Eradicating Harassment from Employment: Big Settlements Should Give Small Employers Pause
In June 2008, the U.S. Equal Employment Opportunity Commission announced the settlement of a harassment lawsuit against Tavern on the Green, a landmark restaurant located in Central Park in New York City, for $2.2 million. The EEOC charged in the case that Tavern on the Green engaged in severe and pervasive sexual, racial and national origin harassment of female, black and Hispanic employees. According to the EEOC's New York Director, "This case should remind employers to take seriously allegations of harassment and retaliation, especially where managers in positions of authority are involved in the misconduct."
This settlement, along with several other high profile settlements, should serve as a warning to businesses that operate without an effective no-harassment policy.
What is discriminatory harassment?
Under federal civil rights law, discrimination occurs when an employer takes an adverse employment action -- for example, fails or refuses to hire, fails to promote or terminates an employee -- because of the employee's race, color, religion, sex, national origin, age, disability or membership in another protected categories. Harassment is a kind of discrimination. Discriminatory harassment occurs when an individual is treated differently at work (harassed) because of his or her membership in a protected group.
What groups are protected?
The perils associated with sexual harassment lawsuits are familiar to us from the media. Many of us saw Michael Scott of The Office sign a waiver absolving Dunder-Mifflin of liability when he dated his boss; we've also seen the children of South Park learn how to comply with federal laws from the Sexual Harassment Panda. Thus small business owners sometimes falsely assume that the anti-discrimination laws only implicate harassment based on sex.
In fact, harassment based on race, color, ethnicity/national origin, religion, age, disability, pregnancy, veteran status and citizenship status is also prohibited under federal law. The number of racial harassment cases filed in federal courts has more than doubled since the 1990s. Nor does this trend appear to be slowing down; racial harassment filings increased from 5,646 in 2006 to 6,977 in 2007. And from 2000 to 2007, the EEOC received 51,000 racial harassment charges.
As a small business owner, it's important to make sure that you are equally vigilant about preventing harassment directed against members of all these groups.
What types of harassment are there?
Harassment cases fall into two categories: quid pro quo and hostile work environment. "Quid pro quo" is a Latin phrase meaning "this for that" and refers to those cases in which an employee has demanded sexual favors from a subordinate employee in exchange for certain employment benefits. Hostile environment claims arise when verbal or physical conduct of employees has the purpose or effect of unreasonably interfering with an individual's work performance or creates an intimidating, hostile or offensive work environment.
What can happen if I'm found to be out of compliance with anti-discrimination law?
Financial penalties for violating anti-discrimination laws can be steep. For example, Lockheed Martin recently paid a $2.5 million settlement to plaintiffs in a racial harassment case. Nor are such eye-popping settlement offers in response to harassment lawsuits unusual. Recently, Allied Aviation Services, Conectiv, and Washington Group, International, Inc. settled harassment cases for the sums of $2.5 million, $1.65 million, and $1.5 million respectively.
How can I protect myself from a harassment claim?
An employer can provide an affirmative defense to a harassment charge if the employer took reasonable care to prevent harassment from occurring and then took prompt and appropriate corrective action, and the employee failed to follow the employer's complaint procedures.
Practically speaking, you can minimize your liability by doing the following: (1) implement a written non-harassment/non-discrimination policy and train all employees about what constitutes unlawful harassment; (2) develop procedures by which your employees can make complaints about potential unlawful harassment and make sure employees understand these procedures; and (3) develop mechanisms for investigating incidents of alleged harassment thoroughly and fairly.
Finally, you should also develop policies and procedures for disciplining employees who harass others in the workplace. The gravity of the sanctions can and should vary according to the seriousness of the harassment and whether the harasser has violated your firm's policies in the past. For example, verbal warning or a letter in the employee's may be appropriate for a first-time offense, whereas termination might be appropriate for a repeat harasser or for a particularly severe one-time incident.
It's a good idea to check with an attorney licensed in your state as you develop these policies and procedures. NFIB members can consult the NFIB Model Employee Handbook for Small Business to obtain a sample Non-Harassment/Non-Discrimination Policy, available at www.NFIB.com/legalpublications.