Labor & Employment Newsletter - November 2018

Date: November 20, 2018

’Tis the Season! Celebrating the Holidays in a #MeToo Era

By: Tiffany M. Releford, Esq. 

In light of the #MeToo movement, companies that have held holiday parties in the past are foregoing hosting holiday parties to avoid the potential for liability. However, concerns about #MeToo should not dissuade companies from celebrating staff, the holidays, and end-of-the-year accomplishments. Instead, companies should be proactive in planning holiday parties, as well as in educating employees about appropriate behavior, before hosting such parties to minimize risks. Below are suggested considerations for companies that do not want to forego throwing a holiday bash.

  • Educate employees on your anti-harassment and anti-discrimination policies. Review your company policies ahead of time with staff, which should also be done periodically throughout the year, and explain the method by which staff can report violations of policies. Make sure to have the proper persons in place to receive and handle complaints, including having someone designated to receive such complaints at your holiday party. This will help to ensure immediate action is taken with respect to a complaint. If your company has an existing culture that denounces any form of harassment, that same culture will be maintained at your holiday party.
  • Limit alcohol consumption at the holiday party. It is a known fact that alcohol can impair an individual’s judgment, including missing obvious social cues that the person’s behavior is inappropriate. To avoid this, consider limiting alcohol consumption to beer and wine. Also, think about using a system, such as tickets, to limit the amount of alcohol served to staff, or limiting open bar hours. Also, ensure there is sufficient food to lessen the effects of alcohol, as well as water to keep staff hydrated. 
  • Make safe rides available for staff. Before the party, recommend employees designate a driver if they intend to drink at the party. Offer incentives for staff that volunteer to be designated drivers such as gift cards, ride-sharing credits, etc. If employees are unable to drive home and a designated driver is not an option, have safe rides available for the staff, which are prepaid for by the company, such as Uber, Lyft, or taxis.
  • Schedule activities during the holiday party. Often, there is idle time at holiday parties where employees spend most of their time drinking while interacting with one another. Consider having distractions in the form of activities so that the focus is not on alcohol. Activities can include a gift swap, recognition ceremony, ugly sweater contest, raffles, etc. Another option is to combine your holiday party with a volunteer effort such as a toy donation, serving meals at a shelter, or putting together meal packages before the party. Getting your staff engaged in the party will reduce the focus on alcohol consumption.
  • Lead by example. Ensure management leads by example at your holiday party. Management can partake of the festivities as well, but must acknowledge that they set the tone for others. Thus, if a supervisor is drinking heavily, it will send a message to subordinates to do the same. Make sure managers know they must continue to be the example of what is appropriate behavior at the holiday party.

With proper enforcement of existing company policies to prevent harassment and discrimination, as well as the company’s culture of not accepting behavior in violation of those policies, there should be no hesitation to hosting a holiday bash. 

Whiteford, Taylor & Preston can assist you in assessing your company’s policies to ensure they are up-to-date and effective, and can also provide trainings for your staff to educate them on company anti-harassment and anti-discrimination policies.

The Impact of #MeToo is Deeper Than You Think?

By: Peter D. Guattery, Esq. 

Under Title VII of the Civil Rights Act, and many similar State civil rights laws, the liability for sexual harassment can vary greatly based on the nature of the claim. The Supreme Court companion cases of Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) set out a standard holding an employer strictly liable for instances of sexual harassment by a supervisor, but left open a window, by way of an affirmative defense, where the employee suffered no tangible adverse employment action as a result. In order to utilize the affirmative defense and avoid liability for the harassment, the burden was on the employer to demonstrate:

(a) that it took reasonable care to “prevent and correct promptly any sexually harassing behavior;” and

(b) that the employee “unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to otherwise avoid harm.”

In the recent case of Minarsky v. Susquehanna County, 895 F.3d 303 (3rd Cir. 2018), what has become known as the Faragher-Ellerth defense, entered the #MeToo era, when the U.S. Court of Appeals for the Third Circuit reinstated a claim against Susquehanna County, despite the fact that the employee, Sheri Minarsky, never reported the sexual advances made by her supervisor, which occurred repeatedly over a four year period. The County challenged the claim largely on Minarsky’s failure to notify them about her supervisor’s conduct. They had a clear policy, and took action against the supervisor when complaints from others led to the supervisor’s termination. Minarsky, herself, however, had only told a friend, who told another employee, who in turn told human resources. From the county’s perspective, they took prompt action once the particulars of the supervisor’s conduct toward Minarsky and others became known, and therefore were protected from the claim.   

For many employers, these may seem like strong facts to support a defense. Susquehanna County had a clear policy in place, which the court found to be reasonable. It clearly defined harassment and provided alternative reporting procedures. Minarsky knew of the policy and the process, but she did not make a complaint. But was the policy effective? The Court of Appeals said a jury should decide.

Multiple female employees had similar interactions with the offending supervisor over the years – unwanted hugging, kissing, massaging of shoulders, sexually explicit emails, and sexual advances. During the holiday season, the supervisor asked Minarsky and other female employees to kiss him under the mistletoe. There was such a strong pattern of pre-existing conduct that the Court of Appeals felt that the number of incidents and the employer’s dragged out response to these incidents, for which there was evidence of knowledge on the part of the County, created an issue of fact as to whether the County actually took reasonable measures to protect the employee from the harassment.

Minarsky herself explained that her failure to report the incidents was because the supervisor knew her young daughter was ill and depended on her job to pay medical bills. She feared speaking up to him in any way because he would react and become nasty. In short, she feared retaliation. Minarsky was also aware of a prior reprimand the supervisor received, which had done little to change his behavior. 

In looking at the second prong of the Faragher-Ellerth test, and determine whether Minarsky had acted “unreasonably” in not reporting the conduct, the court turned to #MeToo: 

This appeal comes to us in the midst of national news regarding a veritable firestorm of allegations of rampant sexual misconduct that has been closeted for years, not reported by the victims. …. While the policy underlying Faragher-Ellerth places the onus on the harassed employee to report her harasser, and would fault her for not calling out this conduct so as to prevent it, a jury could conclude that the employee’s non-reporting was understandable, perhaps even reasonable. That is, there may be a certain fallacy that underlies the notion that reporting sexual misconduct will end it. Victims do not always view it in this way. Instead, they anticipate negative consequences or fear that the harassers will face no reprimand; thus, more often than not, victims choose not to report the harassment.

Recent news articles report that studies have shown that not only is sex based harassment in the workplace pervasive, but also the failure to report is widespread.  

… Most of all the women who have experienced harassment report that the male harassers faced no consequences.

Id. at 313 n12. The court went on to observe that, in a 2016 report, the EEOC noted that 70% of individuals who may have experienced harassment did not report it. A full 90% who experienced workplace harassment never reported it. The net effect of the court’s decision was to send the case back to the District Court to set the case in for trial.  

The obvious lesson from the Minarsky decision is that the most important aspect of any sexual harassment prevention program is not a detailed policy or strong words of “zero tolerance,” though a policy is important. Instead, the promptness and effectiveness of the employer’s response will be critical. One might even suggest that it should be the window through which the employer assesses the strength of its entire harassment policy, from how the policy is communicated to how supervisors and employees are trained, who conducts investigations and how, and ultimately, what actions should be taken. 

Susquehanna County was faced with allegations by not just a single employee, but evidence of a persistent and unrelenting pattern of misbehavior by a supervisor who allegedly conducted himself as he pleased given his position and the relative isolation of him and his staff from the main office. The County’s problem was not simply that its response to the reported incidents was lacking, but also that it treated its harassment policy as a reactive, rather than proactive, tool for addressing complaints. If anything, #MeToo suggests that this kind of HR practice is now out of date. Creating a work environment that promotes respect, and encourages trust requires an active effort by employers to understand and respond to employee concerns. Implementing a policy with those specific goals in mind will ultimately be an employer’s most effective defense against such claims.

Whiteford, Taylor & Preston can assist you in assessing your company’s HR policies and practices, ensuring they are up-to-date, and guiding you through proper investigation practices. 

Sexual Harassment in the #MeToo Era and Minimizing Risk

By: Jennifer S. Jackman, Esq. 

Originally published by Association of Corporate Counsel National Capital Region

The number of sexual harassment claims reported to the EEOC, as well as the amounts recovered by the EEOC and in jury awards, are on the rise. In 2015, 6,870 sexual harassment complaints were filed with the EEOC. Between 2010 and 2016, private employers paid nearly $700M to employees arising from harassment claims filed with the EEOC. As of October 2018, the EEOC had already filed 41 sexual harassment lawsuits – a more than 50% increase since 2017. Similarly, as of October 2018, sexual harassment charges filed with the EEOC in 2018 increased by more than 12% from 2017 and the EEOC has already recovered nearly $70M in sexual harassment claims in 2018 – an increase from the $47.5M it recovered in 2017.

What do sexual harassment claims cost a company? There are the obvious costs of the settlement (if resolved) and attorneys’ fees, but there are many other indirect costs. These include increased insurance premiums, increased labor costs due to turnover, absenteeism from work, and, what is seen even more now, severe reputational damage. If the media takes hold of a claim, this can result in a public lashing, which can directly affect the profits and value of the company. 

Given the significant cost associated with sexual harassment claims, organizations need to be proactive in addressing and preventing sexual harassment. There are multiple steps companies can take to minimize risk, including:

  • Strong Harassment Policies with Proper Reporting Channels

Companies should carefully review their harassment policies to ensure they prohibit retaliation, provide for confidentiality, and implement proper reporting channels. Once the policy is approved, it should be published to staff on an annual basis. In addition to having harassment policies in a handbook for employees, organizations should consider adopting a Code of Conduct for the Board of Directors that includes a prohibition against harassment.

  • Proper Training of Staff, Managers and the Board of Directors

In order for policies to be effective, companies must train their employees, managers and staff. Staff needs to understand what conduct is prohibited and what to do if they witness or become the victim of harassment. Board members, executives, and managers are held to a higher duty under the law and should receive separate management training that clearly defines their duties and obligations in handling harassment claims, in order to minimize risk not only to the organization, but to themselves.

  • Executive Agreements

Given the potential exposure to organizations for sexual misconduct/harassment by executives, employment contracts should expressly include harassment as one of the types of “cause” that allows for termination of employment.   

  • Consensual Relationships

Harassment claims often arise from consensual relationships that have gone bad. Re-evaluating whether your organization should allow consensual relationships is advisable. If such relationships are allowed, there should be parameters implemented and notice to the organization of such relationships should be required.

  • Avoid Retaliation

Companies must be proactive in preventing retaliation of employees who complain of harassment or participate in investigations. Actions an organization takes to “protect” an employee must be carefully considered to ensure they do not provide a basis for retaliation.

  • Avoid Taking Action that Could Be Deemed Discriminatory

Similarly, disciplinary actions taken by an organization against an accused in response to the complaint could be seen as gender discrimination. For example, an organization that prohibits a male executive from working with or meeting with female employees in response to a complaint of harassment could face a gender discrimination claim if this action leads to fewer interactions with key employees, and thus, fewer promotions, salary increases, etc.

  • Promptly and Properly Investigate

The only thing worse than not having a sexual harassment policy is having a policy and not following it. When a complaint of harassment is received, it must be promptly investigated in accordance with company policies.

  • Take Action

Once the investigation is complete, if there is a finding of inappropriate conduct, the organization must take prompt and appropriate action. Consideration should be given to whether the harassment was intentional and whether the person is a repeat offender. Action must, however, be taken to endeavor to stop the conduct from occurring in the future.

  • Obtaining and Maintaining EPL and D&O Insurance

While companies can take steps to minimize potential harassment claims, they cannot eliminate the risk altogether. Accordingly, it is imperative to have appropriate insurance coverage that provides a defense and indemnifies the organization and its Board members against such claims. Understand what a “claim” is under the policy and ensure proper notification is given to the insurer when a claim is made.

The #MeToo movement brought with it an increase in reporting of sexual harassment. Employers should invest the time and resources to review the organization’s culture, ensure they have proper policies, and appropriately train staff, managers and Board members. When a concern is raised, organizations should promptly investigate and take appropriate action. 

Whiteford, Taylor & Preston can work with you to ensure that your investment in time and resources effectively minimizes risk.