From the July 1997 issue of Entrepreneur

Despite all the media attention devoted to sexual harassment, some are not getting the message. Lawsuits over sexual harassment are still on the rise. When the White Plains, New York, law firm Jackson, Lewis, Schnitzler & Krupman surveyed 850 human resources specialists
in 1995, 92 percent reported that their company had handled a sexual harassment claim in 1995, up from 62 percent the year before. Small businesses are especially vulnerable because the informal office atmosphere may seem to allow sexual banter and innuendos, and a small business is less likely to have an official sexual harassment policy and training program. But be sure you and your staff understand what sexual harassment is, what it isn't, and how to stay out of trouble.

The law is still developing in such areas as same-sex harassment, female-to-male harassment, what constitutes a "hostile environment," and just who can be held liable. Basically, though, charges of sexual harassment are based on the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of gender. (Many states have similarly worded anti-discrimination laws.) After a string of pioneering cases in the mid-1970s and 1980s, the Equal Employment Opportunity Commission (EEOC) issued definitions and guidelines to clarify what constitutes sexual harassment.

According to the EEOC, sexual harassment consists of "unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature." The key word is "unwelcome," a term being hotly debated in the courts. Those who claim they've been harassed must show the conduct was unsolicited, undesirable or offensive, even if they didn't demand that it stop. Employees who participate in sexual banter or encourage the advances of a co-worker will have a harder time proving their cases in court.

The EEOC recognizes two types of sexual harassment. The more blatant is quid pro quo harassment, in which an employer or supervisor offers a promotion in exchange for sexual favors or threatens termination if refused. More subtle is a sexually charged "hostile environment" that hurts an employee's job performance. It might involve unwelcome sexual advances, gender-related verbal abuse, pornography, hugs and back rubs or sexually explicit jokes in a pattern pervasive enough to change the conditions of employment. To prevail in court, the employee must have indicated the conduct was offensive.

"A lot of managers do not understand that just because one employee doesn't consider it offensive doesn't mean it's not a hostile environment for others," says Debra J. Cohen,
professor of management at George Washington University in Washington, DC. What seems like good fun to one person might be distressing to another.

Although an employee bringing suit over sexual harassment typically names both the individual and the company, the plaintiff's lawyers don't expend much effort going after the individual, who is not likely to be able to pay much. But for employers, failing to take action against the harasser can make them liable. "One way you can cut off your liability when one co-worker harasses another is to investigate immediately and fire the [harasser]," says J. Miles Gibson, an employment law attorney in Columbus, Ohio. Gibson says if the harasser is the employee's supervisor, though, a court is more likely to hold the company and supervisor jointly liable even if no one knew about it.

Recent court cases have expanded the definition of sexual harassment beyond a man's unwelcome sexual
advances toward a woman. In
November 1995, a federal court awarded $237,257 to a married man who managed a pizza store in Florida and was fired after rebuffing blatant sexual advances from his female supervisor. In August 1995, a U.S. District Court in Tennessee awarded nearly $1.7 million to a bookstore worker who claimed he was forced to quit his job because of continual harassment from his homosexual supervisor. In 1994, an Ohio appellate court upheld an award of $386,235 to a highly educated female information specialist after the company vice president repeatedly shouted at her and threatened her. Although the executive did not make sexual advances, his tirades tied in her gender, creating a "sexually abusive, hostile work environment."

Watch your step

To stay out of trouble, begin by watching your own behavior. Since a disgruntled employee may charge you with sexual harassment just to get even, make sure the charge would be completely groundless.

Don't touch your employees without permission.

Don't demean people, especially with reference to their gender.

Don't treat employees as potential dates.

Don't get romantically involved with someone you supervise. "Nothing good can come of it," Gibson says. "If anything bad happens to the relationship, it's an automatic cause of action. The employee will say `I only did it to get promoted.' "

Don't make suggestive comments in the workplace.

Watch your language; cursing and bawdy humor is distressing enough to some people to count as sexual harassment.

Compliment without innuendo. It's fine to say a new outfit looks nice, but don't say it with a wink or a comment on how well the pants fit.

As much as possible, keep your office door open if your employee is a member of the opposite sex (or the same sex if one of you is homosexual). If you expect trouble, bring a witness who is the same sex as the employee.

Setting The Rules

If you don't have a sexual harassment policy, write one. Define harassment, state that the company won't tolerate it, and tell employees what to do if they're harassed. Then make sure everyone understands the policy, and set a tone that makes it clear you take it seriously. "You need to say it's appropriate to blow the whistle on someone," Cohen says.

The policy should include a procedure for reporting sexual harassment complaints to avoid having unfounded accusations crop up months after someone leaves the job. "Tell employees that if they're going to complain, they have to do it in writing," Gibson says. "That makes it easier to defend yourself." Also, give an option other than reporting to the employee's supervisor, who may be the harasser.

Know what's going on in your office. Notice the posters and listen to the talk. "Be proactive rather than waiting for problems," Cohen says. Try an anonymous survey to see if your employees think their co-workers are out of line.

If a complaint arises, take it seriously. Interview the victim, the alleged harasser and any witnesses. (To avoid charges of defamation, use open-ended questions about inappropriate behavior, which encourage the witness to volunteer names.) Keep a record of what's said. Evaluate and take action, such as giving the perpetrator a written warning, and tell the complaining party what you did. Follow up to make sure the conduct has stopped. After all, running a business is difficult enough without employees harassing each other.