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Roll Call

Cain Flap Highlights Trade Groups’ Dilemma

Chris Maddaloni/CQ Roll Call
The controversy surrounding Herman Cain’s tenure at the National Restaurant Association is unusual because trade associations normally keep personnel matters under wraps.

In the lucrative and sprawling world of Washington, D.C.-based trade associations, the controversy dogging former National Restaurant Association head and current GOP presidential hopeful Herman Cain is both commonplace and highly unusual.

The Cain story, which Politico broke this week when it reported that two of the association’s employees had accused Cain of inappropriate behavior when he was the trade group’s president and CEO, is unremarkable in that the monetary settlements involved are standard practice, legal experts say.

But the Cain controversy is atypical in that trade groups are unusually attuned to and determined to avoid public relations controversies, and they very rarely face discrimination allegations that go public. When employee-employer disputes do arise, settlements typically include confidentiality agreements, meaning the story never leaks.

The two women received financial payouts after signing agreements with the trade group, Politico reported, by far the most common outcome in such cases. Cain has vigorously denied any improper behavior. The restaurant association has declined to comment beyond a terse statement that the incidents date back “nearly 15 years” and that the group doesn’t “comment on personnel issues.”

In this case, the presence of such agreements didn’t prevent the story from becoming public, largely because of the intense scrutiny focused on Cain as a leading presidential candidate.

“The bottom line is that trade associations are, if anything, more conscientious than businesses regarding [human resources] matters,” said Jerald Jacobs, a partner at the Pillsbury law firm who is general counsel at ASAE, which represents the trade association industry. “That is because, at least in Washington, they are national associations, and an entire industry is watching them.”

The greater Washington area is home to more than 500 trade associations employing some 61,000 people, according to ASAE. By some estimates, the industry grosses more than $9 billion a year. Association heads in Washington often represent thousands of individual companies or trade groups and manage multimillion-dollar political action committees.

The National Restaurant Association represents more than 380,000 businesses in the food service industry and manages a PAC that spent slightly less than $1 million during the last election cycle. The trade group has circled the wagons in the wake of the Cain allegations and did not respond to requests for comment.

The Cain scandal has put the association in a touchy spot, particularly now that a lawyer for one of the two women has called on the trade group to release her from the confidentiality agreement. The woman in question now wants to tell her story, the Washington Post has reported.

The association industry spans niche groups such as the National Association of Professional Pet Sitters and the Greeting Card Association, along with powerhouses such as the Motion Picture Association of America, headed by former Sen. Chris Dodd (D-Conn.), and the American Gaming Association, whose president and CEO is Frank Fahrenkopf, former chairman of the Republican National Committee and an ex-Reagan White House aide.

In recent memory, only one high-profile Washington organization has faced a public dust-up involving employer misconduct, said legal experts specializing in such disputes.

In 2007, the American Red Cross fired its president, Mark Everson, after only six months, citing a “personal relationship” between Everson and “a subordinate employee.”

The firing itself was not as unusual as the organization’s public statement acknowledging the reason, say lawyers specializing in discrimination matters. Although discrimination complaints have declined in recent years, according to the federal Equal Employment Opportunity Commission, they remain commonplace in both the public and private sectors.

“I don’t think that this is a rare circumstance,” said Joanna Friedman, a partner with the law firm of Tully Rinckey, which specializes in employment law. “We see that in all types of private-sector and
federal-sector law.”

“Quid pro quo” harassment — which might involve an employer offering an employee a raise in exchange for a date, for example — is down, Friedman said. But complaints involving clashes around issues of gender, culture and generation gaps surface frequently, said Friedman and other lawyers.

Many employers are insured against discrimination allegations and settle such matters through their insurance companies. Lawyers specializing in human resource issues advise employers of all stripes to have clear policies in place; to train both workers and supervisors in how to identify, respond to and investigate discrimination allegations; and to have regular training sessions.

“I think that the vast majority of people are good people, and are not intending to cause harm,” said Robert Shoop, director of the Cargill Center for Ethical Leadership at Kansas State University. “But without proper training, people can engage in behavior that is inappropriate, without [that] being intended. And that jeopardizes the association.”

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