Friday, July 17, 2015

One for All and All for One

According to a statement issued by the Department of Justice, a settlement has been reached with retailer Abercrombia & Fitch after a year-long investigation was launched due to one employee's hiring violation. 

With nearly 80,000 full and part time employees, clothing giant Abercrombie & Fitch relies on many hiring-managers staffed to run the company’s thousand stores. However, after a New Jersey manager’s interaction last year with a new-hire, the company found itself surprised with an investigation that had been opened by the Department of Justice into their practices.

Instead of confirming the validity of the documents and completing the verification process, the hiring manager refused them and asked for specific documents to be shown by the new-hire. This frustrated the hiring process as it’s against federal regulations to require specific documents that some may never have in the first place, so when the Office of Special Counsel at the Department of Justice received the complaint, they had reason to investigate.

On June 25, 2015 about a year after the incident, the Department of Justice announced that a settlement had been reached with the company and released the terms of the settlement on their official website. Detailing the terms, one can see the burden on the company is extensive and will follow them for at least the next two years. 

The settlement as published on the Department of Justice official website includes an agreement to compensate the charging party with back-pay. This is just the beginning. Abercrombie & Fitch also agreed to set up a fund of $153,932.00 to compensate any others who may have been affected, but the fine may well be the smallest inconvenience. Within fifteen (15) days, the company is required to identify and compile all records for their New Jersey based stores regarding their hiring processes.  Then there’s more.

Anyone not offered a job after submitting an application would be contacted and have the opportunity to file an additional claim against the company.  Records going back to 2013 would have to be produced and all parties involved in the hiring process will be now identified and scrutinized. 

Extra training and verification of the training would have to be put in place. Overseers would be involved and the daily operations of company stores would now be affected. The federal government will now be standing closely over everyone’s shoulder and business practices will no longer be limited to internal oversight alone.

Going forward, a record will be kept and delivered quarterly to the Justice Department documenting Abercrombie & Fitch’s compliance in their new obligations ensuring the training of their employees in great detail. The company will need to adjust to the requirements regulating how they train and manage their employees involved in hiring. 

Just one person’s mistake caused trouble for all! The situation could have easily been avoided entirely had the manager followed the law and confirmed any uncertainties before refusing to accept legally valid documents. Instead, it would cast doubt on the company’s processes as well and interfere with the smooth flow of business other organizations enjoy.  

American laws in place regulate the hiring process and the Office of Special Counsel is not the only way to an investigation nor is it the end to one either. Just a few years ago, many were surprised when Chipotle had a similar problem that ended up involving the SEC (Securities & Exchange Commission), who figured one problem here meant there was potential for other violations.

A company with massive revenues may not be pained much by a six figure fine, but as seen in this speedy investigation, this inconvenience is hardly the only consequence and hardly the only cost faced by the company. 

As the working public becomes more and more involved and educated in the hiring process, more corporations will find themselves caught off guard by workers more and more informed than before. This time, its not always the government or internal audit responsible for uncovering these corporate liabilities.  

E-Verify is also now working to integrate and inform a job applicant of their own hiring process, allowing them to monitor the company hiring them. Employers will not only have to make a decision during the verification process, but this decision will be transparent and subject to the new-hire’s own scrutiny.

After all, when it’s not a government audit or company manager; but a non-employee who uncovers a liability as expensive and as overlooked as this, it may be a good time for others to examine their own operations.  Because as we now know very well, someone will follow-up sooner or later.

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