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Volume 21 No. 2
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How to build ethical decision-making into compliance programs

When the NCAA Executive Committee directed NCAA President Mark Emmert to examine the circumstances surrounding the recent scandal at Penn State, the result was an unprecedented $60 million fine and other dramatic punitive and corrective measures. The severity of the penalties stemmed from Penn State’s alleged failure to meet what President Emmert identified as the first responsibility of all association members: to adhere to the fundamental values of respect, fairness, civility, honesty and responsibility. According to the president, “if you find yourself in a position where the athletic culture is taking precedence over the academic culture … bad things can occur.”

The effect of failed compliance

For the past several years, whistleblowers have alleged that bad things are happening in athletic departments, giving rise to a number of whistleblowing and retaliation claims brought by high-level employees. In 2007, for example, a women’s basketball coach alleged retaliation after she complained about funding-related gender inequity. She received a $19 million jury verdict. That same year, a former assistant athletic director who claimed she was retaliated against after participating in a Title IX compliance review received a $3.4 million jury verdict. Similarly, former coaches in Florida received a $3.4 million settlement after alleging their university retaliated against them for their involvement in gender-equity complaints.

Mike McQueary’s lawsuit against Penn State alleges he was terminated because of his cooperation with authorities in the case against Jerry Sandusky.
Other cases are ongoing. In New Jersey, a former director of athletics has filed a claim under the state’s Conscientious Employee Protection Act alleging he was fired after reporting academic fraud and other violations to the NCAA. In Arizona, a former member of a university athletic department sued the NCAA, his former university and several athletic administrators personally, claiming he was wrongfully terminated after participating in an NCAA investigation concerning rules violations by the baseball program. Earlier this month, former Penn State assistant football coach Mike McQueary filed a whistleblower complaint alleging that he was terminated after participating in a criminal investigation and providing grand jury testimony in 2010 concerning the Jerry Sandusky sexual abuse case.

While the theories asserted in these cases vary, the allegations underscore the importance of value-based decision-making. To be sure, these cases reflect one certainty: Bad decisions result in bad facts, which make for bad lawsuits, resulting in bad settlements or bad jury verdicts.

In an atmosphere of heightened awareness regarding issues of ethics and campus safety, reports by whistleblowers are only likely to increase. In 2008, the Clery Act, a law that governs campus safety, was amended to specifically protect whistleblowers from retaliation. Since that time, enforcement of the Clery Act is on the rise. Last year alone, the U.S. Department of Education imposed fines for Clery Act violations against six major institutions. That is the same number of institutions that were fined in the first 18 years following the law’s enactment.

A culture of ethical compliance

In light of these developments, athletic departments are asking how to assist their personnel in making better decisions and ensuring a culture of compliance. For athletic departments that lack policies and practices designed to promote a workplace of mutual respect and ethical standards, the first step is to conduct a risk assessment so that an effective compliance program can be designed and implemented. Many entities are turning to outside counsel experienced in conducting internal investigations and implementing ethics and compliance programs. Experienced counsel will review policies and procedures, ascertain problem areas, and recommend practical solutions to remedy those deficiencies.

Regardless of whether an athletic department has existing policies or is starting from scratch, all departments must adopt an ethics policy or code of conduct for all employees. These policies should be drafted in a manner that complements the athletic department’s values, principles and strategies. Effective policies will govern the value-based decision-making mandated by the department as a term and condition of employment.

Next, athletic departments are encouraged to adopt their own internal whistleblower policies designed to discover and rectify potential problems before they fester and escalate into litigation. Effective whistleblower policies clearly identify reportable misconduct and set out a confidential procedure for reporting it. Equally important is an express prohibition against unlawful retaliation or discrimination against the whistleblower.

However, simply providing employees with an ethics policy or code of conduct is not enough. A successful compliance program must provide training to employees. Most ethical violations occur when an employee is faced with a difficult choice that requires balancing competing interests — where the right thing to do is not entirely clear. Athletic departments must provide effective training to address those gray areas and teach employees practical skills for identifying and resolving ethical dilemmas. There also should be specialized training for managers to ensure that whistleblowers are neither discouraged nor ignored, and are protected from retaliation.

Finally, athletic departments must respond to whistleblower complaints promptly and thoroughly. An effective complaint procedure includes methodologies for protecting and preserving evidence and electronic records, and measures that protect the whistleblower and any witnesses from intimidation or any form of retaliation. To encourage good-faith, internal reports of misconduct, these departments must demonstrate to faculty, staff and students that they welcome such reports and will respond to them fully and fairly.

Along with the risks of liability exposure and legal costs posed to a college or university, ethical violations carry the potential for career derailment, loss of professional reputation, individual liability and brand attrition. The key to sustainability is going beyond compliance: taking steps to prevent unethical and illegal conduct from arising in the first place, while simultaneously strengthening organizational values and accountability.
Scott James Preston ( is a shareholder in the Indianapolis office of Littler Mendelson, P.C., the world’s largest employment and labor law firm representing management.