm was a fair place to work, that it was a competitive atmosphere for women and men alike, and that Ms. Pao was the cause of her own difficulties . Clearly, the jury believed Kleiner’ s version of events, rejecting out of hand all of Ms. Pao’s claims.
Looking at it from afar, many are already saying that – even with a loss – the Pao case has sent some powerful messages through the high tech industry in Silicon Valley.
But, if you are not in the high tech world, you are probably asking, “What does this case have to do with my company?” The answer is: a great deal.
First, any time there is a high profile harassment, case – whether it results in a plaintiff’s verdict or not – it brings sexual harassment back into the media and the spotlight, raising the specter of a spike in new claims. Some women may see and hear about this case and be tempted to become the next Pao. Although a jury found that Pao could not connect the industry’s male-dominated culture to Kleiner’s failure to promote her or to fire her, the case underscores how a work environment can provide fodder for discrimination claims and shine a spotlight on your culture.
Second, all employers should remember that any victory like this comes at a huge cost for the defendant/employer. There are first the direct costs of hundreds of thousands (maybe millions) of dollars in legal fees. There are also indirect costs, like the time taken away from the business by senior management because of the ligation, and then the public “airing” of the company’s dirty laundry in court and in the newspapers. No company wants either, and depending on your business the reputational harm from a case like this – win or lose- may be substantial. In fact, that’s what much of the post-trial press has been about: Pao lost in court, but her former employer may have lost in reputational terms.
Thus, the real win for a company is to avoid being the next Kleiner Perkins. But how can you do that? …
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The Day of the Woman – Maybe Not at Kleiner Perkins
On Monday, March 9, one day after we all celebrated International Women’s Day, Ellen Pao, a Harvard-trained lawyer, took the stand in her sexual harassment trial against venture capital firm Kleiner Perkins in California. There are always two sides to every case, and Kleiner has just begun to cross examine Ms. Pao and offer its defense to her claims, so I do not profess to offer my views on which side is telling the truth. However, even before she testified, the evidence thus far has depicted an environment that – at least from what has been presented – was far from the model of the professional workplace.
First, there were alleged “slights” in the treatment of women at Kleiner. For example, women partners were not invited to an important client dinner with Vice President Al Gore and then were excluded from a company ski trip. One male partner asked two female junior partners to take notes at a meeting. The firm has explanations for all of these incidents, but women felt that they were being treated as second-class citizens.
Then there are the more significant “events” and incidents. It is undisputed that Ms. Pao had a consensual affair with a married partner. When that ended, the same partner appeared at the door of yet another female partner’s hotel room in a bathrobe carrying a wine bottle. When that woman complained, a partner suggested she “did not want to go public” and that she should be “flattered” by his attention. When Ms. Pao tried to complain about the partner, senior partner John Doerr laughed it off, claiming the partner was a “sex addict.”
Beyond these lurid incidents, the testimony also reveals a deeper possible double standard that the women like Ms. Pao had to endure. Ms. Pao’s evaluations revealed sometimes contradictory advice and criticism. In some situations they were told to “speak up,” while at other times they were told to be quiet.
When outside counsel (a male law firm partner) was finally brought in to investigate Ms. Pao’s complaint, it is alleged that no one could locate a copy of the firm’s harassment policy. When asked about Ms. Pao, Mr. Doerr told the investigator she had a “female chip on her shoulder.” Once he made his report, Mr. Doerr did not have time to read it, so it was merely “summarized” for him. There are also now allegations from Ms. Pao that the outside counsel was biased, as he was trying to get hired by Kleiner for an in-house position.
Ultimately, Ms. Pao claims that she was terminated in retaliation for reporting this alleged harassment.
Again, the trial continues and the defense is now cross-examining Ms. Pao and putting some holes in her story, but many of the facts which have come out at the trial are disturbing.
So you may ask yourself what does this case have to do with my company?
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