A Sexual Harassment Policy Could Head Off a Liability Disaster

Swift investigation of a harassment complaint and clear action steps will create a better workplace culture for everyone.

Interested in Business?

Get Business articles, news and videos right in your inbox! Sign up now.

Business + Get Alerts

Failing to prevent and address sexual harassment on the job can have serious consequences. A Florida septic company learned that lesson in 2021. In a same-sex sexual harassment and retaliation lawsuit, a male employee reported being sexually harassed by the company’s owner. After reporting the harassment to authorities, the employee was fired in retaliation.

         In addition to an $82,500 settlement, the court ordered the septic company to develop and distribute a written antidiscrimination policy, conduct antidiscrimination training, post a notice about the lawsuit at its work site and submit biannual written reports to the U.S. Equal Employment Opportunity Commission.

         Sexual harassment incidents aren’t just about the time and money spent resolving a complaint. They’re also about treating employees with the respect and concern they deserve. The Florida court case underlines the importance of creating and implementing a sexual harassment policy.

         “No matter the size of the business, having a written sexual harassment policy in place protects employees and a company’s bottom line,” says attorney Jodi Labs, of the law firm of Conway, Olejniczak & Jerry S.C. in Green Bay, Wisconsin. “The liability for sexual harassment claims isn’t based on the employer’s size or number of employees.”

         All employers may be found liable for their supervisors’ or employees’ actions involving sexual harassment. Owners of small businesses stand to lose as much as large businesses, and maybe more if a lawsuit and settlement are costly or damage the company’s reputation.

         The work environment at a small business may be less formal than a large corporation, and this friendly nature makes it essential to have a sexual harassment policy.

         “Employees sometimes become too comfortable with each other, perhaps making jests that may be perceived as simple ribbing but may, in fact, be offensive to one or more individuals,” Labs says.


         An effective policy helps employees understand what behaviors are appropriate in the workplace and ensures consistent and fair treatment of employees.

         When developing a sexual harassment policy, Labs recommends these six provisions:

1. A definition of sexual harassment — this is a must-have.

2. Examples of sexual harassment

3. Details about the company’s complaint mechanisms (e.g., duty to report by both the victim and witnesses; timely and accurate report to appropriate management authority or HR department; and several avenues for an employee to report sexual harassment so that the employee can bypass his or her supervisor who might be the alleged harasser).

4. An overview of the investigation and disciplinary processes

5. A confidentiality provision, which will maintain confidentiality to the extent the company can but cannot guarantee absolute confidentiality

6. An anti-retaliation provision

         Because sexual harassment in the workplace has so many potential “gray” areas, Labs recommends a black-and-white zero-tolerance policy.

         “Also, a sexual harassment policy is only effective if the employer makes clear that unacceptable conduct will not be tolerated, provides recourse to victims of harassment and applies appropriate corrective action against perpetrators, up to and including termination of employment,” she says.


         Once completed, a sexual harassment policy should be posted at the workplace, distributed to all employees, and included in the employee handbook. Next, the focus shifts to training.

         “It is not enough to provide employees with a written sexual harassment policy and assume they will be aware of their role in creating a harassment-free workplace. Rather, such policy must be followed by a strong and active training program,” Labs says.

         Some states require companies to conduct sexual harassment training. Even if it’s not required, annual training is advised. In addition to companywide training, supervisors and managers should participate in separate sessions to learn how to prevent, recognize and report sexual harassment.

         All employees should be aware of the company’s complaint procedure.

         “To be compliant with EEOC’s requirements for asserting a potential defense against liability, a complaint procedure must encourage employees to come forward with allegations of sexual harassment,” Labs says.

         It takes courage for employees to come forward and assert their rights, so companies should do everything they can to show compassion and a sincere desire to help.

         “It is also important that companies treat each allegation with the respect and concern it deserves. It is incredibly important to refrain from pre-judging or downplaying the situation,” Labs says.

         Here are two key aspects of a sexual harassment complaint procedure:

-Employees have the option to bring a complaint to different people, such as a supervisor, manager, business owner or human resources official.

-Employees are reassured that their allegations will be promptly and thoroughly investigated, without retaliation of any kind.

         According to the EEOC, a complaint triggers the need for an investigation, whether the employee asks for one or not. Each allegation should be treated with the respect and concern it deserves. Prior to a harassment investigation, employers should take these actions:

-Designate both men and women as investigators because an employee might feel more comfortable reporting harassment to someone of the same sex.

-Handle complaints as discreetly as possible.

-Use comforting language with the accuser and assure the employee of help.

-Investigate reports promptly; this is a legal obligation.

          “One of the biggest mistakes an employer can make is waiting too long to investigate a sexual harassment complaint,” Labs says. By acting quickly, an employer collects key information while it’s fresh. Delaying an investigation can be a sign that the company is trying to ignore or cover up the complaint, which can result in greater liability.

         “The actions an employer takes, or fails to take, after an employee files a complaint can either protect the company from liability and bad press or make its problems worse,” Labs says. “When a formal charge of sexual harassment is filed with the EEOC or a state regulatory agency, or a sexual harassment lawsuit is brought in federal or state court, one primary issue will be what, if anything, the employer did to prevent or stop the harassment.”


         An employer’s liability for sexual harassment claims depends on a variety of factors, including the type of harassment and the accused person’s role in the company. Sometimes, an employer will not be held accountable for sexual harassment, even if an employee has evidence of the conduct. Other times, an employer faces expensive legal fees and other monetary consequences.

         Employers may be liable for paying the victim’s lost wages or future lost wages, plus compensatory damages for future earning capacity, medical treatment and any other out-of-pocket expenses related to the harm sustained by the victim. If a court finds substantial evidence that an employer willfully or intentionally violated employment sexual harassment laws, the court might impose punitive damages designed to punish the employer.

         The victim may also receive noneconomic damages, which tend to cover injuries that are not quantifiable, like pain and suffering, emotional distress, loss of enjoyment of life activities and loss concerning the reputation of the injured party.

         Lastly, a victim may be awarded equitable relief which may reinstate the victim to his or her job or give the victim a promotion. Equitable relief may also include mandatory amendments of workplace policies and reinstatement of job benefits if the victim was terminated prior to the lawsuit.

         As you can see, settling a sexual harassment lawsuit can be costly. Thus, prevention is a smart alternative. A clearly written, effective sexual harassment policy, followed up with employee training, helps to create a harassment-free workplace where every member of the team is respected. Taking sexual harassment seriously is a reflection of a company’s corporate culture and the support the company provides to employees.


Comments on this site are submitted by users and are not endorsed by nor do they reflect the views or opinions of COLE Publishing, Inc. Comments are moderated before being posted.