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Start Your Business Startup Basics

A Small Business Guide to Addressing Workplace Sexual Harassment

A Small Business Guide to Addressing Workplace Sexual Harassment
Credit: wavebreakmedia/Shutterstock

The recent outing of high-profile sexual harassers across multiple industries, along with the evolution of the #MeToo movement, have shined a spotlight on the issue of sexual harassment in the workplace.

Though at times it may be uncomfortable, small business owners need to be part of the national conversation surrounding this topic so they can effectively protect their employees and address any harassment claims that may arise.

Whether you've been avoiding dealing with this issue or know it's time to review your existing policies, here's a brief primer on how to create a nonthreatening work environment and limit your business's potential liability in the face of sexual harassment claims.

The U.S. Equal Employment Opportunity Commission (EEOC) defines sexual harassment as a form of discrimination that violates Title VII of the Civil Rights Act of 1964, which prohibits unfair employment practices and discrimination based on sex (including pregnancy, gender identity and sexual orientation), age (40 or older), color, national origin, race, religion, disability or genetic information. Sexual harassment specifically consists of unwelcome conduct and behavior of a sexual nature that creates an uncomfortable and often hostile work environment.

"Offensive conduct may include, but is not limited to, offensive jokes, slurs, epithets, name-calling, physical assaults or threats, intimidation, ridicule or mockery, insults or putdowns, and offensive objects and pictures," explained James Baiers, chief legal officer at Trion Solutions, which manages HR, payroll, benefits and insurance for small businesses. "To be unlawful, the conduct must create a work environment that would be intimidating, hostile or offensive to a reasonable person." 

Federal laws apply to companies with 15 or more employees. However, smaller employers should check if there are any other laws in their area that apply to their business. Labor and employment lawyer David Miklas advised reviewing state laws and even local city and county ordinances.

According to a recent study by the EEOC, 4 out of 10 women reported being on the receiving end of unwanted sexual advances in the workplace, including come-ons, gender insults or sexual assault. Nearly 13,000 sexual harassment complaints were filed with the EEOC last year alone, with about 16 percent of those filed by men. However, this number may only be the tip of the iceberg, since the agency estimates that 75 percent of all workplace harassment incidents go unreported.

Workplace sexual harassment typically falls under two categories: quid pro quo and hostile work environment. 

Quid pro quo – This translates loosely from Latin as "this for that" and refers to when job-related benefits are offered in exchange for sexual conduct. In this sort of situation, an employer or another person in a position of power will use employees' submission to or rejection of sexual advances in making decisions about their employment (a promotion, pay increase, termination, etc.). A common example of this would be an employee being demoted for refusing to date a supervisor.

Hostile work environment – This occurs when comments and conduct are so inappropriate that the workplace becomes intimidating, offensive, demeaning or abusive. This sort of behavior can be perpetrated by anyone in the workplace, including co-workers, vendors and customers. Examples of this conduct can include sexual jokes, display of pornographic photos or repeated sexual advances.

"In determining if a hostile work environment exists, courts will consider the totality of the circumstances, including the frequency and severity of the conduct, and whether it is threating or humiliating and if it interferes with the employee's work performance," said Baiers.

Perpetrators are often ready with justifications for their sexual harassment. It was only a joke and not intended to offend. It was consensual. It occurred after hours, so it shouldn't be considered a work issue. But none of these excuses negate the responsibility an employer has to create and maintain a safe workplace.

"Employers are under a legal obligation to take reasonable measures to provide a harassment-free workplace," said James M. Cooney, an assistant teaching professor at Rutgers School of Management and Labor Relations and an attorney who has represented plaintiffs in sexual harassment cases.

A small company may be left facing bankruptcy as a result of the costs involved in settling a sexual harassment claim. But even if it manages to financially survive this upheaval, it may never be able to recover from the damage to its reputation in the public eye or from the brain drain suffered when key employees leave because they no longer want to be associated with a damaged brand. Therefore, it's prudent for small businesses to put the time, energy and resources in place to effectively address sexual harassment before an issue even arises.

To do your part in creating a positive, respect-driven workplace culture, your business should develop and implement a comprehensive anti-harassment policy. This policy should be included in the employee handbook and prominently displayed throughout the workplace.

"A standard sexual harassment policy should include not only a definition of sexual harassment, but examples relevant to the business environment, how to report harassment and how the company will address harassment claims, including a policy prohibiting retaliation," said Laura Handrick, HR analyst at Fit Small Business.

To ensure employees are aware of it, all employees should be asked to sign a copy of the policy, which should be kept in their personnel file.
If you don't have a dedicated HR specialist on staff, our expert sources advise hiring a professional consultant or attorney to review your policy. The upfront expense is worth it to avoid the potential liability later on.

"It is very, very easy to set policies or deal with situations in an entirely inappropriate way – even if inadvertent or unintentional," said Jon Umstead, business consultant and founder of Plan Canvas. "Small businesses should ... contract a professional HR outsourcing firm, HR consultant or employment attorney to draft HR policies and review those policies with new employees upon hire, and all employees on an annual basis."

The following fundamental behaviors can help your business reduce harassment incidents and address them quickly and ethically when they occur.

The line between the professional and personal is often blurred in small businesses that employ family and friends. This can create an overly casual environment with few boundaries and where inappropriate comments and behaviors can easily arise.

"Familiarity taken too far can breed ... employer liability," said Carol Gordon, human resources professional and CEO of Carol Gordon Consulting. "Nicknames, discussions of people's sex lives, touching, profane language and stereotyping are all areas that need to cease to exist. This takes work, with management setting the tone."

When employees hear owners or managers making inappropriate comments with friends or family in the workplace, they may interpret that this sort of behavior is acceptable across the board. In turn, they may also feel like they cannot report their concerns because they will be dismissed or not taken seriously by management.  Therefore, employers need to have a very clear set of expectations that guides the behavior of everyone at work, regardless of their personal relationships outside of the office.

A company's management must lead by example by creating a workplace culture based on respect, civility, diversity and inclusion. This commitment needs to be lived out in hiring practices, highlighted in core company documents such as vision statements, modeled in daily interactions, and clearly communicated to employees at all levels of the organization.

"An organization reflects its leadership's values," said Scott Cruz, senior counsel at Clark Hill, which represents employers in employment law cases. "If the leaders do not demonstrate a commitment to fair and impartial handling of sexual harassment allegations, employees will not feel comfortable nor supported in the reporting of inappropriate behavior."

Companies should provide training on their expectations regarding workplace behavior, including sexual harassment. Jessica Childress, managing attorney and founder of The Childress Firm, an employment law firm, noted that all employees should be required to complete such training.

According to Handrick, training can be as simple as a group review of policies with a discussion of prohibited behaviors or as formal as a classroom session with evaluations. Training programs should also focus on innovative approaches such as bystander training, which focuses on empowering co-workers with the tools to intervene when they witness harassing behavior.

Handrick noted that management must be fully committed to engaging all employees in the training program as well as participating in the program themselves.

"Managers also need to be trained to recognize and stop a culture of harassment," she said. "And managers themselves – who are sometimes the harassers – need to be aware of the consequences of harassment, up to and including termination."

"Senior executives from the organizations should make it a point to directly express to all staff that harassment of any kind is not tolerated in the workplace," added Childress. "[They] should also ensure that all staff feel comfortable reporting harassment and express that employees will suffer no retaliation for reporting harassment."

Many victims of sexual harassment never report it. The reasons vary widely, but they often include not knowing who to report it to, fearing retaliation or feeling like the accusation will not be taken seriously. To address these concerns, businesses need to have clear procedures for reporting grievances and a plan in place for the prompt and impartial investigation of claims.

In small businesses where workers feel that the team is too small to ensure anonymity, it is especially necessary to have multiple avenues for reporting incidents that allow employees to bypass their immediate supervisors. These can include phone, email and in person through appropriately identified individuals and management, said Cruz.

"Many companies utilize a 24/7, third-party tip line allowing for the reporting of workplace allegations," he added. "The reporting may include anonymous complaints and should be well known throughout the organization."

Furthermore, businesses need to be ready to conduct thorough investigations and use external and objective resources if necessary. They also must be ready to take immediate action to resolve the issue.

Cruz advised having a core team in place to assess allegation information, provide counsel on the risk and liability of the organization, provide appropriate resources for the victim, and make sure the privacy and rights of both the victim and the alleged offender are protected. This, he said, goes a long way in developing a culture of responsiveness.

Companies with more women in management have less sexual harassment, according to a host of research recently cited in the Harvard Business Review. This occurs, at least in part, because harassment is more tolerated in male-dominated environments where workers, including men, often feel they cannot speak up about misbehavior. Women's inclusion in management teams begins to change this workplace culture.

Additionally, just having more female representation in the workplace at all levels begins to shift the power dynamic and reduce harassment throughout the ranks. When business owners make an earnest effort to reduce gender inequality, they move a step closer to minimizing the space in their organization where sexual harassment can take root and fester.

Paula Fernandes

Paula is a New Jersey-based writer with a Bachelor's degree in English and a Master's degree in Education. She spent nearly a decade working in education, primarily as the director of a college's service-learning and community outreach center. Her prior experience includes stints in corporate communications, publishing, and public relations for non-profits. Reach her by email.