#MeToo: legal and practical concerns for companies and boards
September 2019 | SPOTLIGHT | LABOUR & EMPLOYMENT
Financier Worldwide Magazine
September 2019 Issue
The #MeToo era is not only a cultural phenomenon, but also represents significant potential liability exposure to companies of all sizes, as well as risk to reputation and employee morale. Keep in mind that #MeToo is not necessarily about increased incidents of harassment and discrimination in the workplace, but rather the increased reporting of complaints, both current and historical.
Allegations involving gender – and specifically sexual harassment and sexual assault – require a thoughtful, and at times, delicate approach. It is important for companies and their counsel to know how to handle these issues promptly, thoroughly and effectively in order to mitigate risk to the organisation.
Compliance and prevention: avoiding the problem at the outset
The best way to deal with #MeToo-related issues is to avoid them altogether. Strong policies, corporate culture, employee and manager trainings, and compliance programmes are effective prevention tools.
Effective compliance and prevention programmes are multifaceted and regularly updated. For instance, most organisations require employees to go through anti-harassment training during onboarding, but not all have continual training through an employee’s tenure. Annual trainings and compliance certifications go a long way toward keeping harassment and discrimination issues at the forefront of employees’ minds. In addition to general employee trainings, companies should pay particular focus to training managers and supervisors.
Not only can companies be strictly liable for harassment or discrimination committed by supervisors, supervisors are the eyes and ears of the organisation – they exhibit and enforce corporate culture and are often the first people to whom employees make reports of inappropriate behaviour. Their initial handling of those reports can greatly increase or decrease the company’s potential exposure.
Even the gold-standard compliance and prevention programme cannot always prevent every instance of harassment or discrimination. If faced with an allegation, companies should keep the following issues in mind.
Document and evidence preservation
Ensure documents and other potential evidence are retained. A legal hold is a logical starting point, but issuing the hold is not enough. Companies should ensure that any potential email, text messages, social media and other data are retained, whether by taking an image of the account or journalling. Also, consider what other sources of evidence may exist.
#MeToo-related allegations are often ‘he said, she said’ situations, with little direct proof either way. Companies should think creatively about other ways to substantiate or discredit allegations. For example, if the alleged incident occurred at a hotel, review hotel folios, surveillance footage and expense reports.
Documentation of the investigation and decision making is paramount. This includes documentation of any witness interviews, copies of all correspondence and documentation of any decisions made, and the reasons supporting those decisions. This helps on both fronts – if the accuser alleges the company failed to take action or in response to a claim by the accused for wrongful termination.
Maintain appropriate communication with the accuser
Accusers often bring lawsuits or administrative actions when they feel their allegation was not sufficiently investigated or they were not kept up-to-date on the status of the investigation. Keeping the accuser informed of how their complaint is being handled is important.
Retaliation against the individual who made the complaint, and those who participated in the investigation, provides an independent potential risk for employers facing a #MeToo allegation. Employers should ensure managers and those with day-to-day supervision over the accuser and participants are instructed in clear and plain terms that retaliation is prohibited and will not be tolerated.
Employers should also consider following up with the complainant and participants after the conclusion of the investigation to ensure they are not experiencing retaliation. The benefits of doing so are twofold. First, it allows the company to be proactive in ensuring retaliation is not occurring, and if so, allowing for prompt remediation. Second, it protects against future retaliation claims by demonstrating that employees had the opportunity to notify the company of retaliation and failed to do so, making their contentions less credible.
Consider whether interim protective measures are necessary
Consider whether interim protective measures are necessary, even before an investigation is undertaken in earnest. Once on notice, employers have a legal obligation to take reasonable steps to end the alleged harassment or discrimination and stop it from happening in the future. When the complainant is a subordinate of the accused, it may require temporarily moving one or both individuals to avoid contact with one another. Other options include placing the accused on paid administrative leave and prohibiting the accused from having any contact with the accuser.
Reputational risk concerns
Consider whether a defensive public relations strategy is necessary. When the misconduct alleged is sufficiently serious or the accused is a high-ranking corporate official, employers may want to consider developing a public relations standby plan in the event the matter becomes public. This avoids a situation where press inquiries are made on short deadlines and the company is unable to comment and influence the public narrative.
Thoroughly and promptly investigating the complaint
Investigations serve several purposes. Not only are they required once the company is on notice of a potential issue, they also display and reinforce the company’s commitment to a harassment and discrimination-free workplace. They also demonstrate respect for all parties involved – to the accuser, that the company takes the issue seriously and supports them, and to the accused, that there is a fair and unbiased process in place to protect their rights in case the allegation turns out to be unsubstantiated.
The first step to any investigation takes place before it even starts: deciding what scope of investigation is appropriate. The scope of an investigation is based on several factors, including the seriousness of the allegation – e.g., an inappropriate poster on someone’s office wall versus sexual assault – the reporting relationship between the accuser and accused, and the level of seniority of the accused. For instance, if the accused is a senior executive, it may be better to engage outside counsel to conduct an independent investigation to avoid any potential arguments that the investigation was biased in favour of the higher-ranking official.
In addition to scope, companies should be thoughtful about the makeup of the investigative team. Especially where the investigation involves highly-sensitive and inflammatory allegations, such as sexual assault, employers should consider who is in the best position to conduct the investigation, taking into account issues such as gender, age and seniority within the organisation. For instance, a young, female entry-level accountant may be less inclined to be forthright and open when being interviewed by a high-ranking male company official.
Throughout the investigation, it is important to keep in mind issues of attorney-client privilege. To the extent possible, companies will want to maintain attorney-client privilege over the investigation, including witness interviews conducted. Although employers may decide to waive privilege at a later point, such as to argue that they took appropriate remediation in response to the allegation, the failure to ensure the privilege is maintained at the outset will leave the company without any meaningful choice.
Finally, the goal of the investigation should be kept at the forefront of the investigation team’s mind. The goal of the investigation is not to determine whether the accused is guilty beyond a reasonable doubt. Rather, it is to determine, in good faith, whether the allegation is credible, and if so, what the appropriate corrective action should be. Companies, however, are not law enforcement or forensic investigators, although referrals to law enforcement authorities may be warranted in some situations.
Law enforcement issues
If the allegation involves a crime, such as sexual assault, or the accuser has made a criminal complaint, it may be necessary for the company to interface with law enforcement.
It is important in such situations to be as cooperative as possible with law enforcement, while keeping in mind employee confidentiality and privacy concerns. Law enforcement can also be a helpful tool to the organisation’s investigation – for instance, law enforcement may be able to obtain evidence that a company would not otherwise be able to obtain. A prime example is video surveillance of hotels and restaurants. These businesses are typically reluctant to turn over copies of surveillance footage to a company without a subpoena, but are often willing or required to provide tapes to law enforcement.
Insurance coverage issues
Many employment practices liability insurance (EPLI) policies provide coverage for sexual harassment claims, but there can be nuances. For instance, criminal conduct and bodily injury are typically excluded from coverage under EPLI policies. However, bodily injury may be covered under another corporate policy, such as general liability.
Companies should put carriers on notice of a potential claim as early as possible to ensure coverage. Moreover, many policies cover investigation and defence costs, but typically only on a go-forward basis after notice of a claim is made.
It is worthwhile to dialogue with the various carriers and policy brokers to fully understand what is and is not covered by different policies. Often, aspects of #MeToo-related claims can fall under different policies, and it is important for companies to dialogue with carriers to fully understand what each policy is willing to contribute to investigation, defence and judgement-related costs. Before selecting outside counsel, companies should review their EPLI policies as they sometimes mandate the use of carrier-approved outside counsel.
In sum, #MeToo-related claims are increasingly becoming a circumstance that many corporations and their executives and boards must address. Taking appropriate steps to mitigate the occurrence and consequences of these claims should be a high priority for every business.
Christine M. Bowman and Howard S. Suskin are partners at Jenner & Block. Ms Bowman can be contacted on +1 (312) 840 7219 or by email: firstname.lastname@example.org. Mr Suskin can be contacted on +1 (312) 923 2604 or by email: email@example.com.
© Financier Worldwide
Christine M. Bowman and Howard S. Suskin
Jenner & Block