Already, Penn State University has paid a heavy price (millions of dollars and lost football scholarships, not to mention damage to its reputation) for allegedly sweeping under the rug scandalous conduct of convicted sex offender and former assistant football coach, Jerry Sandusky. However, while Penn State’s football team appears to have weathered the storm, the university’s problems are far from over. In October, a jury awarded former assistant coach, Mike McQueary, $7.3 million for Penn State’s mishandling of his report that he had witnessed Sandusky molesting a young boy in a locker room shower. Worse yet, on November 30^th a judge tacked on another $5 million for McQueary’s whistleblower retaliation claims, separate from the already huge jury verdict. This case holds some poignant lessons for employers who may be faced with news of serious misconduct by any of their employees, whether it be sex harassment, unlawful discrimination, or criminal activity.

McQueary’s lawsuit against Penn State alleged that school officials misled him by misrepresenting that his report of Sandusky’s criminal conduct, was being taken seriously and would be investigated and handled appropriately. Instead, the former Penn State quarterback accused university administrators of engaging in a cover-up to prevent the scandal from tarnishing Penn State’s national reputation gained under former head coach, Joe Paterno. Worse yet, when the Pennsylvania Attorney General pursued perjury charges against these officials for allegedly lying under oath to a grand jury by denying that McQueary had reported Sandusky’s behavior, Penn State’s then-president publically commented that he was confident the charges would be proven groundless. In his concluding remarks to the jury at trial, McQueary’s attorney supported his claims of fraud and defamation by asking rhetorically: “How in the world can the charges be groundless unless [McQueary] lied to the grand jury about what he reported?”

Perhaps the final straw that may have added millions to the jury’s verdict, was the university administration’s decision that McQueary – a witness and not the one accused of wrongdoing – should be placed on administrative leave and banned from athletic facilities within days of the indictments being handed down. At trial, Penn State’s attorneys claimed this was done to protect McQueary in response to death threats against him. However, the jury did not appear to buy this explanation, concluding instead that McQueary was penalized and retaliated against for sticking to his testimony that seriously contradicted the university’s defense in the Sandusky scandal.

So what can employers take from Penn State’s hard-learned lessons? One key lesson, is that going into cover-up/denial mode in the face of workplace scandals can backfire horrendously. Taking sides in workplace investigations before all the facts are known, should not happen. But more subtly, just as most employers and HR professionals know not to penalize the victim (e.g. in a harassment scenario) the same holds true for employees who witness and report serious misconduct. The size of the jury’s verdict in the McQueary lawsuit speaks volumes on how dangerous it is to mistreat witnesses whose versions of the facts do not happen to support the employer’s defenses. Penn State’s gravest error may have been to side at least initially with Sandusky, or placing the preservation of its own public image over credible evidence from McQueary and other witnesses. The ongoing fallout over this scandal serves as a reminder to all that no one is beyond reproach, not top officials or even successful football coaches. Faced with bad facts, sometimes it is best to just throw in the towel and live to fight another day.