How Safe Is Your Business from Employees Like This? 

I don’t know if this is real. This guy is so charismatic, I suspect he’s a professional actor.

Take a look at this video:

This may be a con, but this sort of thing does happen. In fact, when a business gets to a certain size – say, 1000+ employees – claims of racial discrimination and sexual harassment become commonplace. Even if you have a strict code of employee conduct and even if you have a hiring practice that gives preference to minorities.

I remember the first time this happened to one of the businesses that I was a partner in. The accusation was so implausible, and the claim of innocence by the employee accused was so credible, that I wanted to not just resist the claim but sue the claimant.

The claim, after all, was a smear on the reputation of someone I knew and trusted, as well as on our company. But when I suggested my course of action to corporate counsel, he said, “We can do that, if you want. But it will cost us at least $50,000 to cover the legal expenses. Or we could settle it now for $10,000.”

I was willing to spend the money. But the rest of the board was more pragmatic. “We could lose. We might be wrong. And who wants to risk $50,000 when we can settle for $10,000?”

We settled for $10,000.

This became standard operating practice. And each year the claims arrive. We rarely bother to review them anymore. It doesn’t matter who is lying. It’s cheaper to pay off the claimant and fire the accused.

I understand the logic. But I wish we had not let the bottom line determine our protocol. I can imagine a hack doing a hit piece on us, pointing out that we must be encouraging sexual harassment and racism. How else to explain the fact that we have settled out of court 20 times?

I sent the above video to our CEO, saying, “I guess the lesson is that if you make it easy and profitable for people to extort you, some of them will.”

He replied, “Not surprising. We have found the book How to Sue Your Employer and logs on perceived misconduct in people’s desks after they were fired.”