June 18, 2018

The Law & You: Sexual Harassment Claims and Brokers' Liability on the Rise

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The Law & You: Sexual Harassment Claims and Brokers' Liability on the Rise

Joe and Betty arrive at their offices at ABC Realty, spouting their usual nonsense. Joe is speaking in glowing terms about the physical characteristics of the company’s newest sales associate. Betty, meanwhile, begins going desk to desk telling her latest dirty joke.

Joe’s and Betty’s behavior may or may not rise to the level of sexual harassment, but if it does, are you, as their employer or broker, liable?

Recent court decisions have expanded employer liability for the actions of supervisors. Brokers can also be held liable when an employee is harassed by a coworker or a nonemployee, such as a salesperson working as an independent contractor.

Fortunately, brokers can limit their liability by taking precautions to prevent or correct incidents of sexual harassment long before any suit is filed.

Traditionally, courts categorized sexual harassment claims as one of two types: quid pro quo (“this for that”) or hostile work environment. Although the most recent court decisions regarding the actions of supervisors don’t distinguish between the two, the terms are still useful to help us recognize inappropriate behavior.

Quid pro quo violations occur when a job, raise, or other benefit is conditioned on an employee’s sexual acquiescence. Hostile work environment exists when an employee’s terms of employment are altered by the severe and pervasive behavior of managers, supervisors, or coworkers. For example, an office manager or other employee might find work intolerable because of a coworker’s sexual remarks or physical contact.

It’s important to know that sexual harassment doesn’t have to involve bosses and employees--it can involve any party in a position of power. For example, a broker can be liable if a prospective buyer or a sales associate harasses a secretary, and the broker knew or should have known about the problem and took no steps to correct it.

The bad news for brokers is that recent court decisions have expanded employer liability for the acts of employees in supervisory roles. Courts now look at whether the behavior constitutes harassment under Title VII of the Civil Rights Act of 1964, then whether the plaintiff actually suffered adverse employment action, such as termination, demotion, undesirable reassignment, decrease in benefits, or failure to be promoted as a result of the supervisor’s actions. If so, brokers are liable whether or not they knewor should have known about the harassment or tried to stop it.

The good news is that brokers can limit their liability when there’s been no adverse employment action by demonstrating that the company exercised reasonable care to prevent or correct problems and that the employee failed to take advantage of preventive or corrective opportunities provided by the employer.

To reduce your liability:

  • Establish a solid sexual harassment policy and distribute it to every employee and independent contractor, not just supervisors.
  • Obtain a signed statement from employees and independent contractors affirming that they have read the policy and understand it.
  • Make it clear to everyone--especially supervisors--that the company will not tolerate sexual harassment.
  • Reinforce that message through training materials, periodic employee communications, and consistent and effective complaint procedures.
  • Encourage employees to come forward with complaints, treat cases discreetly, investigate all claims, and take appropriate swift action.
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