What a year! We have all been focused on surviving outside forces that threaten us, such as manufacturers’ demands, data breaches, and ongoing consumer cases. However, we should never forget that one of the legal exposures to dealers comes from within, the employees. While the topics could be wide-ranging, let’s just talk about one: preventing sexual harassment.

What can dealers do to prevent sexual harassment lawsuits from occurring within the workplace, and, should a claim arise, how can they properly handle claims of sexual harassment brought by employees? Generally, sexual harassment is defined as “unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature.” These requests constitute sexual harassment when submission to such conduct is made a term or condition of employment; submission to or rejection of such conduct is used as a basis for employment decisions that affect the individual; or when the acts have the purpose or effect of unreasonably interfering with an employee’s work performance or creating an intimidating, hostile or offensive working environment.

Sexual harassment claims are categorized into two types of claims. The first is quid pro quo sexual harassment, in which a supervisor conditions an employment benefit or continued employment on the employee’s acquiescence in sexual behavior. Strict liability for the employer is associated with quid pro quo sexual harassment if a “tangible employment action” has been taken against the employee by a manager/supervisor. Tangible employment action means “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” If an employee does not allege that a tangible employment action took place, the employer can perhaps avoid vicarious liability if it can show that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and, that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.”

The second type of sexual harassment liability is “hostile work environment.” This is by far the most common type of claim and is factually driven. Sexual jokes, suggestive comments, sexually derogatory comments or cartoons used by either management or any other individual entering the business environment can create a “hostile work environment.” It is very important to understand that the court’s focus is on the work environment and inappropriate actions, from any source, can create a “hostile work environment.” This can be extremely difficult to control when the source comes from the outside, such as vendors and even customers. 

Contrary to general understanding, sexual harassment based upon a hostile work environment claim is a term of art. A manager or employee asking someone out for a date or making a one-time offensive remark is not sexual harassment. It may certainly be inappropriate work behavior, but not “sexual harassment.” The employee must show (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating, or a mere offensive utterance; and (4) whether it unreasonably interferes with an employee’s work performance. 

In order to satisfy the four-part test set forth in Harris v. Forklift Systems, the harassment must be “severe and pervasive.” A single incident, or isolated incidents over a period of time, will not likely create a “hostile environment harassment,” but can if severe. Generally speaking, the courts will review the questionable conduct using a sliding scale; the more offensive the conduct, the less frequency is needed to create a hostile work environment. Less offensive conduct needs to occur more frequently. The timeframe in which the alleged offensive conduct occurred is also important. If the events occurred over a more extended period of time, it is less likely to create a hostile work environment. Importantly, the term “severe and pervasive” is based upon a reasonable person standard, not a sensitive person standard.

A number of defenses are available to employers depending on the type of harassment alleged. If an employee unreasonably fails to use an existing harassment policy, the employer can use that as a defense to the harassment claim. Another affirmative defense is when sexual advances are welcome. Although it may be difficult to prove, courts have allowed defendant employers to ask probing questions about personal romantic relationships between the plaintiff and defendant and sometimes even other coworkers. It is also quite normal for the plaintiff to engage in joking and conduct that they now complain about. This type of evidence can influence the jury’s perception of the plaintiff, although too much of this type of evidence can leave a jury wondering what type of business you are running.

In order to effectively defend claims of sexual harassment arising under a hostile work environment theory, employers can take simple steps to create a system that lessens the chance of harassing behavior occurring in the workplace and increases the likelihood of success. 

1. Employers need to have an active anti-harassment policy in place. The policy should include thorough, easily understood complaint procedures. While the policy should encourage complaints in writing, the policy should not require them.
2. The policy must be effectively communicated to supervisors and employees. Every employee needs to know that the policy exists and what it says. And, the employer should establish proof that the policy has been disseminated by retaining a signed copy from each employee or emailing over the company email and keeping track of who received the policy.
3. The employer should conduct consistent sexual harassment training (at least every other year and with all new employees) in the workplace. Employees need to understand how to follow the procedures of the policy, and managers need to initiate investigations. Failure to train supervisors about how to follow procedures set forth in the sexual harassment policy can cost employers one of their most valuable defenses to sexual harassment claims.
4. If a claim of harassment does arise, it must be reasonably and promptly investigated. Individuals in charge of investigating claims need to take the claim seriously, investigate promptly and reassure the complaining employee that the procedures outlined in the harassment policy are being followed. In conducting the investigation, accurate and complete documentation is the key to success if litigation should arise.
5. If inappropriate harassment has occurred, the employer must take prompt remedial action against the individual responsible. Any action taken needs to be done with the purpose of preventing future harassment — it must be effective in stopping the harassment. Employers should be sensitive to preventing any type of retaliatory action against the complaining employee.
6. Last, monitor the situation. Monitoring includes following up with the complaining employee to determine whether the problem has been resolved or whether any other necessary action is needed; reaffirming the harassment policy with affected employees; and, perhaps, holding another training session to reinforce the policy. Again, the supervisor or human resource employee should document all occasions of re-training.

It is always better to be aggressive to prevent these types of issues. Once the claim is made, the damage is done. Sexual harassment claims negatively impact morale and the overall work performance of all employees. Competing groups develop once a claim is made and the investigation begins. Alleged sexual harassment victims are quite emotional, understandably so, and can demand unwarranted disciplinary action taken against the accused employees, i.e., removal of body parts and firstborn children. It is always difficult to control these emotions through the process, and I recommend that our time and effort be spent preventing these types of claims instead of litigating them. 

Hopefully, with a strong sexual harassment policy, timely and consistent training, and a strong team to communicate and enforce your policies, you can significantly lessen your exposure to these types of claims and provide a great working environment for your employees.

In the next article of Counselor’s Corner, we will explore whether a dealer needs a handbook and what should be included. As always, should you have any questions, please do not hesitate to contact the association; we will assist you.