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Sexual Harassment Lawsuits: How to Protect Your Company

By now, employers should all realize and understand that sexual harassment is illegal.

However, what they might not be aware of are two 20-year-old rulings by the U.S. Supreme Court that:

  • Expanded what is termed sexual harassment;
  • Expanded the responsibility that employers have to provide a work environment that’s non-hostile; and
  • Did away with harassed employees having to prove that their company holds some responsibility or that their career suffered from lack of promotion, firing, demotion, or other such action.


Employers are now directly responsible for employee behavior, thereby giving harassed workers more recourse in bringing about legal actions against them.

Work-related harassment and discrimination cases have been steadily climbing and according to the Equal Employment Opportunity Commission, there were nearly 7,000 sexual harassment complaints filed against U.S. employers in 2015.

Any employer that’s ever been involved in a sexual harassment suit can attest that the cost to settle or defend a sexual harassment lawsuit can be jaw dropping. It can easily run into several hundred thousand to several million dollars.


What constitutes sexual harassment?

State and federal law prohibits behavior that involves an employee in authority basing professional expectations or decisions regarding a subordinate employee being willing or unwilling to exchange sexual acts. The following are examples of such behavior:

  • Altering expectations of job performance when a subordinate repeatedly refuses advances for a date or sexual encounter.
  • A superior demanding sexual acts in order for a subordinate to receive a raise or promotion.
  • Disciplinary action, including termination, against a subordinate that refuses sexual advances or ends an existing romantic relationship.


But, sexual harassment doesn’t always involve a subordinate/authority figure relationship. An offender can be anyone from a co-worker to a customer or business vendor. The offender can be male or female, as can the victim.

Furthermore, the victim doesn’t even need to be the employee actually harassed. Anyone that’s affected by the harassing or offensive behavior can be termed a victim; for example, an employee that overhears two other employees discussing a taboo subject. The two employees directly involved might not be offended, but if the overhearing worker is offended, then it can constitute sexual harassment.

Verbal, visual, physical or written…any behavior that causes another employee to view the work environment as hostile, or any focus on the sexuality or gender of another person may constitute sexual harassment. Specific examples would be teasing, suggestive objects or pictures being displayed, and repetitively requesting sexual acts or dates verbally or in writing.


First line of defense
As an employer, you have a responsibility to maintain a workplace that is free of sexual harassment. This is your legal obligation.

Steps you should take include:


Adopt a clear sexual harassment policy – In your employee handbook, you should have a policy devoted to sexual harassment.


The policy should:

  • Define sexual harassment.
  • State that sexual harassment won’t be tolerated.
  • State that wrongdoers will be disciplined or fired.
  • Spell out procedures for reporting sexual harassment complaints.
  • State that all complaints will be investigated.
  • State that retaliation against anyone who complains about sexual harassment won’t be tolerated.


Train all employees – Besides including the information in your handbook, you should also train your employees about the above on an annual basis.


Train supervisors and managers – At least once a year,
conduct training sessions for supervisors and managers that are separate from the employee sessions. The sessions should educate the managers and supervisors about sexual harassment and explain how to deal with complaints.

If someone complains, you must take it seriously and conduct an investigation and reprimand or fire anyone found to have engaged in harassment.


Second line of defense

If sexual harassment has occurred in your workplace and an employee sues you, employment practices liability insurance (EPLI) would step in to cover legal costs.

Besides sexual harassment, policies cover a range of other employee actions:

  • Discrimination
  • Wrongful termination
  • Employment contract breaches
  • Employment and promotion failures
  • Wrongful disciplinary actions
  • Infliction of emotional distress
  • Negligent employee evaluations


While policies vary, EPLI generally doesn’t cover criminal or civil penalties and punitive damages.

EPLI generally covers:

  • Settlements
  • Judgments
  • Incurred legal costs


Coverage is specific. So, before purchasing a policy, decide who should be covered. For example, should full- and part-time employees, contracted persons, supervisors, department heads, subsidiaries, and company divisions be covered or not?

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