Coast River Business Journal

by Technical Assistance for Employers

Question: I’ve been reading quite a bit about sexual harassment in the news lately and wonder if I should be concerned. I’m a shareholder and member of the board of directors of a corporation. The president of the company is known for being a bit of a ladies’ man. In fact, he boasted at the annual board meeting that he has a "close working relationship" with one of his attractive subordinates, and seemed to imply that the relationship had become intimate.

Is this something the board or the shareholders should be worried about or would any potential issue be the president’s problem alone?

Answer: You have good reason to be concerned. Any sexually inappropriate conduct in the workplace on the part of the president may create problems not only for him but also for the company itself. If the misconduct is sufficiently severe, as with a sexual assault, it may result in criminal sanctions against the offending party.

Typically, in the case of an alleged sexual assault, a complaint is filed with a local law enforcement agency. If an unwanted sexual touching can be proved beyond a reasonable doubt, the district attorney may choose to prosecute the perpetrator of the assault. Even if there is not enough evidence to prosecute him criminally, however, there may be significant liability for both the offending president and for the company under state and federal laws against sexual harassment. As a shareholder, your financial stake in the company may be at risk. Unlike in a criminal case, the standard of proof required to prevail in a civil or administrative action is much lower. The plaintiff or complainant, as the case may be, need only prove that sexual harassment was more likely than not to have occurred.

Sexual harassment is a form of discrimination that generally involves repeated unwelcome behavior directed at an individual because of the individual’s gender. Workplace conduct rises to the level of harassment when it is severe or pervasive and creates a hostile work environment.

A person of either gender can be the victim of sexual harassment, and it can be perpetrated against someone of the same gender as the perpetrator or of the opposite gender. The perpetrator might be a supervisor, a coworker of the same or inferior rank as the victim, or even a third party, such as a customer or a client of the victim’s workplace.

Sexual harassment can also occur outside the office, for example at company sponsored events like holiday parties or trainings. The employer has exposure to liability if the company knew of the harassment or should have known of it, but failed to take immediate and appropriate corrective action to make it stop.

Sexual harassment can consist of unwelcome sexual advances, requests for sexual favors or conduct of a sexual nature directed at an individual because of the individual’s gender. It is particularly problematic when there is a degree of control involved, as with your president and his subordinate. In these situations, the victim may feel as though submitting to the overtures of the supervisor is an implicit term or condition of employment.

The employer also has exposure in a situation where a third party or coworker repeatedly harasses an employee and the employer does nothing to protect the victim.

If an employer has reason to believe that harassment is happening in the workplace, it should conduct an investigation immediately and determine what remedial action is appropriate to end the offensive conduct. Care must be taken to insure there is no retaliation against the victim or the perception that the reporting party is being punished for coming forward. For example, removing the subordinate to another position or shift can be viewed as an adverse employment action, which would enhance rather than reduce the employer’s liability.

Instead, the company may choose to counsel and discipline the supervisor, require training, or increase monitoring to prevent further harassment. In any event, it is important to have good written policies in place to let employees know what is expected of them and to provide a means for a victim of sexual harassment to report the unwelcome behavior.

If the perpetrator is the president of the company, the victim may need to know that he or she can report the harassment to the chairman of the board or the chief executive officer. Of course, it might be a good idea to get legal advice to help navigate a difficult situation like this.