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Limiting sexual harassment liability; the best defense is an effective policy against harassment.

The frequency of sexual harassment lawsuits is increasing, as are the monetary damages awarded to winning plaintiffs. Even firms that don't face lawsuits can be hurt financially. A recent study found the legal damages of sexual harassment suits were minor compared with the costs of lost productivity, increased absenteeism and turnover caused by sexual harassment.

CPA firms are at risk for two reasons. First, both males and females are employed at various levels. According to one survey, 43% of responding CPA firms reported that women make up over half of their work force. In such situations, sexual interactions will inevitably occur. When the interaction is inappropriate, the victims in many cases are women who are well educated and understand the legal protection from harassment afforded them. Second, while CPA firms are more sexually mixed at the senior levels than either manufacturing or service firms, upper management remains predominantly male. The survey mentioned above found 35% of firms had women in less than 10% of senior staff positions and 39% reported that less than 10% of their middle managers were women. This means the tone set by top management may not include an awareness of and sensitivity to sexual harassment. The good news is firms can protect themselves from monetary damage awards and other losses by implementing a few simple procedures.

WHAT THE LAW SAYS

Sexual harassment violates Title VII of the Civil Rights Act of 1964 as well as state and local antidiscrimination laws. Equal Employment Opportunity Commission (EEOC) rules call sexual harassment any unwanted sexual advance that is related to employment status. The alleged misconduct must be sexual in nature. Either males or females may file charges for harassment that can be either heterosexual or h sexual.

Harassment that is a significant term or condition of employment is called quid pro quo harassment. Charges also can be brought if sexual interaction creates a hostile or offensive work environment. This type of sexual harassment need not be tied to employment status but may simply be sexual teasing that creates a climate some employees believe is offensive. Even if the teasing is considered harmless by the majority of employees, it can create a substantial liability for the employer should someone file a sexual harassment charge.

In judging whether or not sexual harassment has created a hostile or offensive work environment, the courts generally use a reasonable-person standard although consideration is given to the victim's perspective. A climate that most employees consider harmless or playful may still be judged hostile depending on the circumstances. While a single incident of physical harassment may create a hostile work environment, especially if committed by a supervisor, courts generally find that other types of sexual harassment create a hostile work environment only after repeated occurrences. A recent court decision also found that an individual doesn't have to be the target of sexual harassment to have a cause of action. The California Supreme Court ruled that an operating room nurse who was not the object of any sexual harassment but who had witnessed the harassment had grounds for a suit since she objected to a physician's sexual misconduct (Fisher v. San Pedro Peninsula Hospital, 262 Cal. Rep.842, 1989).

In judging whether a sexual advance is unwelcome, the courts examine who made the advance, considering the circumstances on a case-by-case basis. An employee who solicits or entices a sexual advance may still be able to claim it was unwelcome. The victim's reaction to the alleged sexual harassment is evaluated, but his or her prior behavior and character usually are not given much weight. A detailed account of the alleged harassment may be persuasive even without corroborative evidence.

A sexual harassment suit also may be expanded to a class action suit if an entire group of employees has been affected. Given the decision in the California Supreme Court case mentioned above, CPA firms charged with sexual harassment could easily see such a case becoming a class action suit-with a concomitant rise in potential damages.

Law firms, investment banks and consulting firms all have been the subject of sexual harassment charges. While there have been no reported studies of sexual harassment in accounting firms, one study found that two-thirds of all women employed in law firms experienced some form of sexual harassment. CPA firms are not immune from these claims. A firm that has not taken steps to protect itself from a sexual harassment charge may be a prime candidate for such a filing.

EMPLOYER LIABILITY Firms may be held liable for the actions of superiors, subordinates and coworkers if those in charge know of the harassment or should have known (Miller v. Bank of America, 600 F. 2d 21 1). The firm also may be liable for harassment of employees by clients, although the court will consider whether the firm condoned or had control over a client's actions.

Courts also have accepted suits in which the plaintiff contends that a superior's paramour received a promotion instead of an equally or more qualified candidate because of the sexual relationship between the superior and the subordinate. If accounting firms don't keep exact performance data, they may be especially vulnerable to this type of lawsuit.

Employee resignations that result from sexual harassment of coworkers may be considered constructive discharges. In evaluating whether an employee has resigned voluntarily or was constructively discharged, close examination of firm complaint policies and procedures is a crucial variable. A victim of sexual harassment may forfeit the right to pursue legal remedies if he or she fails to use an effective internal complaint procedure.

Firms should recognize that sexual harassment violates an employee's rights. A false accusation also may have serious repercussions for the accused and for the firm, if not properly handled. The sample policy in the sidebar on pages 46-47, based on a study of policies now in use in various industries, provides safeguards for both the employee and the accused. Firms may want to implement a program based on this sample policy after first reviewing it with their own legal counsels.

NOW TO LlMIT LIABILITY

The best way to limit a firm's liability and prevent lost productivity and increased turnover is to prevent the harassment from occurring. An effective, proactive, well publicized policy against sexual harassment is key. If a firm has effective procedures, it typically won't be held liable for harassment of which it is unaware.

A policy should contain several. features to eliminate harassment and address complaints, including

* A definition of sexual harassment.

* A clear message to all firm members that sexual harassment in any form will not be tolerated.

* A choice of channels for filing a complaint to enable a victim to bypass those involved in the harassment.

* Assurances there will be no reprisals for filing a complaint.

* Specific remedies for the victim and disciplines for anyone who engages in harassment.

Firms should offer comprehensive training on the workings of the policy and the legal implications of sexual harassment for the firm when the policy is introduced and to new firm members.

If a complaint is filed, firms must follow their stated policies. The victim should be encouraged to pursue established remedies. The firm should hold an unbiased investigation in which the accused is informed of the complaint and told that he or she could be subject to the disciplines described in the policy. The firm must show respect for the rights of the accused as well as for the concerns of the complainant during its investigation. One of the most damaging pieces of evidence against the employer in a sexual harassment lawsuit is a complaint filed by an employee that was not followed by a comprehensive investigation.

If harassment has occurred, the person responsible should be disciplined. While EEOC guidelines call for appropriate sanctions against harassers, no specific penalties are given. The managing partners must consider whether discipline can correct the damage done and eliminate the proscribed behavior in the future. In some cases, a written reprimand, suspension or training may be appropriate. In others, a transfer of the offending employee may resolve the issue. If the employee continues the harassment after a transfer, this behavior places the firm at considerably greater risk of liability. Discharge may be the only appropriate discipline if the harassment has been pervasive or aggressive. The victim should be informed of the outcome of the investigation and encouraged to report any additional occurrences of harassment.

Top management must take the lead in establishing a climate free from harassment. Many people don't understand what constitutes sexual harassment, so firm policy should include a definition. The senior partners must set the guidelines and follow them. Misconduct by employees and clients must be dealt with quickly and equitably if the firm is to send a message that sexual harassment will not be tolerated. While some experts believe anonymity in filing complaints is desirable, this can lead to perceptions that resulting disciplinary measures are unfair. Anonymity also increases the possibility of unfounded allegations. While complaints should be kept confidential, anonymity is not recommended.

Since many of the costs of sexual harassment are emotional and mental, managing partners can help offset some of the damage with a personal letter to the victim that expresses regret, offers sympathy and assures a prompt investigation of the charge. Remember that individual differences play a large part in the definition of sexual harassment. Regardless of the investigation findings, the mere fact of the filing of a complaint means the complainant's work performance has been affected.

Sexual harassment is not prevented simply by implementing a policy or leading an annual discussion with employees. Effective protection from lawsuits depends on constant effort to stop harassment. For example, memos summarizing recent court decisions could remind employees that harassment suits could mean high costs to the firm and termination for offenders. Employees should be informed they may be held liable for financial damages under tort law should they engage in sexual harassment. If employees seem uncertain about what sorts of behavior are acceptable, they should be encouraged to consider whether they would want someone to direct such an action at their spouses, children, parents or themselves. If they would not, the action is not appropriate in the office.

THE BEST DEFENSE

CPA firms must protect themselves from the liabilities of sexual harassment, but few have established policies dealing with this issue. An effective policy is the only practical way to protect a firm. Courts are unlikely to award damages if a firm can show it has procedures for dealing with harassment that are effective, available to all employees and well known within the firm. Without an effective policy, courts are likely to award substantial damages should a plaintiff establish even the possibility that sexual harassment has occurred. n SAMPLE SEXUAL HARASSMENT POLICY Our firm is committed to a workplace free from sexual harassment. Sexual harassment is a violation of Title VII of the Civil Rights Act of 1964 as well as state discrimination laws. The firm will not tolerate such misconduct. This policy applies to all firm members as well as to clients and others who come in contact with the firm. Reprisals against those who file complaints under this policy will not be tolerated. Violators of this policy will be subject to discipline, including discharge. Any firm member who receives a complaint and does not act on it under the procedures of this policy will also be subject to discipline, including dismissal.

Occasional compliments of a socially acceptable manner or statements or acts that are acceptable to all elements of society are not sexual harassment. Sexual harassment is statements or acts that are offensive to some people. What may constitute sexual harassment may differ from person to person. Sexual harassment is unwelcome sexual advances, requests for sexual favors or verbal/ physical contact of a sexual nature when 1. Submission to such conduct is either implied or stated to be a term or condition of employment or a factor in the evaluation of the employee's performance, promotability or any other component of employment. 2. Such conduct interferes, either directly or indirectly, with an employee's work performance by creating a hostile, offensive or intimidating environment.

Verbal harassment is sexually vulgar language, remarks about an individuals physical anatomy, derogatory comments about gender, distribution of written or graphic sexual material, sexually oriented magazines/posters, display of nude pictures, other words or depictions of a sexual nature.

Physical harassment is touching in a sexual manner or invading personal privacy, especially the intentional touching of breasts and genital areas or buttocks or threats to take such actions. PROCEDURE Any employee who feels sexually harassed by a supervisor, manager, coworker, subordinate, client or other person should take the following course of action: 1. Tell the offending individual(s) to stop the harassment. State your objection to the action and the specific behavior to which you object. Have a witness present if possible. Also note the time and date of the discussion and write a summary of what you said and how the offender responded. If uncomfortable with a discussion with the harassing individual(s), state your objections m writing and keep a copy. In any sexual harassment case, documentation will help support contentions of harassment. Keep a log of the specifics of the actions to which you object. Record dates, times and witnesses. Keep copies of any notes or materials.

2. An individual who does not feel comfortable confronting the offending party in person or in writing may proceed directly to this step but should still keep a log of occurrences. If step 1 does not resolve the problem, or if you fear reprisals will result from a complaint, immediately complain to your supervisor, the firm's personnel manager, a partner or any other supervisor. You have a right to discuss your complaint with a superior with whom you feel comfortable. AH complaints are handled in a timely fashion. Your complaint and all the details of the investigation will be treated as confidential information. Only those involved in the investigation, witnesses to the harassment and the alleged harasser will be contacted. Your identity, as far as possible, will be withheld from all involved parties. The firm will attempt to do the utmost to protect the privacy of the complainant. The firm will also attempt to protect the integrity of any individual who may have been wrongfully accused of sexual harassment.

3. An individual who receives a complaint will contact the personnel officer (or the person who will conduct the investigation). The alleged harasser will be contacted, along with witnesses, coworkers and possible other victims. The investigators determine guilt or innocence and recommend any disciplinary action to the managing partner(s). Any managing partner involved in the harassment will be excluded from the decision-making process on the penalty to be imposed. Both the victim and the alleged harasser will receive copies of the investigators' findings. While the investigation should be thorough and complete, in only the most unusual circumstances will it take longer than 10 days.

4. Throughout the investigation and after the determination of penalty, if any, the complainant will be assured there will be no reprisals from any firm member. A complainant's career will not be adversely affected by the outcome of the investigation.

S. Appeals of the investigators' findings may be made to the managing partners. Any managing partner involved in the harassment is excluded from the appeal decision-making process.

6. Only the victim and the accused harasser will be told the final disposition of the complaint. Details of the investigation will be released only in the event of a court proceeding. HARRASSMENT BY CLIENTS

Firm policy prohibits sexual harassment from any source. The above procedure will be followed in cases of alleged harassment by clients or suppliers. If investigation substantiates the charge, the managing partners will take prompt remedial action. Possible remedial steps range from letters of objection to the accused to refusal to continue the business relationship. Individuals filing complaints against clients should be aware of the limits on the firm's ability to control client behavior.
COPYRIGHT 1991 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Veglahn, Peter
Publication:Journal of Accountancy
Date:Jun 1, 1991
Words:2675
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