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How to Handle Sexual Harassment in the Workplace as an Employer

The #MeToo movement exploded into America’s consciousness in the Fall of 2017, shaking executive offices and boardrooms across the country. Initially promoted in 2006 by women of color who had suffered sexual abuse, the movement became mainstream on social media after actress Alyssa Milano’s tweet, “If all the women who have been sexually harassed or assaulted wrote ‘Me too.’ as a status, we might give people a sense of the magnitude of the problem.” The massive response to her tweet was unexpected and became the basis for a national movement.

Encouraged by movie stars recounting their experiences, millions of women (and some men) have written or spoken about their mistreatment by powerful men and women. For many, the extent of sexual harassment and abuse in our male-dominated society was a revelation as it became clear that no sphere – schools, sports organizations, government agencies, churches, or workplaces – has been immune to the powerful exploiting the powerless for generations.

The consequences of sexual misconduct are swift in today’s climate. As TIME magazine reports, “Nearly every day, CEOs have been fired, moguls toppled, icons disgraced. In some cases, criminal charges have been brought.” Time’s Up, an advocacy group formed in 2018, focuses solely on sexual harassment and women’s issues in the workplace. One of their aims is to bring about additional federal and state legislation to punish companies that tolerate harassment.

While many companies have had sexual harassment policies in place for decades, this new atmosphere places managers under even stronger pressure to uphold these policies and provide employees with a safe, supportive working environment. If you’re a manager wondering how the #MeToo movement affects your responsibilities, here is what you need to know.

How Extensive Is the Problem?

WIRED magazine reports that the extent of harassment in the workplace is unknown due to the increased use of non-disclosure agreements (NDAs) in settlement negotiations. Confidentiality provisions can hide the acts of serial abuse by powerful, wealthy men such as current President Donald Trump, former President Bill Clinton, and Roger Ailes for years. As former Fox News host Gretchen Carlson, who sued Ailes to escape the NDA she signed with Fox in 2013, told WIRED, these agreements “both silence the victim and fool our culture into thinking we’ve come so far when we have not.”

Women have silently endured sexual harassment in the workplace for generations. In previous generations, they rarely reported or spoke of these instances for fear they might lose their jobs or chances for promotion. A 2016 study by the Equal Employment Opportunity Commission (EEOC) found that three-quarters of working women had experienced unwanted sexual attention or sexual coercion (including physical touching) on the job, but less than 10% filed a formal complaint.

Some may wonder, when they hear about instances of sexual harassment, “Why didn’t she speak up?” Apart from the use of NDAs, in most cases, silence is due to the fear of losing one’s job, being ostracized, or facing retaliation. Some women believe that the systems established to investigate sexual abuse and harassment charges are unfairly biased, intended to protect the organization and the accused rather than the accuser.

In a 2016 interview on “BBC World News America,” Congresswoman Marsha Blackburn summarized the reaction of most women working in a sexist, uncomfortable environment: “I think most women are like me, you’ve heard enough of it over the years that you don’t excuse it, and you don’t embrace it, but you push it aside… Unfortunately, there’re times in life where I have to play dumb. Saying that I know what you’re up to and what you’re insinuating just puts me in a bad position.”

For those who do pursue legal recourse, only about 5% of cases filed make it to trial. According to Deborah Rhode, director of Stanford’s Center on the Legal Profession, sexual harassment cases are regularly dismissed by older, male judges “who lack understanding the emotional, psychological and professional damage harassment can do.”

Older women remember the public ordeal of Anita Hill, who accused Clarence Thomas of sexual harassment in his Supreme Court confirmation hearings in 1991. Hill was branded a liar, a “race traitor,” and part of a “high-tech lynching” by Thomas. A New York Times/CBS News Poll found that, at the time, two-thirds of Americans felt Hill’s account of the harassment was “probably not true.” Her testimony led to a public backlash, threats of death and sexual violence, and efforts to remove her from her job as a law professor at the University of Oklahoma. One year later, public opinion reversed. A 1992 poll by The Wall Street Journal/NBC News found that 44% of registered voters believed Hill told the truth, while only 34% thought Thomas was being truthful.

The tide has slowly been turning when it comes to women’s willingness to come forward to report sexual harassment – and people’s willingness to believe and support them when they do. With the #MeToo movement, this tide has become a tidal wave, and employers and managers need to know how to respond before their companies are swept away.

Employers’ Legal Obligations

The EEOC issued its Guidelines on Sexual Harassment in 1980, which defined sexual harassment and provided a process for employers to verify whether a complaint was valid. The content of the guidelines included:

  • How to determine whether the sexual contact was consensual
  • How to evaluate the evidence of harassment
  • How to ascertain whether the work environment is hostile
  • Recommended preventive and remedial actions to take to restore a non-sexist workplace

In 1986, the Supreme Court held in Meritor vs. Vinson that employers, as well as their supervisory employees or agents, were financially liable for violations. Two subsequent cases, Faragher vs. City of Boca Raton and Burlington Industries, Inc. vs. Ellerth, further detailed the circumstances in which employers would be held liable for acts of sexual harassment. A fourth case, Oncale vs. Sundowner Offshore Services, extended the scope of the guidelines to include same-sex harassment.

Today, Regulation 1604.11 of Title VII of the Civil Rights Act of 1964 prohibits “Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature” and holds employers liable for “acts of sexual harassment in the workplace where the employer (or its agents or supervisory employees) knows or should have known of the conduct, unless it can show that it took immediate and appropriate corrective action.”

The Costs of Sexual Harassment

The costs of sexual harassment are high for companies. A 2016 EEOC report found that almost $700 million was paid to victims alleging sexual harassment between 2010 and 2016. The effect of negative publicity on a company’s reputation can also be bad for business:

  • “The O’Reilly Factor,” featuring host Bill O’Reilly, lost more than 60 advertisers when O’Reilly was accused of sexual harassment in 2017. Ultimately, O’Reilly lost his job on the Fox News Channel.
  • Uber’s CEO Travis Kalanick was fired, along with 20 other employees, after public allegations of sexual harassment and sexism at the ride-sharing service.
  • Hollywood producer and CEO of The Weinstein Company Harvey Weinstein was forced from the company after reports of paying $40 million to settle harassment suits over the years. The assets of the company were sold to Lantern Capital in 2018, and Mr. Weinstein currently faces criminal charges of rape and sexual abuse.

The new Tax Cuts and Job Acts eliminates a tax deduction for sexual harassment-related settlements only if the settlement or payment is subject to a nondisclosure agreement. In other words, if an employer requires the alleged victim of sexual harassment or abuse to keep the settlement (and presumably the underlying claim) confidential, then the amount of the payment and any attendant attorney’s fees are not tax deductible. Sexual harassment/abuse settlements and related attorney’s fees remain tax deductible if they are not subject to a nondisclosure agreement.

As a result, company management and board members who had previously accepted boorish, illegal acts by their top brass are rethinking their strategies, reviewing their policies, and praying they don’t become a headline on the evening news.

The impact of an abusive workplace extends beyond the financial costs of lawsuits and bad publicity. One study found that victims suffer from increased stress and physical ailments, lowering their productivity and raising absences and employee turnover. Studies conducted by sociologist Heather McLaughlin suggest that 80% of victims leave their jobs within two years, delaying and possibly destroying their career trajectories.

The loss of talented women is an incalculable cost to businesses. The global marketplace is intensely competitive. Multiple studies have proven that gender-diverse companies have superior financial results, higher employee engagement, and better alignment with consumer preferences. As Gallup puts it, “Companies cannot afford to ignore 50% of the potential workforce and expect to be competitive in the global economy.”

At the same time, companies must recognize the possibility of false or malevolent accusations. False charges arise when an employee misinterprets the actions of another, while malevolent accusations are a deliberate attempt to cause harm to the accused. Paradoxically, as employees learn about the remedies available to them for abusive situations, some might misuse the policy to protect their employment status, divert attention from their actions, or get payback for a broken relationship.

Company policy should recognize that an accusation is not a fact until investigated and substantiated. Investigations should be fair, objective, thorough, and confidential. Taking punitive action against an accuser or the accused before the facts are known exposes the business to legal claims and damages from the aggrieved party if the evidence is not sufficient to support the discipline.

Recommended Harassment Policies & Procedures

Companies that believe themselves to be immune to sexual harassment claims are exposing themselves to potential disaster, according to the Society for Human Resource Management (SHRM).

Permitting or ignoring harassment only begets more harassment because perpetrators know they will face few consequences for their actions. Failure to recognize or address inappropriate behavior is an invitation to morale problems, financial costs, loss of customers, and public shame. The consequences can compromise the sustainability of an organization, as The Weinstein Company has discovered.

Fortunately, company management can take steps to ensure a productive, harassment-free work environment by following the below recommendations.

1. Develop & Publicize a Formal Anti-Harassment Policy

The language of this policy should unequivocally state that harassment of any kind is not tolerated, whether it’s based on an individual’s sex, race, color, national origin, age, religion, disability, or any other legally protected status. Be sure to include a non-exclusive list of actions that are inappropriate and forbidden in the workplace, such as:

  • Making sexual gestures or displaying sexually suggestive objects, pictures, cartoons, posters, calendars, or computer screens
  • Making or using derogatory comments, epithets, slurs, or jokes of a sexual nature
  • Verbal sexual advances or propositions
  • Unwanted physical contact (i.e., touching) of any type

Examples of abusive behavior, as well as instances often mischaracterized as harassment, should be provided. The Faragher case requires that conduct “must be both objectively and subjectively offensive, [such] that a reasonable person would find [the work environment to be] hostile or abusive.” Simple teasing, offhand comments, and isolated incidents, unless extremely serious, are unlikely to be considered abusive.

Finally, the policy should define the possible consequences of harassment, such as:

  • Demotion
  • Loss of pay
  • Loss of promotion opportunities
  • Layoff
  • Forced transfer
  • Termination

Companies with union labor contracts should work closely with union officials, with the understanding that tolerating harassment is damaging for both parties.

2. Educate Your Workforce

Company culture plays a large role when it comes to deterring sexual harassment. According to research reported by The Atlantic, companies that are male-dominated, hierarchical, and forgiving of bad behavior tend to have hyper-masculine cultures that promote aggressive, competitive relations. This “locker room” environment includes treating women as “sexualized pawns” and discourages men from pointing out inappropriate acts by their colleagues.

Policies that are issued but not enforced can be worse than having no policy at all. Sexual harassment is most likely in smaller, privately held companies where those at the top are not accountable to anyone. According to Peter Cappelli of the University of Pennsylvania’s Wharton School, “Bigger companies have very sophisticated policies and practices against sexual harassment, and in the biggest public companies, the CEOs are held accountable for their behavior by the board of directors.” Inaction is prima facie evidence of a hostile work environment and a violation of Title VII of the Civil Rights Act.

Your company’s educational program should:

  • Provide examples of potential stereotypes and biases that can lead to harassment
  • Note that anyone who experiences, witnesses, or becomes aware of abuse is required to report it immediately
  • Confirm that complaints of harassment will be treated confidentially to the greatest extent possible and only shared on a “need-to-know” basis or as required by law
  • Detail the process and schedule by which a claim of harassment is investigated and adjudicated

The education process should begin at the time of an employee’s initial hire and be reinforced through periodic discussion and refresher courses. Document all instances of training with times, dates, attendees, and instructors to provide legal evidence of your company’s intent and effort to provide a harassment-free workplace.

Many states have passed specific laws and requirements for training that are more extensive than those required by federal law. Unfortunately, the responsibility for investigating claims varies from state to state. Those who have a potential case are best advised to contact a local state representative or senator for directions on how to proceed.

3. Address Romantic Relationships Between Employees

Employees dating is an issue every company must deal with head-on, rather than waiting until a situation arises to determine their course of action. Some companies take a hard line, forbidding romantic relationships between employees, vendors, and customers to eliminate harassment possibilities. Others require that employees notify the company and sign a “relationship contract” stating that the relationship is consensual and confirming that each party has read and will comply with the company’s written policies on harassment.

The decision to accept or prohibit employee relationships is especially difficult for small companies. Ashley Hunter, the owner of a small insurance company with eight employees, implemented a policy that banned relationships between co-workers and vendors, saying, “If you’re in a billion dollar business, you can weather those problems [claims of harassment], but I can’t.”

4. Set Up Multiple Options for Complaint Reporting

If your anti-harassment policy restricts reporting to direct supervisors, it is worthless since the supervisor may be the harasser. Companies should have two or more separate and unrelated contact persons – such as the head of Human Resources, an inside or outside legal counsel, or the person responsible for the oversight of the anti-harassment program – to whom complaints can be reported. Some companies utilize a 24/7 hotline where employees can make allegations anonymously.

Your policy should include a statement that employees will not be subject to retaliation for submitting a complaint. Note that this protection does not excuse malicious or false charges or protect individuals who knowingly engage in such actions. Management should confirm their legal position before taking action against anyone who has filed a harassment complaint.

Where abuse has been discovered or suspected, companies often direct their HR department or a third-party auditor to periodically review company culture and ensure compliance with company policies.

5. Protect the Accuser

Upon receiving a complaint of harassment, the employer should take immediate steps to stop the alleged conduct, protect the rights of the parties, and begin an investigation. Since every action of the investigators might become part of subsequent litigation, documentation of each step of this process is essential.

Separating the accuser from the accused through a transfer, schedule change, or leave of absence might be necessary to avoid retaliation. However, it’s essential that the accuser does not view your action as punishment for reporting the claim. Understand your legal position before taking any action that might escalate the issue.

6. Impartially Investigate Complaints

Most companies rely on their HR department or legal counsel for the investigation of a sexual harassment complaint. The person or persons designated to investigate the complaint must be respected within the organization, have no personal stake in the outcome, and be able to be a credible witness if litigation results. Also, investigators should have:

  • Working knowledge of employment laws
  • The ability to investigate the claim without prejudice
  • The interpersonal skills and temperament necessary to build rapport with the parties and conduct interviews
  • The skills necessary to develop and implement a complete plan of investigation, including identifying the issue, parties, and witnesses; which questions to ask each party; and how to document the process and preserve records

7. Take Meaningful, Appropriate Action

When the investigation is complete, the employer is responsible for determining and implementing corrective action based on the recommendations of the investigators. The appropriate outcome will recognize the severity of the offense, any damage done to victims, previous incidents of all parties, and the company’s legal vulnerability.

Advise the accused and the accuser of the findings and any subsequent disciplinary action taken. If possible, secure the written agreement of the accuser affirming that they have been given a full opportunity to be heard and understood, even if they disagree with the outcome. Finally, schedule follow-up meetings with the parties to ensure the matter is closed.

8. Document the Process, Findings & Outcomes in Detail

Recognizing that every complaint, subsequent investigation, and outcome can become a matter of litigation, carefully document and date all aspects of the case. The SHRM recommends a final written report that summarizes:

  • The incident or issues investigated, including dates of occurrence
  • Parties involved, including the identity and credentials of the investigator(s)
  • Significant factual and credible findings, including any sources of information referenced in the report
  • Employer policies and their application to the investigation
  • Specific conclusions
  • The party responsible for the final determination
  • Any unresolved issues at the time of the report
  • All employer actions taken to resolve the issue

Taking these steps will protect your company from being charged with encouraging or permitting a hostile work environment.

Final Word

In the ultra-competitive global marketplace, company managers increasingly recognize that employee engagement is fundamental to survival and success. A Gallup poll reported in Harvard Business Review found that companies with highly engaged employees experienced 22% higher productivity, 25% lower turnover, and 41% fewer quality defects. Nevertheless, many managers fail to appreciate the changing diversity of their workforce or take steps to ensure the workplace promotes the engagement and well-being of all employees.

In the era of the #MeToo movement, female employees no longer accept sexual harassment as “business as usual.” Failing to prevent harassment or allowing a hostile work environment has drastically negative consequences for businesses. Companies stuck in the 1950s style of male-dominated management and behavior will become marginalized to the point of extinction.

If you’re an employer, do you find managing employees more difficult with the rise of the #MeToo movement? If you’re an employee, have you been a victim of harassment or a hostile workplace or falsely accused of harassment? What did you think of the process?

Michael Lewis
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike's articles on personal investments, business management, and the economy are available on several online publications. He's a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas - including The Storm.

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