4 Smart Ways to Protect Your Small Business from a Sexual Harassment Lawsuit

by QuickBooks

2 min read

All it takes is a single sexual harassment lawsuit for a small business to come to a screeching halt. Even a claim of sexual harassment can cost a small business its well-earned reputation, plus the depletion of its bank account.

How common is this problem? Over 13,000 harassment claims were reported to the Equal Opportunity Employment Commission (EEOC) in 2008 alone, with 16 percent filed by men. In fact, male-reported harassment incidents are on the rise, with these claims doubling from 1992 to 2008. Total monetary damages recovered by the EEOC for plaintiffs in 2008: about $47.4 million.

Although many small businesses have a sexual harassment blurb in their employee handbook, many don’t take the time to educate themselves — or their employees — on what constitutes sexual harassment. What’s more, many small business owners don’t have sexual harassment insurance as part of their business insurance protection.

Experts say that employee awareness of what constitutes sexual harassment is rising, and along with that comes increased reporting of sexual harassment incidents. Take these critical steps to guard your small business from inclusion in next year’s EEOC sexual harassment statistics.

  1. Know what constitutes sexual harassment – Sexual harassment violates Title VII of the Civil Rights Act of 1964 and is a form of sexual discrimination. Physical or verbal conduct of a sexual nature, requests for sexual favors, and unwelcome sexual advances all constitute sexual harassment when rejection or submission to the conduct creates an offensive, hostile, or intimidating environment, unreasonably disrupts or interferes with a person’s work performance, or implicitly or explicitly affects a worker’s employment. Keep in mind that the victim doesn’t have to be the opposite sex.
  2. Make sure your employees know what constitutes sexual harassment – Small business employers need to train their employees on sexual harassment behaviors. In fact, some states, such as California, Maine, and Connecticut, require sexual and workplace harassment training. Contract with qualified outside sexual harassment instructors, use training videos, engage in role-playing sessions, or distribute printed materials to increase your employee’s awareness of sexual harassment. Some employers even post “What is Sexual Harassment?” flyers in employee common areas.  Connecticut even requires businesses with three or more employees to prominently display sexual harassment information at the office.
  3. Include a sexual harassment policy in black and white in your employee handbook – If your small business doesn’t already have a sexual harassment policy in the employee manual, it’s important to develop one as soon as possible. Your employees need to be well-informed about your harassment policy.
  4. Obtain sexual harassment insurance – Even if the small business owner does everything he can think of to teach his employees about sexual harassment, he must still protect his business financially. When a small business owner is presented with a sexual harassment claim, he may not have the infrastructure to handle such a complaint, not to mention the funds to pay the claim without tapping out the coffers. In spite of a sexual harassment claim settling out of court, it doesn’t come cheap. With sexual harassment lawsuits and their related legal expenses on the rise, it’s critical for the small business owner to consider employment practices liability insurance as part of his portfolio of business insurance.

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