Understanding Sexual Harassment

Few things can hurt a company as badly as a sexual harassment lawsuit. A single harassment claim can cost a firm millions of dollars in damages, legal fees, and related costs. And even if liability insurance covers the financial cost of a sexual harassment claim, it can't repair the damage to employee morale, or compensate for the public embarrassment and ridicule a company may suffer.

What Is Sexual Harassment?
Sexual harassment can occur in any situation where an employee is treated unfairly because of his or her gender. Most cases focus on two particular types of sexual harassment:

• Quid pro quo harassment. This occurs when an employee's benefits, promotions, or reviews are tied to sexual activity. For example, if a supervisor offers to promote an employee in exchange for sexual favors, that is considered quid pro quo sexual harassment.
• Hostile work environment harassment. This occurs when employees are uncomfortable in the workplace because of sexually charged actions or remarks. Behavior that could lead to a hostile environment includes treating women differently from men (or vice versa), making unwelcome sexual advances or sexually derogatory comments, or displaying sexually oriented pictures or objects.

In both types of harassment, the offending activity must be unwelcome. The activity must also be objectionable, based on what a reasonable person would consider harassing behavior. Other important factors include the nature of the work environment and whether the employee contributed to the harassment.

If one of your employees is sexually harassed, the law can hold your company liable even if the harasser is a fellow employee, client, or vendor. As a rule, however, you're only considered liable if you knew about the problem and did nothing to stop it. Additionally, sexual harassment can involve both men and women, and include situations where the harassed employee and the person accused of harassment are of the same gender.

The Applicable Laws
Sexual harassment law is based on Title VII of the U.S. Civil Rights Act. Passed in 1964, Title VII prohibits discrimination based on a number of factors, including race, color, religion, sex, or national origin. Although there was initially some doubt and confusion over whether sexual harassment qualified as illegal discrimination under Title VII, since the 1980s there has been no doubt that employees can sue for sexual harassment — just as they can for any other type of illegal workplace discrimination. For a list of other important laws that businesses must adhere to, be sure to read Eight Employment Laws You Must Follow.

In recent years, court rulings have expanded an employer's liability for harassment claims. To defend themselves against sexual harassment allegations, employers must show that they exercised "reasonable care" to prevent or correct the harassment. This could include actions such as disciplining or firing an employee who engages in sexual harassment, or sponsoring mandatory sexual harassment training for all employees. If your company does face a sexual harassment claim, these types of actions can be vital for defending yourself and avoiding financial penalties. Therefore, it's best to put preventive measures into effect to demonstrate commitment to a harassment-free work environment.

For a thorough discussion of what an employer can and should do in response to sexual harassment allegations by any staff member, read Legal Remedies for Harassment in the Workplace.