No good deed goes unpunished

Nov. 9, 2011
In this edition of In the Trenches, a part-time do-gooder gets the axe when he rats out a software pirate.

Acme, a preeminent supplier of trimethyl flubdub to many well-known manufacturing companies, also has been hit by the current recession. In fact, production is running at only half capacity. But that’s not a big concern for Al Famaille, Acme’s president and CEO. A true believer when it comes to automation, Al championed and successfully built a plant that serves as the industry benchmark in terms of the unit labor content per pound of product. Struggling for 30 years to minimize the plant’s fixed costs and associated breakeven production levels, Al’s creation now turns a profit, even at 25% capacity.

The plant, however, still needs a few good people, but only periodically and only for a while. The resultant turnover keeps Acme’s HR director, Ruth Leslie Krewel, quite amused and quite secure in her job. Part-time goodwill ambassador and part-time executioner, Ruth maintains adequate staffing at minimum cost. For example, five years ago, Dyan Knight, the production superintendent, needed an instrument technician to verify the accuracy of the plant’s self-adjusting meters and gauges. It didn’t take Ruth very long to find Caleb Brashen, a retiree with too much time on his hands and consequently willing to work an erratic and irregular 25 hr/week schedule. Dyan was pleased with this hire because having Caleb work only two or three days a week, plus odd weekends, kept her operating costs low. It also freed up her time to do her own work, unencumbered by day-to-day trivialities in the plant.

Part of Caleb’s job required him to key instrument performance data into a maintenance software package. He quickly familiarized himself with the intricacies of the software that provides an audit trail should the FDA or a nosy customer ask for proof of Acme’s marketing claims of extraordinary product quality.


After he logged on, the software offered Caleb a choice of data files to be opened. He noticed that some of the instrument files he never used were nevertheless always updated, based on the date and time stamp the computer appended to them when they were saved. Caleb found this curious, as he was the only instrument technician at the plant. When he opened one of them, he realized it covered instruments not found in the Acme plant. After some additional nosing about, he realized that Dyan was updating the files. Then, he discovered the files covered instrumentation apparently belonging to another company. It slowly dawned on him that Dyan was freelancing and using Acme’s computer system and maintenance software to do it.

When Caleb reported his suspicions to Ruth, the only visible outcome was that Dyan started watching him like a hawk the following week and she began criticizing his work as inadequate.

Some time later, when Al was walking through the plant, Caleb stopped him and mentioned his suspicions about Dyan’s freelancing and the suddenly heightened level of scrutiny he endured ever since mentioning it. Al acted concerned and said he would look into it.

Within a week, Dyan was accusing Caleb of putting other employees in jeopardy by being drunk on the job. Caleb demanded a blood test to confirm he never consumes alcohol, but Dyan ignored his request.

One week later, Ruth called Caleb into her office and summarily fired him, the proffered reason being that he failed to do his job. One week after that, Caleb initiated a suit, claiming he was harassed and fired because he reported that Dyan was using company property to do freelance work.

An analyst's response:

Unfortunately, Caleb stuck his neck out and fell victim to the “part-time executioner.” But Caleb probably couldn’t have done anything to prevent his downfall. Given standard operating procedure at Acme, Ruth may well have hired Caleb as a “temp” employee all along, unbeknownst to him, and might have been shown the door even if he’d kept his head down. Paraphrasing the unfortunate mantra that employment lawyers must often tell potential clients: Just because it’s unfair doesn’t mean it’s illegal. As an at-will employee, Acme had considerable leeway to hire and fire, even for lousy reasons, as long as those reasons were not unlawful. More enlightened HR policies could have averted the costs of initially defending the lawsuit, regardless of whether the force of law was on his side.

How could Acme have avoided the problem? Perhaps by implementing clear computer usage policies, properly enforced, which expressly state that all computers, data and equipment are to be used for Acme purposes only, the company could have lessened the risk. In the worst-case scenario, given her side job, Dyan may have been playing fast and loose with Acme’s own instrumentation data, as well, and disclosing Acme’s intellectual property. A handbook provision expressing Acme’s commitment to consider legal remedies in such cases might serve as an even more powerful deterrent. At minimum, Dyan could be breaching her duty of loyalty, for which Acme, in theory, could assert a legal action. As happens too often, the messenger, not the wrongdoer, incurs the wrath, but Al should have taken Caleb’s suspicions more seriously for his own sake.

On the other hand, perhaps for Acme, there was no problem. Al’s benign neglect, in his view, hasn’t cut into profits. The revolving-door HR policies are having little impact on production. Caleb doesn’t have a viable legal claim, at least not yet: Acme should resist trying to fight paying Caleb’s unemployment benefits with that trumped-up “drunk on the job” claim — and avoid making such allegations to prospective employers — lest the company wants to defend a genuine defamation action, among other possible claims.

It’s also possible that, like Ruth, Al knew of Dyan’s freelancing and condoned it, perhaps reaping the benefits of procuring a competitor’s information. More nefariously, Acme was using its competitor’s data to cover up problems with its own instrumentation (the result of an overly aggressive cost-cutting regime, perhaps?), should the FDA come calling. If so, Caleb might have been able to bring a whistleblower suit, had he reported his concerns outside the company. But generally, in most states, complaining internally won’t be enough for a “public policy” wrongful discharge claim. Caleb may have enjoyed more whistleblower protections if Acme were a publicly traded company, which doesn’t appear to be the case here. Moreover, ruling out this unlikely scenario of corporate intrigue, Caleb had uncovered no unlawful activity to report.

Lisa Milam-Perez, J.D., Labor and Employment Analyst, Wolters Kluwer Law and Business
(773) 866-3908, [email protected]

A maintenance management consultant says:

Al is so focused on automating his plant that he doesn’t seem aware of what his staff and employees are up to. It certainly appears that Dyan and Ruth are working together to use Acme’s equipment and software to run an instrument calibrations business on the side at the expense of Acme. If it wasnt for Caleb, they might never have been discovered.

When Caleb mentioned to Al his suspicions about Dyan’s freelancing and increased scrutiny, Al said he’d look into it. However, he didn’t. Had Al investigated, he might have discovered what was going on. It appears that Al was just giving lip service to Caleb’s concerns.

The bottom line is that, under Al’s leadership, Acme couldn’t have avoided these problems, because he wasn’t focused on his staff’s performance and activities but on the plant’s automation. Acme is very profitable under Al’s guidance and direction, but it could be even more profitable if he paid more attention to his staff’s activities.

It’s one thing for Dyan to be freelancing and using Acme’s computer system and maintenance software to make some extra money for her personal gain. However, it certainly sounds like Ruth is part of Dyan’s freelancing activities, because shortly after Caleb took his concerns to Ruth, Dyan began to scrutinize Caleb’s work more than usual.

Now, perhaps Ruth isn’t involved with Dyan’s freelancing work, but because she failed to investigate further, then she’s obviously not doing her job. Either way, Ruth is at fault.

Caleb did all that he could do. He presented his concerns to the proper person in the chain of command (Ruth) about his supervisor. When that didn’t resolve the problem for Acme and he became more scrutinized by Dyan following his discussion with Ruth, he took it to the next higher level.

On being terminated and filing a suit against Acme, Caleb was correct. Unless Dyan is smart enough and quick enough to permanently erase the computer records, Caleb certainly has proof of his concerns that Dyan is using Acme’s system and software for personal gain.

Bob Steibly, C.P.E., Steibly & Associates
(802) 747-7220, [email protected]

A corporate consultant says:

Although they couldn’t have prevented the initiation of this abuse, Acme could have prevented its continuation. Numerous software programs are available to monitor the use of computer applications. Installing the appropriate programs and informing employees of the installation may have successfully demotivated Dyan. However, there simply isn’t any failsafe mechanism Acme could have used to absolutely prevent the initiation of such abuse by employees. Most assuredly, Acme should have published policies specifically prohibiting these practices, but that doesn’t guarantee compliance. Even when severe consequences of infractions are spelled out, compliance cann’t be assumed. That’s why I suggest some form of monitoring.

As for Caleb, his best choice would have been to approach Dyan directly, providing hard copy documentation that someone was using her computer to freelance. He could offer to continue monitoring the situation, printing out hard copy evidence that could be sent Al, if she couldn’t get the mystery “freelancer” to cease and desist. This would likely have prevented the various repercussions he experienced as a result of speaking to Ruth.

Another option would have been to speak only with Al and give him hard copy documentation that someone was using Dyan’s computer to freelance. If Acme is privately held, it’s completely Al’s choice whether he takes action or not. If it is publicly held, Caleb should simply follow up his conversation with Al with a letter summarizing their meeting, attaching documentation. The hard copy would be enough to alert Al that Acme is at risk to its shareholders.

Francie Dalton, Dalton Alliances
(410) 715-0484, [email protected]

Reader responses:

I think Caleb should have taken the blood test. A company has every right to set guidlines for employment.

Caleb did his "research" on the company time, and it was not authorized. After his "discoveries" were reported, he should have realized it was none of his business after 2 others that were notified did nothing. Again, not his business to further reasearch on someone elses funding.

I would have released him for not doing what he was supposed to do. How does he know what the extra files indicate? There may have been permission to help a different company. It could have been a business partner or supplier or customer.


Robert Cowen

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