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Harassment claims set to increase

Posted On: Nov. 6, 2017 12:00 AM CST

Harassment claims set to increase

Other companies are likely to continue to feel the fallout from the problems of film producer Harvey Weinstein, who resigned from his position as co-chairman of the Weinstein Co. last month after numerous allegations of sexual harassment and assault were revealed.

The Weinstein incident has led to a deluge of sexual harassment complaints from women in many industries.

Fidelity Investments, Fox News, Uber Technologies Inc. and various Silicon Valley-based firms are among those that have been accused of tolerating a culture of sexual harassment.

In addition, New York Attorney General Eric G. Schneiderman announced a civil rights investigation into Mr. Weinstein’s former firm.

“As more of these high-profile cases come to light,” it will “embolden women to come forward, too, in other companies,” said Paul E. Starkman, a member of law firm Clark Hill P.L.C. in Chicago.

The allegations came after years of decline in the number of sexual harassment charges filed with the U.S. Equal Employment Opportunity Commission.

Some question, however, whether the Weinstein incident will ultimately lead to any significant change.

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 (see related story).

“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 at least eight 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 anyone besides Harvey didn’t know what was going on,” said Mr. Hyman.

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, Mr. Hyman said.

“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.

Private companies can also be sued by their shareholders and others.

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

“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.

Sara 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.

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 (mentoring meetings) 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.