A Guide to Understanding Employer Liability in Workplace Harassment Situations

Workplace harassment is one of the most significant legal risks facing any business today.

And yet… that doesn't stop employers from blindly waiting for a harassment complaint to land on their desk before suddenly caring about liability.

Here's the thing. Harassment complaint procedures aren't optional anymore.

The Equal Employment Opportunity Commission ("EEOC") received 31,354 total harassment charges in FY2023 — up over 47% from FY2021. And employers repaid a whopping $202.2 million in monetary recoveries for harassment charges in FY2023 alone.

The financial and reputational stakes have never been higher.

Not sure why harassment complaint procedures are so important? Or what a business can — or should — be doing about them? Let's break it down…

Here's What You'll Learn:

• What Is Employer Liability in Workplace Harassment?
• When Does an Employer Become Liable?
• How Harassment Complaint Procedures Protect Employers
• The Investigation Stage and Employer Liability
• Recommended Steps Every Employer Should Take Now

Employer Liability: Harassment at Work

What Is Employer Liability in Workplace Harassment?

Employer liability means legal responsibility for harassment that occurs in the workplace. Simple as that.

The tricky part is employers don't actually need to participate in harassment to be liable for it. In many instances, employers can be severely exposed for doing nothing at all.

Under federal harassment laws, employers can be held liable for harassment from supervisors, co-workers, and even third parties like contractors or customers under certain circumstances. When defending sexual harassment at work cases in Los Angeles and employees across the country, employers overwhelmingly failed to do one thing:

Have harassment complaint procedures they actually enforced.

If written, communicated, and consistently enforced anti-harassment procedures for handling complaints are in place… great. That's the first and most critical step towards protecting against liability.

When Does an Employer Become Liable?

It depends.

When a supervisor harasses an employee, liability attaches to the employer automatically if the harassment results in a tangible employment action (i.e., termination, demotion, failure to promote, etc.). If the supervisor created a hostile work environment without precipitating a tangible employment action, the employer may avoid liability by demonstrating:

• That it took reasonable steps to prevent and promptly correct any harassing behavior; and
• That the complaining employee unreasonably failed to take advantage of any available complaint procedure.

Since harassment can come from anyone, including non-employees, it's important to understand how harassment liability applies if someone other than a supervisor makes an employee's life miserable.

If a co-worker or non-employee harasses an employee, the employer can be liable only if it was aware (or should have been aware) of the harassment, and failed to take immediate and appropriate corrective action.

23% of employed people across the globe have experienced violence or harassment in the workplace at least once, according to an international survey conducted by ILO and Gallup. That's nearly 750 million employees.

What happens if a business becomes the next harassment statistic?

How Harassment Complaint Procedures Protect Employers

Here's where it gets even more important…

Anti-harassment complaint procedures serve a dual purpose. Not only do they prevent ongoing harm to employees, but they also minimize legal exposure for employers.

How do you build a strong complaint procedure? Start with these five parts:

• A clearly written harassment policy that all employees must acknowledge receipt of
• Multiple avenues for reporting harassment
• Confidentiality for employees who make complaints
• A formalized investigation process with designated timelines
• Anti-retaliation provisions for those who complain and/or participate in an investigation

49% of employees say they would not report harassment if they did not have access to anonymous channels or feared retaliation. If a harassment complaint procedure isn't fully accessible and safe for employees to use… it's not working.

Employers that can prove an employee didn't feel comfortable using the available complaint procedure will almost always have a stronger defense in court. Employers that can't prove it will always struggle to defend themselves.

This Is Why Investigations Are Important

Once a complaint is received, the importance of properly handling harassment allegations cannot be overstated.

Employers who take too long to respond — or worse, ignore complaints completely — are asking for serious liability. That's what judges and juries zero in on when they're asked to assess liability and determine damage awards.

There are five things an employer should do during an investigation. Don't miss any of them:

• Begin investigating immediately once notice of a complaint is received
• Have someone OTHER than the accused harasser conduct the investigation
• Interview all relevant parties, especially witnesses
• Document everything that happens during the investigation
• Provide a written report of findings with corrective actions identified

Skip any of these steps at the organization's own peril.

Recommended Steps Every Employer Should Take Right Now

Understanding harassment liability is great. Taking action to actually protect a business is better.

Employers that take a proactive approach to harassment complaints reduce their risk dramatically. Employers who only act after a harassment complaint is received consistently face less favorable outcomes and pay larger settlements.

Here are the big ones:

• Audit the policy. Does the anti-harassment policy need refreshing? Is it written in plain language that all employees can understand? Review the policy as soon as possible.
• Train, train, train. Harassment training isn't a one-time event. It's an ongoing process that should be integrated into the employee handbook and reinforced regularly.
• Provide alternative reporting channels. Employees must have a reasonable way to report harassment without having to go to their supervisor first. Ideally, there should be multiple reporting channels.
• Take complaints seriously. All complaints should be acknowledged immediately and put into the investigation queue without delay. No complaint should be ignored or stalled.
• Document, document, document. When a harassment complaint is received, document every step taken to investigate and resolve it.

This isn't brain surgery. Implement these procedures and the business is doing more than most employers.

Employer Liability Doesn't Have to Be a Mystery

Still wondering what employer liability actually is when it comes to harassment at work? Here's the short version again:

• Employer liability means being legally responsible for harassment that happens at work
• If an employee is harassed by a supervisor, the rules are slightly different
• Employers can't ignore harassment complaints without serious consequences
• A strong complaint procedure can provide excellent legal protection
• Promptly investigate all complaints with documentation at every step

Statistics don't lie and harassment laws certainly aren't going away. Employers who understand harassment liability and take active steps to prevent harassment can rest easy knowing they've done their due diligence.