Sunday, June 5, 2011

Avoid a $290k Hit to Your P&L By Paying Less Than $1,000 for Sexual Harassment Prevention

In the local news this week (and all over the web) was this report:

Local Franchise to Pay $290,000 to Settle EEOC Sexual Harassment Lawsuit

Teens Among Victims of Store Supervisor's Abuse, Federal Agency Charged

According to the EEOC, the manager engaged in unwanted touching and hugging and made lewd sexual comments to the female employees.  The EEOC argued that the owner allowed the manager's illegal conduct to continue even after two employees had complained about it a year before.  The manager was finally fired after the employees reported his conduct to the police and he was arrested.  The EEOC filed suit after first attempting to reach a pre-litigation settlement through its conciliation process.

In addition to paying $290,000 to the former employees, the company will be bound by a six-year consent decree enjoining it from engaging in further discrimination or retaliation.  The decree calls for the appointment of an equal employment opportunity coordinator and training for all employees and managers on sexual harassment prevention.  The company will issue a letter of apology to the women; revise its anti-discrimination policies and complaint procedures; post a notice to employees about the resolution of the lawsuit; and never re-hire the manager responsible for the harassment.

Rather than walk you through the whys and wherefores of my standard Sexual Harassment Awareness and Prevention spiel, I'm going to bottom-line it for you:  investing about $1,000 or less to proactively have a qualified HR and/or Legal Subject-Matter Expert (internal or external to your organization) to:
  • Ensure that your anti-discrimination policies and complaint procedures exist and are compliant with state and federal law;
  • Train your employees and managers annually on sexual harassment prevention and document it;
  • Take violators of your compliant anti-discrimination policies and complaint procedures through a progressive discipline (and if warranted) termination process;
will save you the $290,000 the above-mentioned franchise owner will now have to pay as the EEOC settlement.  That doesn't include the lingering cost of the reputational damage inflicted by the negative publicity of the compliance violations.

A $290,000 settlement is a huge bite out of an annual small-business P&L such as a franchise store:  in this tight commercial lending environment, unless the owner has a large cash reserve, that large a settlement can effectively shut down a small business.

In contrast:  $1,000 or less invested proactively in Sexual Harassment policy compliance, training, discipline and prevention by a qualified internal or external HR SME is a much smaller bite of a small-business P&L, and will pay off in positive legal and reputational dividends for years to come.

Pink donut with a bite missing

Pink donut with a bite missing (clipped to

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