Avoiding A Time Bomb: Sexual Harassment

From videos to Web sites, new resources are available for small businesses

Like most companies its size, J.D.A. Professional Services Inc., a 60-person, high-tech headhunting firm in Houston, had no sexual-harassment policy two years ago when recruiter Rachel Thompson complained that a male co-worker in the next cubicle--the firm's top producer-- had made allegedly offensive comments. The colleague denied it, but owner James Del Monte moved Thompson to the other side of the 30-by-30-foot office anyway. That was still too close for Thompson, and she eventually left the company.

The messy confrontation convinced Del Monte he needed to take some precautions. So in late 1995, he shelled out a hefty $15,000 fee for a human-resources consultant to do a top-to-bottom review of all the company's employment policies. The consultant also provided sexual-harassment training and developed a plan for formal handling of harassment complaints. "It's like buying insurance," Del Monte says. "It's always too expensive--until you need it."

"WHIPLASH OF THE '90s." These days, business owners who fail to deal with the issue of sexual harassment are running big risks. Companies of all sizes increasingly face lawsuits, lawyers say. Since Anita Hill testified in 1991, complaints to the Equal Employment Opportunity Commission have more than doubled, to 15,342 in 1996. Unfortunately, many are frivolous; last year the EEOC found "no reasonable cause" for action in 38.8% of cases. Management lawyers say it has become common for terminated employees to fire back with sexual-harassment claims. "Some people call it the whiplash of the 1990s," quips Nancy E. Pritikin, a management lawyer at San Francisco-based Littler Mendelson. And small businesses are more vulnerable to "these after-thought claims," she says, because they have fewer formal procedures.

While some forms of sexual harassment are obvious--a demand for sexual favors, for instance--the law defines it as any "unwelcome sexual conduct" that creates a "hostile work environment."

That leaves room for interpretation that could prove fatal, even to a company as large as California Acrylic Industries Inc. Despite $125 million in sales, the Pomona (Calif.) hot-tub maker was so debt-laden that its net worth stood at just $5.9 million when it was hit with a $1 million sexual-harassment verdict in 1993. The company was saved only because a court cut the award to $350,000, says Mary Maloney Roberts, Acrylic's Oakland (Calif.) lawyer. Fear of crippling verdicts propels most small companies into settlement talks long before trial, says Roberts, even if they're convinced the allegations are baseless.

In the hothouse climate of a small company, the damage of a harassment complaint goes beyond litigation risk. Once an allegation is aired, it may be impossible for the people involved to get far enough away to co-exist.

Susan W. Brecher, director of Cornell University's EEO studies program, who conducts sexual-harassment training, points to a recent effort at mediation in a 25-employee communications company as typical. The dispute involved one of the partners and a young woman who claimed he had made inappropriate comments. Once, she said, he had pinned her against a wall. The partner denied the charges but agreed to stay away from her--then broke his agreement. Brecher can't think of how to resolve the problem since the woman still deals with the same partner. "She really needs to look for another job," she says. In such a situation, Brecher says she often suggests a buyout, which gives the worker something and protects the company against a suit later.

OFFENSIVE CONDUCT. Without a human-resources department to set an institutional tone, the small-business owner personally signals what's acceptable. The moxie it takes to launch a company can take an ugly twist, say lawyers who represent harassment victims. "Some small-business owners think, hey, it's my company, I can do whatever I want," says Margaret A. Harris of Houston's Butler & Harris. How bad can it get? Harris cites a 1994 case she brought against Houston's Medical Care Ambulance Service Inc. The owner, Jonathan N. Lee Jr., told his female employees that he wanted them to wear short skirts so he could "see some leg" and insisted a job applicant pull her dress to her upper thigh and sit with her legs spread, according to the complaint. Harris sought $450,000 in damages; the case was settled for an undisclosed sum. Through his lawyer, Lee denies the harassment occurred and declines comment.

On the other hand, contact with employees can allow a business owner to discover a problem and nip it in the bud. In her days as an employee, Boston-based civil engineer Judith Nitsch saw how to effectively react to offensive conduct. The same day her firm's chief engineer heard of a harassing remark, he sent a memo to all 35 employees that such conduct wouldn't be tolerated. It stopped.

When Nitsch opened her own firm in 1989, which now has 54 employees and $3.6 million in annual revenues, she also took a hard line. She not only created a sexual-harassment policy but also named a male and a female employee to whom workers can report complaints directly. She says this has worked well.

You don't have to spend thousands of dollars to take the kind of preventive steps Nitsch and Del Monte did. At Rare Medium Inc., a 36-person, Manhattan-based firm that creates interactive Web advertising, President Glenn S. Meyers created his "zero tolerance" policy himself. He mined Internet sites such as the American Civil Liberties Union's Web site (www.aclu.org). There are also software programs retailing for less than $100 that can help create a manual, such as Employee Manual Maker 3.0 by JIAN Tools for Sale Inc. in Mountain View, Calif. The program, designed for companies with 100 or fewer employees, also has a sexual-harassment questionnaire and discussion guide. Cheaper still, try networking with other companies and cutting and pasting from their policies.

After developing a policy, you should begin training. Brumberg Publications Inc., of Brookline, Mass., sells a $95 training video aimed at companies with 15 or fewer employees. In February, Open Interactive Media of New York came out with a $425 interactive CD-ROM about harassment for supervisors at companies with less than 100 employees. There's even a board game on employment law available from the Littler Mendelson law firm that teaches managers how to address sticky situations (table). At $99, it costs a lot less than an hour of a lawyer's time.

Ultimately, however, the best defense isn't a board game, video, or strongly worded policy. To talk the talk, experts say, the boss must walk the walk. "If the senior people behave appropriately, that's the message that's communicated, irrespective of what's in the policy," says training consultant Lynn Revo-Cohen. Best of all, it doesn't cost a thing.