CBS must pay a former executive nearly $10 million after firing him for alleged offensive comments before completing its investigation into his conduct.

At a Glance

• Former CBS Television Stations President Peter Dunn was awarded $9.78 million in an arbitration ruling against the network
• Dunn was fired following allegations of making racist, sexist, and homophobic comments in the workplace
• CBS initially terminated Dunn without specifying cause, then later attempted to retroactively change it to “for cause”
• An arbitration panel ruled CBS violated Dunn’s employment contract by changing termination status after the fact
• Dunn’s attorneys argued CBS caved to external pressure rather than following proper investigative procedures

Rushed Termination Costs CBS Millions

CBS has been ordered to pay former television stations president Peter Dunn nearly $10 million following an arbitration ruling that the network violated his employment contract. The controversy began in 2021 when Dunn faced allegations of creating a hostile work environment through racist, sexist, and homophobic comments. Rather than completing its investigation before taking action, CBS suspended Dunn and subsequently terminated his employment without specifying it was “for cause” – a critical distinction that would later prove costly.

After CBS completed its investigation, the network attempted to retroactively change Dunn’s termination status to “for cause,” which would have significantly affected his compensation package. This after-the-fact adjustment became the central issue in the legal dispute that followed. The arbitration panel determined that CBS breached Dunn’s employment agreement by not establishing cause at the time of termination, as required by the contract terms.

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Allegations and Corporate Response

The initial allegations against Dunn stemmed from a 2021 newspaper article that claimed he had made inappropriate comments in the workplace. According to reports, these included referring to a female anchor as “just a weekend anchor,” criticizing another anchor for being “too gay,” and questioning whether a Black anchor was “too ghetto” for the role. These accusations emerged amid heightened national awareness of workplace culture issues, particularly regarding diversity and inclusion.

CBS responded by suspending Dunn and another executive while launching a third-party investigation. However, before that investigation concluded, the network terminated Dunn’s employment. His attorneys later argued that CBS acted hastily under pressure from critics rather than following proper procedures. The network has maintained that its decision was appropriate based on the investigation’s findings and led to important cultural changes within the organization.

Legal Battle and Final Ruling

Following his termination, Dunn pursued legal action against CBS, arguing that the network had violated his employment contract by changing the terms of his dismissal after the fact. The case went before an arbitration panel, which ruled in Dunn’s favor. CBS then appealed the decision, but the appeals panel recently upheld the original ruling, ordering the network to pay Dunn approximately $9.78 million in compensation and damages.

Dunn’s legal team characterized the situation as an example of corporate decision-making driven by external pressures rather than proper process. They suggested that CBS should have waited for the investigation to conclude before making employment decisions. The network, for its part, has emphasized that the termination was based on substantiated findings from a third-party investigation and that the organizational changes implemented following Dunn’s departure have improved the company culture.

Corporate Governance Implications

The case highlights the challenges corporations face when addressing workplace misconduct allegations in today’s media environment. Companies must balance responding decisively to serious allegations while ensuring due process for the accused. The substantial financial penalty CBS now faces underscores the importance of following contractual obligations and established procedures when handling executive terminations, regardless of public pressure or the nature of allegations.

This ruling serves as a reminder to corporations that even when addressing potentially problematic behavior, the manner in which terminations are executed matters significantly. Employment contracts, particularly for high-level executives, typically contain specific provisions regarding termination procedures that must be followed to avoid potential liability. For CBS, the decision to rush the process rather than completing the investigation before determining the termination status proved to be a $10 million mistake.