A Two-Part Plan to Mitigate Sexual Harassment Claims in the Workplace

January 4, 2018

Kathleen Dashner, MBA, SHRM-SCP
Jeffrey Shupe, CIC

“Respect for ourselves guides our morals, respect for others guides our manners.” - Laurence Sterne

Well said, Mr. Sterne.

Based on today’s headlines, it seems that this respect thing has run amuck within many organizations. We want to believe that we are an advanced and intellectual business society, yet ongoing news featuring people in power positions taking advantage of those in subordinate positions paints a very different picture. Most certainly there will be more high-profile persons named in the upcoming months as perpetrators.

It’s probably safe to say that we’ve all seen a bit of this behavior at some point in our careers. As a business owner, has it caused you to take pause and wonder if your organization is operating above the fray?

Well, risk management is a critical piece to operating a business. And there are steps that you can take that will absolutely lower your liability. Operating with a well thought out two-part plan that focuses on emotionally intelligent people management and savvy business protection coverage will help you sleep easier at night:

SET THE TONE.

It’s easy to want to build camaraderie with your staff, but don’t allow careless banter and jokes to cross the line. Think before you speak. And if you see anything that feels awkward, nip it in the bud immediately.

SET YOUR POLICIES AND PROCEDURES.

Do you have policies in place that address Equal Opportunity, Harassment, Nepotism, proper conduct, business ethics, and solicitation?  Do you offer a reporting procedure and have a clear no retaliation clause?

SET CONSISTENCY.

Apply policy and practice to every similarly situated employee. The worst mistake that you can make is to brush off behavior of an individual because, “He’s just that way sometimes, he doesn’t mean any harm.”

While having proper tone, policies, procedures, and consistency within the business is foundational, business owners may still have to deal with allegations of inappropriate behavior. Sometimes even the best systems fail.  Whether the claim has merit or not, defense costs alone can be backbreaking for a company, not to mention the distraction from the company’s goals and objectives. And, did you know, in the state of Ohio, supervisors and managers can be personally liable for employment law missteps they committed?

Now that we have you attention, our best advice is to consider putting protection in place to reduce your risk of exposure. Employment Practices Liability Insurance (EPLI) protects an entity from a broad array of alleged or actual acts including sexual harassment in the workplace. EPLI provides coverage for defense costs and damages for employment related claims. When considering EPLI, have your insurance agent answer the following questions with respect to the policy as each EPLI policy can vary:

ARE DEFENSE COSTS OUTSIDE POLICY LIMITS?  

While each EPLI policy has a ‘duty to defend’ the company, many insurance agents miss this critical piece.  For example, suppose a business had an EPLI policy with $100,000 limits.  If the defense costs were INSIDE the policy limits, the $100,000 will be depleted quickly because of legal fees.  If the defense costs are OUTSIDE the policy limits, there is, in essence, unlimited funds for legal costs which preserves the limits for damages.

IS THIRD PARTY COVERAGE INCLUDED?  

Most EPLI policies will cover owners, partners, employees, and even volunteers.  Make sure the policy will respond to third parties. Third parties are consultants, 1099’s, and other company representatives who come into the business.  Suppose a package delivery driver routinely entered a business making unwanted advances to some of the employees. If the owner(s) know this and do nothing about it, a claim against the company can be filed by the employees--even though the perpetrator was not an employee of the company.  

WHAT DOES THE POLICY COVER?

In short, the broader the better.  While most EPLI policies include coverage for sexual harassment, look for the broadest list of alleged or actual acts that are covered.  Also, consider the policy exclusions.

For more information: