By Jessica Johnston
If you have been paying attention at all to the news lately, then you have heard about the #MeToo movement. For those who haven’t — or are unsure what it meant when all of Hollywood decided to wear black to the Golden Globes — the #MeToo movement started as a two-word hashtag on social media used to help demonstrate the widespread prevalence of sexual assault and harassment, especially in the workplace. It spread virally and was soon followed by the public revelations of sexual misconduct allegations against Harvey Weinstein, thereby bringing Hollywood into the movement.
At first glance, it might not seem overtly obvious how this impacts businesses. After all, sexual harassment complaints have been around practically since businesses have. However, the costs that sexual harassment allegations are placing upon businesses are nothing to ignore. A Wall Street Journal poll this past fall reported that nearly half of women say that they have been sexually harassed at work.
A recent data analysis by the Pew Research Center found that women experience sexual harassment at nearly three times the rate men do at work. In the poll, sixteen percent of women — and 29 percent of women with advanced degrees — said they had received repeated, small slights at work, compared with just 5 percent of men.
Twenty-three percent of women said they felt they had been treated as if they were not competent, compared with just 6 percent of men. The Department of Labor has calculated that women are projected to account for 51 percent of the increase in total labor force growth between 2008 and 2018 and that women currently comprise at least 47 percent of the U.S. labor force.
With such a large percentage of the workforce being affected by sexual harassment, it follows that this could have a large impact on businesses.
But what is the actual impact to businesses? According to a 2016 report from the U.S. Equal Employment Opportunity Commission, employers paid $699 million to workers alleging harassment through the EEOC’s pre-litigation process going back to 2010. Add in indirect costs such as lower productivity and higher turnover, sexual harassment allegations could be staggering over time to a company. A study from 30 years ago estimated that the average Fortune 500 company loses $6.7 million per year due to settling sexual harassment claims. If that was the figure from 30 years ago, imagine what those costs are now. After all, 21st Century Fox paid out $45 million in the first quarter of 2017 to settle allegations of sexual harassment.
It’s well known by most businesses that within the Civil Rights Act of 1964, Title VII is the part of the law that lays out legal parameters prohibiting discrimination in the workplace on the basis of any “protected class,” including sex (i.e. gender). So, it shouldn’t be news that discrimination in the workplace is unlawful. In the past, paying out for sexual harassment claims was greatly limited and until 1991, the only damages that could be awarded in sexual harassment cases were limited to recouping back pay and lost wages and reinstatement in their previous position if the victim had been fired for bringing the claim.
Today, potential damages are much greater. When sexual harassment claims go to court, a plaintiff can now pursue damages that would include “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life and other nonpecuniary losses” as well as punitive damages in certain circumstances. Add in legal fees that range from $125,000 up to $168 million and now, more than ever before, businesses stand to be greatly affected by sexual harassment claims in the workplace.
So what can be done to help prevent such damages? Pro-active and pre-emptive steps are the best way to limit damages. Under Title VII, companies are vicariously liable for the sexual harassment of their employees if they knew about the conduct of the harasser and failed to take action. Courts have made clear that companies will be liable for such harassment if they fail to intervene and stop the workplace harassment.
Companies can insulate themselves from liability by placing explicit reporting mechanisms in place where employees can seek relief if they are subjected to sexual harassment. This should be identified in company written policies and employee handbooks. Importantly, such policies should make clear that employees can report such harassment without fear of retribution or retaliation.
Another important step is annual or bi-annual training on what constitutes sexual harassment and what is appropriate or not appropriate in the workplace. Importantly, when harassment is reported, a company must take action immediately and has a fiduciary duty to intervene and investigate. Such investigations should be done as quickly and discreetly as possible. An investigation done wrong can open up a company to further liability.
Moral of the story: Sexual harassment and the #MeToo movement are something that employers should be paying close attention to. By taking pre-emptive measures to ensure policies are in place to deter sexual harassment, providing reporting options for those affected, responding to complaints quickly and conducting sexual harassment training often, companies can help protect themselves from the damages sexual harassment can have not only on their employees, but also their bottom line.
Jessica Johnston is an associate attorney at the Strong & Hanni law firm in Salt Lake City where she specializes in employment law.