The Weinstein Effect: Protecting Your Business, Employees From Sexual Harassment

Workplace sexual harassment is a risk every entrepreneur must be informed of and manage.

The Harvey Weinstein Effect

Starting with the floodgates that opened with the alleged egregious actions of Harvey Weinstein, headlines across the U.S. feature claims of sexual harassment, assault and misconduct with news stories literally breaking by the hour on some days. Last week various politicians, business executives, entertainers like Mariah Carey, Louis C.K., Bill and George Takai were all named as alleged “bad actors” in cases as much as several decades old. While these cases make good headlines because they involve millionaires and celebrities, the specific accusations made are common to many of these types of claims against businesses just like yours. With so many victims coming forward in a national movement (#metoo) and aggressively outing and suing those responsible the media feeding frenzy employers must be more vigilant that ever about protecting their employees and their businesses.

We have covered employment risk management from many different angles in the past and have shared statistics including that the average national sexual verdict is currently just over half a million dollars. Bill O’Rielly from FOX news reportedly personally paid $32 million to settle just one claim and according to news reports his employer FOX, as an entity, has paid out $45 million dollars on sexual harassment claims since just the middle of 2016 !

 

Think Beyond Lawsuits and Money

As staggering as the numbers are, they are not the only or even the worst of the consequences of such behavior and claims. These real economic losses will be compounded by legal fees (easily six figures) and the loss of income and assets that results from the factors below. Should you or your practice, including through the actions of another like a partner or employee that has been allowed to act in a way that is abusive, unprofessional and potentially illegal ,  be bad actors (or even just bad leaders), expect the following common results that we have seen repeatedly.

1. It can end your marriage and other personal and professional relationships
2. It can easily cost you your job
3. Your personal and business reputation will be permanently sullied
4. Customers will see it and avoid your business, the internet is “forever”
5. Partners, employees and associates will often leave you, compounding your financial difficulties

The Good News, it’s relatively easy to protect yourself.

First, be engaged and have a culture of respect and compliance that must come from the top. In many cases it is a failure of leadership and supervision, as opposed to intent or morality, that allows a “hostile environment” to exist or for individuals to act this way. This means having hard conversations and enforcing the rules and generally being the adult in the room. Many of the HR problems we see come from owners who are either conflict averse or who delegate the management of their business and future to the point of being ignorant. Your employees and partners should know that you run the kind of shop where this behavior would never be allowed.

Second, have well defined written polices on professional conduct, reporting of complaints, termination policies and how conflicts are resolved in the form of custom drafted, state law specific employment policy manuals which we have covered before in detail. The one you begged, borrowed or stole off the internet from another doctor or got free from your payroll provider often isn’t best of class or compliant with your business or state’s laws.

Third, be insured against the risks that may fall through the cracks. I’ve previously explained EPLI (employment practices liability insurance) in detail in another discussion. Make sure you have that coverage in place and that the limits are high enough (seven figures, not just a $50K rider in your general liability policy) to cover both possible defense costs and a settlement or judgment if required and deal with an experienced agent that will explain the exclusions in your policy.

Finally, never think that this is just about your personal conduct. The effect of the law is that you are legally responsible for almost everything that happens in your office whether you knew or participated or not, so be proactive and protect yourself and your assets personally as well.