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Landmark Ruling Against McDonald’s HR Head Highlights Legal Risks for C-Suite

Feb 1, 2023
Deb Muller

In 2019, we reached out to David Fairhurst and asked him about the systems he had in place at McDonald’s to handle employee complaints about misconduct – including sexual harassment. His response was a curt “no thanks.”

Based on a recent decision by a Delaware court, it appears David’s decision was a bad one.

Karmically speaking, some headlines just write themselves.

Last week’s groundbreaking ruling should serve as a massive wake up call for HR leaders everywhere; the safety of staying neutral isn’t safe anymore. While it’s traditionally been a board’s responsibility to answer for a company’s bad behavior, shareholders can now personally sue members of the C-Suite when they breach their fiduciary responsibilities. This could get expensive real fast.

According to the suit, McDonald’s former Chief People Officer, David Fairhurst, enabled a culture of sexual misconduct. It looks like his poor decision making was a theme. First, he failed to establish a fair, transparent system for catching red flags, reporting issues and addressing sexual harassment and misconduct. Second, he ignored flagrant misconduct from former CEO Steve Easterbrook who was fired for engaging in sexual relationships with several employees.

News flash: turning a blind eye, or pleading ignorance will not hold up in court – because it shouldn’t. Executives at that level are chosen and paid to lead, not cover for each other. Employers expect and hold employees accountable for doing the right thing. It’s not expecting too much for leaders to uphold their “duty of oversight” and take responsibility for either feeding or starving a trustworthy and transparent culture.

CHROs need to take this ruling seriously, not only to protect their organizations, but also protect themselves. Now that the C-suite might be personally liable, making a genuine, documented effort to prevent wrongdoing could go a long way towards a sound legal defense should it come to that. While HR leaders will never be able to control the actions of every person in an organization, building and implementing consistent processes and systems demonstrates a commitment to protect organizations and their people.

I recommend starting with the basics.  Do you have the systems and processes put in place to track and report misconduct and flag potential risks. How easy is it for employees to report issues? Can employees do so anonymously? How many actually take advantage of this and share concerns? How frequently is the C-suite reviewing employee relations data?  Are executives signing off on these data briefings? What is the process for identifying problematic trends and proactively responding? Who is responsible for following up on issues that involve leaders? What formal investigation and case management process is in place if an executive is flagged in a case or issue?

If you can’t answer or don’t know the answers to these questions, you are personally at risk.  The majority of employees know this to be true: culture is built or destroyed from the top down. Now is the time to prove to them HR knows this too.

Deb Muller
Deb Muller is the CEO of HR Acuity, employee relations case management and investigations software that combines documentation, process, and human expertise so organizations can meet the challenge of managing employee relations in the modern world.