15 Key Steps for Companies Responding to Sexual Harassment or Discrimination Allegations

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By Lynne C. Hermle

Reports of sexual harassment and discrimination in the workplace appear to be at an all-time high. The media reports daily on allegations across every industryentertainment, technology, media, law, venture capital, finance, government, and more.

The actions taken after an employee alleges harassment or discrimination can be key in limiting the employers potential liability and resulting adverse publicity. This article examines the important steps a company can take in responding to sexual harassment or discrimination claims, both with respect to addressing workplace allegations as well as dealing with any resulting litigation. While legal and policy considerations are key, effective communications are equally essential, and a team of HR, legal, and (where appropriate) communications professionals should coordinate carefully with senior management on the companys response.

1. Lawyer up

Sexual harassment or discrimination complaints can lead to serious liability, including punitive damages designed to punish the company for inappropriately handling the complaints. The company may face significant liability even if a low level supervisor fails to comply with company rules and policies. Not all of the proper responses to these claims are intuitive and many require knowledge of complex applicable laws and regulations.

The company should involve outside legal counsel experienced in handling such claims as soon as possible to navigate the thicket of related legal issues. Counsel can provide guidance on compliance with legal requirements for the response as well as assist the company in determining whether early resolution is advisable or possible.

With the assistance of legal counsel, the company can also take the appropriate steps to ensure that communications with executives, Board members, and employees are protected by attorney-client privilege. To protect that privilege, communications with the companys legal counsel should be restricted to those individuals with a legitimate need to know and include a subject line that reads Confidential and Subject to Attorney-Client and Work Product Privileges.

2. Notify the Board of Directors promptly of significant allegations

Board members may be able to provide helpful advice regarding difficult allegations based on their experience advising other companies. Additionally, Board members hate to be surprised with bad news, especially if that news shows up in the media before they have heard about the claim.

Accordingly, once an employee makes a significant allegation of sexual harassment or discrimination, especially one likely to bring media attention, the CEO, ideally with the General Counsel or outside counsel (to ensure the communication is privileged), should promptly inform the Board of Directors.

3. Treat the complaining party with respect

Employees usually find it very difficult to make allegations about sexual harassment or discrimination. They worry about the consequences and the effect the complaint will have on others in the workplace. They may feel vulnerable and concerned about losing their jobs.

The employer should show respect, understanding, and concern, including in initial responses to the complaining party. Employees and managers may have misbehaved and violated company standards, and the complainant may be legitimately upset and concerned about that behavior. Swift and appropriate action, including thanking the employee for raising the concern and quick initiation of an investigation, sends a message not only to the complaining employee but to others watching for the companys reaction.

Employees who observe the company taking concerns seriously are also more likely to seek internal resolution and less likely to resort to litigation.

4. Promptly and thoroughly investigate the complaint

The company should promptly investigate complaints (including those which may initially appear to be meritless). Failure to treat a complaint seriously can significantly exacerbate the problem and the liability.

Investigations of these concerns should be conducted by persons with training and experience who have the ability to be neutral and impartial (i.e., who dont report to or have relationships with those individuals involved in the complaint). Legal counsel should provide advice as needed, including on any thorny evidentiary or credibility issues which could arise during the investigation.

The investigator should create an initial plan for thoroughly analyzing the actions at issue, ideally in consultation with counsel. Here are some basic steps which may be appropriate for that plan, depending on the facts:

Determination of the appropriate scope of the investigation
Interviews with the complaining party
Interviews with the accused employee
Interviews with other employees and third parties (contractors, outside witnesses, etc.) who may have relevant information
Review of emails, memos, and other relevant communications
Review of the personnel files of the parties (including any prior disciplinary write-ups)
If needed, consideration of how to resolve credibility in assessing conflicting reports
Assessment of whether the initial scope of the investigation needs to be broadened
Action taken to address the concerns raised, potentially including training and discipline, which should be clearly documented
Determination of the form any report should follow

Here are some tips for an appropriate investigation:

Determine the appropriate scope of the investigation; the scope will vary depending upon the allegations and should be reassessed if facts change.
Choose an investigator who has good people skills and judgment. Both will be important in almost every investigation. If you dont have a qualified neutral candidate inside, hire an experienced one from outside. One good resource is the Association of Workplace Investigators .
If the initiation of the investigation is delayed (for example, because the appropriate internal investigator is traveling or the company is searching for an appropriate outside investigator), document the reasons for the delay. The company may need to explain in litigation, possibly years down the road, why it did not begin to investigate immediately.
The investigator should coordinate activities with legal counsel from the outset, so that the company can determine whether the investigation will be privileged. This is especially important for the drafting of memos or notes associated with the investigation.
The investigator should review company policies or procedures in place for dealing with harassment or discrimination. Employee handbooks often include such procedures (for example, they may identify who is responsible for investigating or pertinent timelines), and you dont want to make the situation worse by not following your own articulated policies.
Assure the complaining party at the outset that the complaint will be treated seriously, that there will not be any retaliation for raising it, and that any concerns about retaliation should be brought to the investigators attention immediately so that they can be addressed.
Instruct the accused not to contact the complainant regarding the complaint, and not to engage in conduct that isor even might be viewed asretaliatory. And if the accused violates the instructions (which happens regularly), take action immediately. It is not unusual for an employee or executive to be terminated for violating these instructions in the course of an investigation.
The U.S. Equal Employment Opportunity Commission (EEOC) provides examples of questions that may be helpful in questioning the complainant and other witnesses, as well as other information helpful for the investigation. See Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors .
The investigator needs to keep an open mind when gathering and reviewing information, and to refrain from coming to a conclusion until all relevant data has been reviewed and assessed.
Encourage all involved to maintain the confidentiality needed for a thoughtful investigation while avoiding heavy-handed mandates (which might lead to National Labor Relations Board complaints about the employees abilities to share workplace concerns).
Consider asking the complainant at the conclusion of the interview what he or she hopes will happen as a result of the investigation (one option: how would you like to see the situation resolved?). The company is not required to comply with unreasonable demands, but some requests (for example, a transfer, additional training, time off) may be helpful in resolving the concerns constructively.
Fairness is important. The investigation must be evenhanded, and both be fairand appear to be fairto all involved.

The Guiding Principles for Conducting Workplace Investigations prepared by the Association of Workplace Investigators contains additional helpful advice.

5. Take appropriate action during and after the investigation

A full investigation into sexual harassment or discrimination often takes time, and it may be appropriate for the employer to take immediate steps with respect to the employee who raised the concerns. Protective measures may include, depending on the circumstances, the following;

Placing the alleged wrongdoer on paid or unpaid leave, pending the outcome of the investigation;
Allowing the complainant paid time off during the investigation;
Altering work assignments so that an alleged harasser does not work directly with or supervise the complainant; and
Ensuring that all supervisors understand that retaliation will not be allowed.

Once the investigator reviews all information, and resolves any credibility conflicts to the extent possible, the investigator should attempt to reach a conclusion about the complaint. The investigators conclusions should generally be tied to determination of whether the companys anti-harassment (and any related) policies were violated by the conduct at issue. Harassment policies typically prohibit inappropriate conduct which does not necessarily fall within legal definitions of harassment or discrimination, but which the company nonetheless prohibits. For example, the telling of an inappropriate joke will not typically meet the legal test for harassment, but it may be prohibited by the policy nonetheless.

A finding by the investigator that is tied to legal concepts, such as a conclusion that an employee engaged in discrimination, or that his or her conduct constituted sexual harassment, may not only be inaccurate under applicable legal standards, but may be argued to be an admission of liability in future litigation (even if incorrect). Accordingly, in most cases the appropriate conclusions will be the companys policy was violated; the companys policies were not violated; or based on the evidence, I cannot determine whether the companys policies were violated.

If the company determines that a policy was violated and inappropriate conduct occurred, it should take appropriate disciplinary action. The correct discipline, depending on the severity of the situation, can include warning, counseling, impact on bonus, impact on future compensation increases, suspension, or immediate firing of the wrongdoer. It is important to document the discipline carefully, although specifics about the investigation should not go into personnel files.

The complainant needs to understand that the investigation has been completed, what the results were (for example, that a policy violation occurred, the investigation could not determine whether a policy violation took place, or that the investigation showed that no violation occurred), and that, if applicable, action has been taken to resolve the issue. The company should remedy any inappropriate action taken against the complainant (for example, a performance rating lower than it should have been, unfair compensation treatment, etc.) and consider whether there should also be an apology with the explanation of the changes.

Even in situations in which the investigator concludes no policy violation occurred, the facts may suggest that the workplace would benefit from anti-harassment or discrimination training as well as written reminders of the company policy. And, in many cases, those who behave with bad judgment may need one-on-one training designed to encourage appropriate behavior and spell out clearly the consequences of further questionable actions.

6. If the company doesnt have a well-drafted anti-harassment and anti-discrimination policy, adopt one

Ideally the company already has a carefully drafted anti-harassment and anti-discrimination policy (which is required by some state laws and expected by many jurors). If it doesnt have such a policy, or if the policy doesnt address the issues below in language appropriate to the company culture, the company should adopt one or edit the existing policy.

Helpful policies typically run 2-3 pages in length and samples can be obtained from experienced employment lawyers or HR consultants. A good policy will typically address the following concepts:

The companys zero tolerance for any forms of harassment, discrimination, bullying, or violence in the workplace
The definition of sexual and other types of harassment or discrimination (i.e., that which is based on race, color, religion, national origin, age, disability, etc.)
Examples of conduct constituting prohibited harassment
Rights of the employees to complain about harassment, discrimination, and retaliation, and to whom such complaints should be made (consider making HR the designated recipient of complaints to ensure they are properly handled)
The companys policy to investigate claims
Assurance that the employer will protect the confidentiality of complaints to the extent possible
Strong prohibitions on any retaliatory conduct
The disciplinary actions that may be taken upon determination that the policy has been violated
State and federal remedies available to the employee

The company should distribute the policy, ideally annually, to all employees with a cover email or other communication insisting on its importance and the need for compliance.

7. Cooperate with government agencies

The EEOC strongly advises employers to promptly investigate complaints of harassment or other unfair employment practices. But the EEOC or similar state agencies may conduct their own investigation related to employee claims, typically after the employee files an administrative charge accusing the employer of discrimination. Some background facts about the process can be reviewed at the EEOCs Get The Facts Series: Small Business Information .

If the EEOC or other government agencies do become involved in reviewing a complaint, the company must cooperate. The governmental agency likely will require a response to the complaint and production of relevant documents (typically those related to the personnel actions at issue). The cooperation and document production should be coordinated with legal counsel, as the companys response may lead to action by the agency or cause problems in future litigation.

The EEOC maintains a free, voluntary mediation service which is often available to the parties. If both sides agree to participate, the EEOC will typically delay the due date for the companys written response to the charge. The mediation, a confidential settlement and negotiation process conducted by trained mediators, which usually takes place at the EEOCs offices, can present an early opportunity to resolve the claim. If the agency doesnt offer mediation, it will often agree to conduct one if both parties agree to attend. See the EEOCs Questions and Answers About Mediation .

8. Consider whether the complaint can be resolved through arbitration

If litigation is threatened or filed in court, the company should determine whether any arbitration agreements might apply to the claim. Arbitration has downsides for employers, such as the possible requirement to pay an arbitrators fees (and good arbitrators can be expensive). But it also has powerful upsides, including less public airing of the dispute, typically a faster and less formal process to completion, and a decision maker who mayunlike a jurorbe less likely to have bad employment experiences color his or her decision-making process.

Arbitration provisions may be present in hiring letters, employment agreements, benefit plans, bonus agreements, employee handbooks, and documents created by outside HR providers (Tri-Net, for example, may include arbitration provisions in the documents they provide their clients). Although courts have held that arbitration agreements cannot easily be waived, you dont want to take a chance in waiving the agreement inadvertently.

9. Dont retaliate

The company should ensure that it does not retaliate against a complaining employee (or a witness involved in the investigation), even if the initial complaint proves to be unfounded. Retaliation claims are often more difficult to defend against than harassment or discrimination allegations, in part because jurors tend to believe that those who are falsely accused have a natural motive to strike back. Retaliation can include many negative acts, including:

Termination of employment
Demotion
Change in responsibilities
Disciplinary action
Transfer of the employee to a less desirable location
Compensation or benefits reduction
Change of shift hours or work area
Isolating the employee by leaving them out of company activities
Giving a performance evaluation that is more negative than it should be
Making the employees work more difficult (such as purposefully changing work schedule to conflict with the employees family responsibilities)
Threats to do any of the foregoing

Additionally, courts have held that retaliation protections extend beyond the employment relationship, and a falsely negative post-employment reference can violate anti-retaliation laws. The EEOC gives further guidance on retaliation issues at Questions and Answers: Enforcement Guidance on Retaliation and Related Issues and at Facts About Retaliation .

10. Be careful with texts and email

After an employee lodges a harassment or discrimination allegation, executives often exchange a flurry of emails or texts responding to and attempting to address the problem. This can be extremely problematic in future litigation, as the shock or concern may lead to emotional and negative reactions to the claim. A company may be required to turn over these emails and texts (and any other forms of communications, such as Slack messages and voicemails) in the course of the litigation. These communications can come back to haunt the company, as the plaintiffs counsel will attempt to use these as evidence of the companys bad faith, complicity, or retaliatory motive.

11. Preserve documents

Once a claim is made, its important for the company to put a legal hold in place. This means that any relevant emails, memos, and other documents must be preserved and not deleted or destroyed, in anticipation of potential litigation. Failure to protect these documents (even inadvertent and unintentional destruction through automatic email deletion processes) can lead to punishment from the court. This can include both monetary fines and evidentiary sanctions, which can adversely affect a companys ability to fully defend itself against the claims.

12. Make a claim to your insurance carrier

Many companies have Employment Practices Liability Insurance (EPLI) or riders to insurance policies that may cover sexual harassment or discrimination claims. But its important that the insurer be properly and quickly notified of a claim or else the company runs the risk of denial of coverage.

Notification to the insurer of a claim is best done after the policy has been reviewed by legal counsel and the notification is made by counsel and the insurance broker. Insurers may also insist on approval of any litigation or arbitration counsel, and may put rate restrictions in place. The company will typically need to cooperate with any insurer providing coverage for the claims.

13. Develop a media strategy

With the development of online court dockets, reporters now have access to many litigation filings. A newly filed lawsuit will soon appear on an online court site visible to the press, and the media (which scours the filings for lawsuits of interest) may begin to report very quicklypossibly even before the company has been served with it.

If the company does not have an experienced spokesperson, such as a communications or PR director, the company will need to get its media house in order. Because the plaintiff may seek to rely upon the companys statements to the press or employees to show bad faith or malice (or possibly defamation), these must be carefully drafted, reviewed, and re-reviewed.

14. Assess the impact

There may be many collateral consequences for a company facing claims of harassment or discrimination. The companys CEO, Board of Directors, and outside counsel should carefully consider the issues in a collaborative manner throughout the claims process. Examples of those issues include:

Is the claim a one-off allegation or are there more claims that can, and likely will, be made?
Does the claim reflect a cultural problem at the company? If so, how should it be addressed? Would training be helpful?
How will third partiesincluding customers, recruits, and vendorsreact if the claim becomes public? (In the Harvey Weinstein sexual harassment situation, many parties severed their contracts and relationships with the Weinstein Co., leaving the company in a difficult position.)
Is it best to attempt a quick settlement with the complainant on reasonable terms? If that occurs, will that resolve all issues?
If the matter heads to litigation or arbitration, what legal fees and costs are expected to be incurred?
Will the companys insurer participate in any litigation defense or settlement?
If the company is in the midst of fund-raising for its business from venture capitalists or other investors, will the claim need to be disclosed? What specifically should be disclosed, and when?
If the company is in the midst of M&A discussions to sell itself, must it disclose the claim to the prospective buyer?
Were any executive officers aware of ongoing harassment or discrimination and did they fail to act? How should any such failings be addressed?
If the company is competing to hire employees, how will questions about any publicity be addressed in the recruitment process?
What communications should be made to employees if the complaint becomes public?

The issue of communications to employees can be particularly sensitive and tricky. Issues of confidentiality, employee morale, and company liability may all be impacted by the communication.

Here is an example of an employee communication from the CEO of Amazon , after the press reported on a sexual harassment complaint against the head of Amazon Studios:

Team,

The news coming out of Hollywood over the past week has been shocking and disturbingand unfortunately we are a part of it. Its sad and very disappointing to me.

Amazon does not tolerate harassment or abuse of our employees or our business partners. If a concern is brought to our attention, we investigate it quickly and thoroughly. Sometimes we will hire an outside investigator to ensure impartiality. Id like to emphasize, that at any time, if you have any concerns related to harassment or abuse at Amazon, please immediately report the incident to your manager, your HR business partner, the legal department, or the Amazon Ethics Hotline ...

I recognize that you may have questions as a result of the recent media reporting, but please understand that we cannot discuss the specifics of investigations that we conduct regarding the behavior of individual employees. As you know, Roy Price is on leave of absence for an indefinite period of time. I want to thank Albert for stepping up in the interim to lead the org. We are also reviewing our options with the two projects we have with The Weinstein Co. The team is moving as quickly as possible to close on a resolution.

I remain incredibly optimistic about the future of Amazon Studios and what we have planned in FY-18 and beyond. We need to ensure that our focus remains on our customers, and that we are executing on their behalf. Thank you for your dedication and commitment to our creators and talent, who are making some of the very best content available on TV and in theaters all over the world.

As always, please feel free to contact me with any questions or concerns.

Jeff

15. If you settle, include these provisions in a settlement agreement

If the company decides to settle the sexual harassment or discrimination claim, its important to have in place a well-drafted and legally enforceable Settlement Agreement. The key terms of such agreements typically include:

The consideration payable to the complaining party (all cash up front? installments payable over time? reimbursement of COBRA costs? non-monetary terms, like recommendation letters?)
Whether the complaining party continues employment or resigns, and, if so, when
A complete release and waiver of all claims, known and unknown, against the company and its officers, employees, directors, shareholders, and agents (note that in California and certain other states, prescribed statutory language is necessary to validly waive unknown claims)
Any obligation of the complaining party to keep the terms of the Settlement Agreement confidential
An obligation of the complaining party from future disparagement about the employer and its officers, directors, shareholders, employees, and agents
A covenant of the complaining party to never sue or bring any action related to the claims released
The method for resolution of any disputes under the Settlement Agreement (the company will often elect for such disputes to be handled exclusively through confidential binding arbitration)
An integration clause stating that the Settlement Agreement represents the entire understanding and agreement of the parties, and supersedes any prior or contemporaneous understanding or agreement of the parties with respect to the subject matter of the Settlement Agreement
A disclaimer of any liability or admission by the company with respect to the underlying allegations
If litigation has been filed, a provision for dismissal and withdrawal of claims with prejudice (so that a similar claim can never be filed again)
A statement that the agreement does not waive claims that cannot be waived as a matter of law
The employees waiver of any right to future employment with the employer or its affiliates

Conclusion

How a company reacts to a complaint of harassment or discrimination significantly impacts the legal exposure, disruption, effect on the companys reputation, length of the dispute, and costs incurred. The proper response to the issues discussed in this article will be heavily fact dependent. Accordingly, some of the advice herein may not apply to a particular situation and different guidance may be appropriate. But by considering the circumstances carefully and taking thoughtful and appropriate action when confronted with claims of sexual harassment or discrimination, the company can mitigate the liability and other negative impacts on its business.