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June 23, 2006
Another Corporate Executive, Another Sex Scandal
Following on the heels of other corporate excutive scandals (see the recent Toyota case for instance), here is another one (from the Toronto globeandmail.com) involving the CFO of Time Warner:
This time, it was Time Warner Inc.'s executive vice-president and chief financial officer, Wayne Pace, whose name was splashed on the front pages of the city's tabloids on the weekend, naming him as the "sugar daddy" for a Brazilian woman who had been arrested and charged with prostitution.
Through his lawyer, the 56-year-old, married executive denied having "an inappropriate relationship" with Andreia Schwartz, but acknowledged knowing the woman, who was awaiting a bail hearing in a Riker's Island jail.
Ms. Schwartz told the New York Post and the New York Daily News in jailhouse interviews that Mr. Pace had showered her with expensive gifts and even helped pay for a Manhattan condo, which she sold in 2002 for $500,000 (U.S.).
Interesting question here is whether, assuming the allegations are true, Time Warner could take disciplinary action against Pace. An attorney in the article opined:
What he did during off-business hours is his own business, but if he used company e-mail to communicate with Ms. Schwartz, or company expense accounts to entertain her, the company has cause for action.
I'm not so sure this analysis is correct. First, even if New York has an applicable off-duty legal activity statute, this type of extracurricular activity might not be protected by such a statute given its connection to illicit behavior.
Also, even without using company property, and under the nexus principle that labor arbitrators use for determining good cause for termination in off-duty conduct cases, if the off-duty conduct has an adverse impact on the company' standing in the community or otherwise disrupts the working environment at Time Warner, I think most arbitrators and decisionmakers would agree that under these circumstances Time Warner would have good cause to terminate Pace's employment.
PS
June 23, 2006 in Labor and Employment News | Permalink
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Comments
Bottom line here = poor judgement. What shareholder would want someone, assumming the allegations are found to be true, who exhibits such poor judgement in such an important position in the company?
Posted by: Diane Pfadenhauer | Jun 23, 2006 4:10:27 PM
As far as employment law goes, New York does have a "lifestyle protection" statute, but it only protects off-duty, off-premises "recreational activities." The question of whether dating is protected under this statute went back and forth for a while between state and federal courts. It was finally settled that dating is NOT a recreational activity and thus unprotected. Particularly applicable in Time Warner's case, the court said that recreational activity not only excludes dating but also any other kind of personal relationship.
I don't agree with the court's decision, and I think limiting protection to "recreational activity" is a major deficency in New York's lifestyle protection statute. Yet, if it can be shown that an employee's off-duty, off-premises actions have harmed, or will harm, the company, I think the company should then have the right to fire the employee. And certainly if the employee was using company property, the right to discharge should be stronger.
Posted by: Christopher Timmermans | Jun 23, 2006 11:55:54 PM
