Small Businesses Face the Greatest Risk from Workplace Harassment

*Please note: the true cost of sexual harassment is borne by the victims. This article does not intend to ignore their plight, but instead to narrowly focus on the cost to businesses, in an effort to encourage them to do a better job of preventing and punishing harassment.

Workplace sexual harassment is a huge problem for American businesses. The Equal Employment Opportunity Commission handles thousands of harassment complaints a year, and businesses pay untold millions in fines and settlements, not to mention criminal prosecution and reputation damage. In the wake of hundreds of recent harassment accusations against famous and powerful people, many businesses are re-examining how they address this crucial issue. Surprisingly, many businesses - especially smaller ones - have no formal policy on workplace sexual harassment. Failure to properly train employees and adequately respond to reports of harassment can irreparably damage any business, but small businesses are particularly at risk; without the money to defend against costly litigation or pay huge financial penalties, a small business can quickly go bankrupt and be destroyed by a single mistake. 

A recent report by Manta shows that a shocking 67% of small businesses have no sexual harassment training, rules, or procedures in place. In the unfortunate (but very possible) event that an employee of one of those businesses harasses someone, the accuser has a strong argument for holding the business itself liable. The argument is this: if a business fails to adequately train its employees not to engage in harassment, fails to provide step-by-step instructions on how to report harassment, or fails to have a plan for management response to reported harassment, then the business is liable for failing to protect its employees. It's a strong (and potentially very expensive) argument.

The best way to ensure the safety of your employees, as well as the reputation and financial stability of your business, is to develop and implement a formal anti-harassment policy and training program. The most important goal of such a policy is, of course, to provide your employees a safe, comfortable, and harassment-free work environment, where they know that reported harassment will be fairly handled by management and will not result in retribution. That's just the right thing to do. In addition to protecting your employees, a formal anti-harassment policy leaves you on firmer ground in the event that harassment happens - you'll be able to honestly argue that you did everything you could to prevent harassment, that you responded appropriately when made aware of it, and that the fault and liability lie solely with the offender.

Many small businesses do not have the legal expertise to develop and implement the necessary policies, or a dedicated HR department to do it for them. A qualified small-business attorney can help create and implement a comprehensive anti-harassment policy, which should include the following components:

  • A training program for all employees, which should be updated and re-administered at least every two years (but preferably more often, ideally as an ongoing process).
  • A written "zero tolerance" policy, including clear definitions and examples, provided to all employees, which explains the consequences for inappropriate behavior.
  • Step-by-step instructions for reporting and escalating complaints.
  • A detailed investigative procedure to ensure claims are thoroughly explored.
  • Assurance that employees who report harassment are safe from retaliation and that their information will be kept as confidential as possible.
  • A management plan for ensuring a complete, fair, and timely response in compliance with federal and state laws.

It is important to remember that implementation is key. It's not enough to merely hand employees a handbook - a victim can argue that although a business has a policy written down somewhere, in practice the business did not effectively implement or enforce that policy, effectively rendering it useless. Management must be actively involved in educating and safeguarding their employees, following up on claims, and protecting the privacy of victims.

Sexual harassment in the workplace is devastating to everyone involved, including the business itself. Developing, implementing, and enforcing a comprehensive anti-harassment program protects employees and businesses alike. The effort and cost involved are minimal - especially compared to the potentially massive price of failing to provide a safe, harassment-free workplace.