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Weinstein revelations highlight sexual harassment risks

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The travails of film producer Harvey Weinstein, who resigned from his position as co-chairman of the Weinstein Co. after numerous charges of alleged sexual harassment came to light, could lead to litigation against other companies as well, say experts.

Some also say that in the 26 years since the Anita Hill-Clarence Thomas nomination hearings, in which the future U.S. Supreme Court Justice was confirmed despite charges of sexual harassment, the Weinstein situation illustrates too little has changed.

Reports last week indicated the New York-based Weinstein Co. is exploring a sale or shutdown after firing Mr. Weinstein following the revelation of numerous accusations of sexual assault and harassment against him.

Observers note the latest sexual harassment scandal follows on the heels of several others, including those involving Fox News, Uber Technologies Inc., and various Silicon Valley-based firms.

“If these haven’t been wake-up calls for companies large and small, I don’t know what will be,” said Eric B. Meyer, a partner with Dilworth Paxson L.L.P. in Philadelphia.

Experts say the way to avoid problems is to encourage a “top down” culture in which even top executives and performers are expected to act appropriately.

“I think the lesson really is, no matter who in an organization is involved … you can’t bury your head in the sand like an ostrich and just ignore it,” said Jonathan T. Hyman, a partner with Meyers, Roman, Friedberg & Lewis in Cleveland.

Referring to reports that Mr. Weinstein had settled a number of sexual harassment charges in the past, Mr. Hyman said if board members see large checks going out, “maybe you should ask somebody why we’re cutting so-and-so a $100,000 check — and if you don’t have the answer, maybe you have an obligation to get to the bottom of what’s going on.”

There was “so much smoke, it’s hard to believe any one besides Harvey didn’t know what was going on,” said Mr. Hyman.

Mr. Hyman said that in addition to potential violations of Title VII of the Civil Rights Act of 1964 stemming from charges made by employees against Mr. Weinstein, there are also charges being made by nonemployees.

“If I were a board member, I’d be really nervous” about investors suing the company for breach of their fiduciary obligations, Mr. Hyman said.

He pointed to litigation filed by shareholders of Los Angeles-based American Apparel Inc., which faced shareholder lawsuits after its former chairman, Dov Charney, was fired for allegedly misusing funds and allowing the posting on the internet of nude photos of a former female employee who had accused him of sexual harassment. 

The Weinstein publicity will lead to lawsuits filed against other employers, say experts.

“I think we’ll see a trickle down, where people will start to see these claims more,” in part because the case is “very high profile,” said Mr. Hyman.

The case “probably demonstrates that there’s still a significant problem with harassment and gender discrimination in the upper management of many large companies,” said Paul E. Starkman, a member of law firm Clark Hill P.L.C. in Chicago.

It shows there are company leaders who “believe that the rules regarding harassment or discrimination don’t apply to them,” said Mr. Starkman.

“There needs to be additional training,” he said. Boards of directors and major shareholders “need to recognize that this is an issue, and the fact that the person has increased the bottom line and met financial goals does not mean that they’re filling all their responsibilities as leaders, because you cannot have subordinates” in the human resources or legal departments “trying to tell CEOs and owners of companies what they can and cannot do.”

“They can try, but it’s often a recipe for a quick exit out of the organization, so it has to come from the people who have influence on the top-level decision-makers, and then it needs to be carried through in terms of training and oversight down the organization,” Mr. Starkman said.

Sarah E. Flotte, a partner with Michael Best & Friedrich L.L.P. in Chicago, said executives should be aware they may be held personally liable for sexual harassment.

“One hook that I often use with clients who say ‘the CEO or someone in a position of power isn’t going to listen to me’ is to remind those individuals in power that there’s personal liability associated with sexual harassment claims in many states,” she said.

Charges against everyone should be investigated, say observers. Even if it is against someone in the C-suite, “someone with whom the buck is supposed to stop,” complaints should be addressed, said Mr. Meyer.

It is important that firms have a “top-down culture of zero tolerance to keep the workplace free of any harassment,” said Amy Epstein Gluck, a partner with FisherBroyles L.L.P. in Washington.

“There’s no substitute for having that culture of equality and no tolerance for any kind” of harassment, she said. “And it’s important not just women report it.” The onus should not be just on them to report these issues, she said.

The situation is likely to lead to an uptick in training among other firms, Mr. Meyer said. “This is an important issue that maybe hasn’t been addressed as much as it should have been,” he said.

“I’m certainly talking to my clients about ‘when was the last time you did harassment training?’” said Mr. Hyman.

“You need to have a clear, well-defined policy and complaint-and-investigation procedure,” Ms. Gluck said.

“I think we will probably deal with this issue for a very long time, which is just another reason why employers need to have their policies in place” and to take them seriously, she said.

Martha J. Zackin, a partner with Bello/Welsh L.L.P. in Boston, said she is concerned this situation will lead more firms to follow the “so-called Pence rule.”

 She noted that Vice President Mike Pence has made it publicly known he will not attend a dinner alone with a woman or any event where alcohol is served without his wife’s presence.

The reaction to the Weinstein case “could be that men are going to be less willing to be mentors and to work with women on a one-on-one basis, which is how men get a lot of help — by being mentored and having good, substantive discussions. But those don’t tend to happen in the workplace,” she said.

“It could end up really limiting networking and mentoring opportunities for women, more than they’re already limited,” she said.