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Discriminatory Employment Practices
Question:
What is the proper accounting treatment for expenditures made by the utility, resulting from employment practices that were found to be discriminatory by a judicial or administrative decree or that were the result of a compromise settlement or consent decree?
Answer:
The Uniform System of Accounts provides that all charges to utility operating expense accounts must be just and reasonable. Expenditures of the nature mentioned above that can be readily identified and quantified should not be considered as just and reasonable charges to utility operations and should be classified to the appropriate nonoperating expense accounts
Types of expenditures usually related to discriminatory employment practices may include but are not limited to, the following:
- fines or penalties related to judicial or administrative
decree imposed by governmental authorities,
- legal fees reimbursed to the plaintiffs,
- in-house and outside legal costs in unsuccessful defense
against charges of discriminatory practices,
- damage awards to plaintiffs,
- duplicate labor cost such as back pay, bonus or other pay
awards to plaintiffs where other employees have already been paid
by the utility for prior services, and
- cost of reporting, training and recruiting undertaken as a
result of a court order, administrative decree or settlement which
are in addition to those which otherwise would be incurred to
assure continuing equal employment opportunity.
- Fines or penalties are to be recorded in Account 426.3, Penalties, and
all other costs are to be recorded in Account 426.5, Other
deductions.
L. H. Drennan, Jr.
Chief Accountant
Effective: February
1, 1980
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