Donald Sterling’s Lessons for Businesses


Whether you agree with V. Stiviano’s decision to publicize a recording of L.A. Clippers owner Donald Sterling, the debacle is a good reminder for business owners and employees that their actions, both inside and outside the business, can impact the company and its brand.

In Sterling’s case, his girlfriend secretly recorded the longtime L.A. Clippers owner making racist remarks. His actions led him into a legal brawl with the National Basketball Association.

This is hardly the first case of an executive’s actions – sometimes in private – turning into a problem without a fix. Other recent examples include BP’s CEO Tony Hayward yachting in a $700,000 boat during the worst oil spill in US history and Paula Deen’s alleged use of racist remarks around her employees. The media criticism of Sterling, Hayward, and Deen was swift, and their businesses suffered.

High-profile individuals have to mind their actions at all times, but what makes Sterling’s case interesting for small and large business alike is that his comments were made in a private setting and recorded without his consent. Texas recording consent law varies depending on the communication and location, but in general, a phone call can be recorded by the consent of one party to the conversation and no consent is required to record someone in a ‘public’ place (which includes bars and restaurants). Employers should review their handbooks and policies to make sure they’re keeping up with changes in society, technology and the law.

Some portions of the workplace are considered ‘public,’ and businesses should include recording policies in their employee handbooks. Among other things, a good recording policy should contain prohibitions against secret recordings in the workplace and should explain how the employer itself might make use of recordings or surveillance. Anti-recording provisions primarily keep company information private, but an employee who secretly records workplace conversations or activities could be terminated for violating company policy. Companies should also consider specific provisions about recording employment reviews and meetings. While untested in court, a policy against recording fellow employees without their consent might be prudent.

But in a world where everyone’s cell phone doubles as a recording device, these protections have limits. While some court decisions have upheld an employee’s free speech rights outside the workplace, an employer will likely be within its rights to terminate an employee for making racist remarks at lunch if presented with a recording of it. And another employee affected by those remarks would have ample ammunition against the employer if a claim is pursued. Of course, the media backlash could be more devastating than – or could worsen – legal proceedings. As Sterling’s case showed, very little attention is paid to how a recording was made once it’s made public.

As usual, avoiding the problem is best. Companies have to repeatedly reeducate employees on “keeping it professional” and how comments and jokes can be used to get an employee fired or the company dragged into a lawsuit (even posts on “personal” social media pages leave tracks). Without periodic reminders, people forget that seemingly innocent activities can lead to discrimination, sexual harassment, and gender employment violations. Business owners in San Antonio should also train employees on San Antonio’s Non-Bias ordinance regarding sexual orientation and gender identity. Business owners should use case examples like Deen, Sterling, and Hayward to make training more meaningful.

Employers should also encourage workers to report any questionable activity they experience or witness to supervisors or management they feel comfortable speaking to. Being willing to investigate and address potential violations early limits the need for employees to secretly record things that make them uncomfortable. It could also prevent having an employment claim filed against your company or it could minimize the impact of a claim.

While the First Amendment protects free speech, it leaves us accountable for what we say, and it won’t protect an employer faced with discrimination claims. A business facing an issue like Sterling should consult with legal counsel and a public relations firm early. But to prevent these issues, updated handbooks and policies and repeated training are key.

Where free speech and economic interests intersect, it’s probably best to just keep personal beliefs to yourself.

If you need legal advice, schedule a meeting with Tiwari + Bell PLLC through our website or by calling (210) 417-4167