If any employment law issue stays hidden “behind the corporate veil,” it is sexual harassment. Until the cover is blown, and the problem becomes public. What many start-up businesses and non-profits don’t realize is that sexual harassment issues can arise in workplaces with very few employees.
Why do sexual harassment laws matter to small businesses?
Small businesses usually operate informally and have few policies and procedures when they start. Moreover, the early employees are often friends or family members, and these relationships add complexity to the work relationships.
Still, if you are running a small business, you are at risk if you do not comply with sexual harassment laws.
Title VII of the Civil Rights Act, the federal law administered by the Equal Employment Opportunity Commission, regulates sexual harassment. Title VII applies to employers with fifteen or more employees. But most state anti-discrimination laws cover employers with just a handful of employees—five in California and four in New York, for example. City ordinances also impose requirements on very small employers in some jurisdictions.
Because most states look to federal law, even small businesses should follow EEOC and federal court interpretations under Title VII. But employers must also be aware of their state laws also—sometimes state law permits broader theories of liability or remedies (such as higher punitive damage awards) than federal law.
What’s the minimum that a small business should do?
A good place for small business owners to start is to read through the EEOC’s sexual harassment fact sheet, Questions and Answers for Small Employers on Employer Liability for Harassment by Supervisors.
The law requires more of employers to avoid liability for a supervisor’s actions than for actions by co-workers or non-employees.
- The EEOC position is that an employer is always responsible for harassment by a supervisor that culminated in a tangible employment action, meaning an action that results in harm to the harassed employee.
- If the supervisor’s harassment did not lead to a tangible employment action, the employer is liable unless it proves that:
(1) it exercised reasonable care to prevent and promptly correct any harassment; and
(2) the employee unreasonably failed to complain to management or to avoid harm otherwise.
This means that as a business owner, you should communicate a policy against sexual harassment, provide viable methods for your employees to complain (other than to the alleged harasser), and promptly address any complaints of harassment. It is better to have a written anti-harassment policy, though orally communicating the policy might work, if you can prove the communication took place, for example, through staff meeting minutes.
But it may be difficult for your small business to develop a strong anti-harassment policy. Usually, such policies need two or more avenues for the employee to complain, in case one of the usual persons to whom complaints can be voiced is allegedly the harasser.
If you are the only manager in your business, how do you find a second person to take complaints? You may not be able to. In that case, you should have an attorney or a human resources consultant conduct an investigation into complaints that might involve you.
Unfortunately, that is likely to cost you. But litigation will cost you far more.
A few more cautions
If you do get a complaint of harassment in your business,
- Investigate promptly, stop the harassment, and remedy any adverse employment actions against the complaining employee.
- Keep the complaint confidential, to the extent possible, and
- Don’t retaliate—complaints of retaliation are easier to make than the initial complaint of harassment, and harder to defend.
The Best Defense: Don’t Let It Happen
Although the anti-harassment policy and complaint procedure are important, the best way that a small business can avoid harassment complaints is by not permitting an atmosphere of casual remarks about sex and employees’ personal lives in the first place.
Even if the business started in a college dorm, the standards are different once the business becomes real. Even if the same people are involved.
I know it’s hard to accept that you can’t continue to treat your friends like you did when you were eighteen, but if you are running a business and providing people’s livelihoods, you need to act with maturity.
For more on this subject, see
When has an unprofessional atmosphere in the workplace caused you problems?