Sexual harassment is a term used to describe a variety of illegal discriminatory actions—from un-welcome sexual advances to verbal conduct of a sexual nature—that create a hostile or abusive work environment. The Equal Employment Opportunity Commission (EEOC) defines sexual harassment as follows: "Unwelcome sexual advances, requests for sexual favors, and other verbal or physical contact of a sexual nature constitute sexual harassment when: 1) Submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment. 2) Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individuals. 3) Such conduct has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment." But legal experts warn managers and business owners that definitions of sexual harassment extend beyond the above borders. "Most people think that sexual harassment necessarily involves conduct of a sexual nature," wrote Theresa Donahue Egler in HRMagazine. "But sexual harassment includes conduct that is not overtly sexual but is directed at an individual based on his or her gender. Thus, conduct such as profanity and other rude behavior … may give rise to liability so long as it is based on gender."

Some observers believe that small businesses are particularly susceptible to sexual harassment problems. "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," wrote Steven C. Bahls and Jane Easter Bahls in Entrepreneur . Savvy small business owners, then, will adopt a proactive stance to make certain that his or her employees know that inappropriate behavior—whether it takes the form of displaying sexually explicit photographs, using offensive language, making suggestive or otherwise inappropriate comments, badgering an employee for dates or other interactions outside the workplace, or suggesting that one gender is inferior to another—will not be tolerated in their company. Indeed, firms that do not do so leave themselves open to financial loss via lawsuits as well as other problems (low morale, employee turnover, absenteeism, etc.) that can ultimately impact financial performance. As EEOC guidelines state, "with respect to conduct between fellow employees, an employer is responsible for acts of sexual harassment in the workplace where the employer (or its agents or supervisory employees) knows or should have known of the conduct, unless it can show that it took immediate and appropriate corrective action."

"The stakes are high and getting higher," concluded Ellen J. Wagner in Sexual Harassment in the Workplace. "In an increasingly litigious society and in an era of ever-increasing employee rights and employer responsibilities, sexual harassment allegations are particularly hazardous." Nation's Business contributors Robert T. Gray and Donald H. Weiss agreed. "All the signs point to sexual harassment becoming a more complex issue in the courts as well as in the workplace, and employers must be ready to respond accordingly," they wrote. "While that response can be prolonged and even difficult, the experts say that the depth of a company's commitment to preventing such conduct can be determined by one step at the moment of the filing of a complaint. That step: Take it seriously."


Over the past several years, sexual harassment has become a subject of considerable discussion. Previous generations of business owners and managers rarely had to address the issue. Business historians and social observers point to several possible factors for this. Some note that women used to comprise a much smaller component of the workforce, and that various societal pressures may have made them less likely to come forward with complaints. Others point out that many of the legal protections that are now in place against harassment have only developed over the last 30 years. Still other observers contend that the rise in sexual harassment claims simply reflects a general decline in civility in American society. Whatever the reasons, sexual harassment complaints have risen steadily in recent years. In fact, the EEOC reported that from 1990 to 1994, the number of sexual harassment cases that were filed in the United States more than doubled. "Because an agency complaint is a prerequisite to suit under federal and many state laws, these numbers forecast a corresponding increase in sexual harassment lawsuits in the coming years," wrote Egler. "When it is considered that many more potentially explosive situations are quietly resolved (some at substantial cost) before reaching the complaint stage, it is readily apparent that sexual harassment is a risk that requires proactive management."

But small business owners and corporate executives alike need to make sure that in their zeal to protect the legitimate rights of employees not to be harassed in the workplace, they do not trample on the rights of those accused of misbehavior. "While sexual harassment is clearly a pervasive reality, every case needs to be reviewed on its own merit," said Wagner. "Just because harassment is a significant social and corporate problem does not mean it has in fact occurred in a particular instance." Indeed, an employee who is punished or dismissed on the basis of a frivolous sexual harassment claim has the same recourse to the law as the victim of sexual harassment who is left unprotected by indifferent managers/owners. Business owners and managers thus need to consider the rights of all parties involved when investigating sexual harassment complaints.


Over the past several years, human resource professionals and business consultants alike have pointed to some fundamental changes in sexual harassment demographics. The overwhelming number of employees who are victims of sexual harassment continue to be women, but increasing numbers of men have found themselves targeted as well. Same-sex harassment charges have been on the rise as well. Observers note that some companies have been slow to treat such complaints as seriously as the more prevalent woman-as-victim, man-as-harasser complaints, with sometimes disastrous financial consequences for the businesses.

Some analysts expect women-as-harasser complaints to continue to rise, as the number of women business owners and executives grows. "Many would say that sexual harassment is nothing but an issue of power—that is, one person exercising power over another and using sex as the tool of power," attorney Gary Oberstein told Industry Week' s Michael Verespej. "[Women are now] in a position to see this as a tool, just as men have seen it as a tool for years." Verespej points out, however, that the nature of sexual harassment does seem to vary with the gender of the harasser. "When a male is the victim of harassment by a female, more than 50% of the cases allege a demand for sex—quid pro quo—in order to retain a job or receive a promotion," he reported. "By contrast, less than 15% of the cases in which a female is the victim of harassment by a male is there a demand for sex; the majority allege a hostile work environment."


Ellen Wagner points out in Sexual Harassment in the Workplace that "a well-drafted, carefully thought-out policy statement on sexual harassment can be valuable to an organization in at least three major ways: 1) as an employee relations tool, 2) as basic education for both managers and employees on the subject of sexual harassment, and 3) as a way of minimizing legal liability to the organization in hostile-environment sexual harassment cases…. Not only is such a policy statement evidence of an organization's good-faith effort to provide a work environment free of harassment but, coupled with a proper investigation that successfully ends illegal or inappropriate conduct, it provides a major offensive weapon in employer efforts to demonstrate that all reasonable steps were taken and that they were effective."

Indeed, business consultants universally counsel both small businesses and multinational corporations to establish formal written policies that make it explicitly clear that no forms of sexual harassment will be tolerated. Some companies prefer to disseminate this information as part of their larger general policy statements because of their sensitivity to giving extra attention to a sometimes awkward subject. But others believe that doing so can have the effect of burying the company's sexual harassment policies under the weight of all its other statements. These observers claim that dissemination of a separate policy statement not only better informs employees of the policy itself, but also underlines the company's serious approach to the subject.

Whether a business chooses to distribute its policies on sexual harassment via general information sources (employee handbook) or separate statements, its policies should list all the various forms that sexual harassment can take (sexually loaded "compliments," sexual advances, denigration of a person's gender, etc.) and explain how the company proceeds when confronted with a sexual harassment complaint. The policy statement should also discuss possible disciplinary consequences for workers who are found guilty of engaging in harassment.

Other steps that businesses can take to establish an harassment-free workplace include: establishing internal procedures that address complaints promptly and thoroughly; establishing training programs that educate workers—and especially managers, supervisors, and other people wielding power—about components of sexual harassment and their responsibilities when exposed to such behavior; establishing alternative routes for workers to lodge complaints (in instances where his or her supervisor is the alleged harasser, for instance).


Legal experts warn businesses that they need to make certain that their policies reflect a true understanding of the legal responsibilities of the employer, and a full recognition of the multitude of forms that sexual harassment can take. They point out that some companies have put together policies that, while sensible and effective in some or even most areas, are flawed in other areas, either because their policies did not adequately cover all the ways in which sexual harassment can occur, or because their understanding of sexual harassment was incomplete from the outset. For example, many people have long operated under the misconception that for sexual harassment to occur, the harasser must have a bad intent. The reality, however, is that "what may be viewed as perfectly harmless by most men, may be viewed as offensive by most women," wrote Egler. "In recognition of gender differences in perception, the courts have developed a new standard for analyzing claims of sexual harassment. In lieu of the traditional gender-neutral reasonable person standard, which is thought to be biased toward the male viewpoint, sexual harassment claims are analyzed in many jurisdictions from the perspective of a reasonable person of the same sex."

Another important factor that is not always sufficiently appreciated by employers is that they can be held liable for harassing conduct by a third party such as a customer or vendor. Egler explained that "even though these people are not employed by, and thus, not under the direction and control of the employer, the employer can be held responsible for harassment of its employees by such third parties." This mostly occurs in instances where the employer does not respond to such situations when they are brought to their attention. Finally, Egler pointed out that some companies have been slow to recognize that "what appears to be a consensual relationship by both parties may be regarded by the subordinate as an unwelcome obligation necessary for the protection of his or her job, whether or not this is actually the case."


Companies must investigate every sexual harassment complaint seriously and thoroughly, and take action accordingly. A key foundation of this process is to make certain that the person who will investigate the complaint has credibility with the workforce. Ideally, the individual will be knowledgeable about the legal dimensions of sexual harassments, experienced in handling employee issues, familiar with the organization's policies, and socially and organizationally distant from both the alleged victim and the alleged harasser (the investigator should not be friends with the alleged victim, nor directly report to the alleged harasser, or vice versa). With smaller companies, however, it can be more difficult to adhere to such guidelines. If a small business owner has only four employees, and two of them become embroiled in an harassment case, finding an investigator with the above qualities is next to impossible. The owner may be tempted to look into the complaint him or herself in such instances, but business advisors often counsel against this. Instead, they recommend that the owner turn to an outside counsel or external consultant to pursue the complaint.

Whether the person doing the investigating is a third party, an employee, or the owner of the business, he or she should have a focused, carefully thought out investigation plan designed to settle the issue in as timely a fashion as possible. This typically includes a review of relevant organizational records, including complainant's personnel file, alleged harasser's personnel file, performance reviews, and promotional and salary records. Such reviews can turn up everything from prior disciplinary warnings aimed at the accused to possibly relevant indications that the involved parties had previously competed against one another for promotions or other job opportunities. Such data may well be completely irrelevant to the legitimacy of the complaint, but it is the investigator's duty to check into all possible aspects of the complaint.

Every claim should be treated seriously, no matter how unusual or seemingly frivolous it might first appear, until an informed decision can be made. Conversely, an investigator should also suspend judgment on complaints that seem obviously legitimate until a thorough investigation has been completed. As Wagner remarked, "when sexual harassment is alleged, defamation is never very far away…. Since sexual harassment investigations almost always involve matters that might go to the heart of a person's reputation and good name, attention must be paid to minimizing the risks of defamation throughout the investigation and once it is concluded."

The first step in an investigation usually involves an in-depth interview of the complainant. Areas that should be pursued during this interview include the cultural background of the complainant (if dramatically different from that of the accused), a detailed reconstruction of the incident(s) that prompted the complaint, the context and circumstances in which it occurred, the involved parties' prior relationship (if any), the nature of the allegations against each individual in instances where incidents involved the participation of more than one person (common in hostile workplace complaints), and the complainant's expectations regarding how the alleged offender should be disciplined.

The investigation then turns to getting the accused's account of events. This step has different nuances, depending on whether the alleged harasser is a supervisor, a coworker, or a third party such as a customer, but basically this part of the investigation aims to secure the accused's perspective. In some instances, the accused may appear angry or shocked when confronted with a sexual harassment charge, so the investigator needs to allow time for the return of some measure of emotional equilibrium. When the initial reaction has subsided, wrote Wagner, the investigator should ask the worker to relate "what he believed happened during the incidents the complainant has cited. Allow him to relate his understanding of the situation through once, then return to it for specific, step-by-step review. As with the complainant, make sure the discussion is specific and detailed enough to provide the information you need to make an informed judgment later on. Note dates, times, places, circumstances, dress, words exchanged, as well as the specifics of the alleged acts." Again, issues such as prevailing work environment, prior relationships, etc. should be discussed.

Once the investigator has finished gathering information from the principal parties, he or she should then turn to possible witnesses. These could range from coworkers who were present when the alleged incident took place to those who have relevant information on either or both of the parties involved. The investigator should not be concerned with unsubstantiated rumors at this juncture; rather, he or she should concentrate on gathering factual data. This can be a very important part of the investigation, for accusations that turn into basic "he said, she said" disputes can be profoundly difficult for employers to resolve. "Immediate action may be difficult when an employer is faced with unsubstantiated accusation on one side and a categorical denial on the other," wrote Gray and Weiss. But experts point out that workplace behavior often can be corroborated by other staffers. Employers need to interview these witnesses carefully, however. "You must assess the credibility and believability of all persons corroborating some aspect of the complainant's or accused's contention," confirmed Wagner. "Consider the issue of witness motivation and the relationship between each witness and the individual whose word is being corroborated. Make sure you understand what each witness might stand to gain from the situation, as well as what genuine feelings are at work here." Witnesses also need to understand that the subject should not be discussed with coworkers or other individuals; sexual harassment charges are both serious and sensitive, and they should be regarded as such. Human resources experts also recommend that investigators not rely wholly on interviews. Ideally, the investigator should also secure written statements from all parties— complainant, accused, and witnesses—as part of this information-gathering process.

Once the investigation into the sexual harassment complaint has been completed, corrective action (if any) needs to be implemented. When corrective action is warranted, it can range from counseling to transfer to dismissal. The key factors that usually determine the severity of the corrective action are: 1) the nature of the offense, 2) the desires of the complainant, and3) the impact that the incident had on the workplace as a whole.


Self-employed individuals who work as independent contractors enjoy fewer legal protections from sexual harassment at the hands of clients. Experts recommend that self-employed people confronted with such unpleasantness react strongly and decisively. They should make it immediately clear that the harassment (which in these situations typically takes the form of unwanted sexual advances) is unwelcome, and that they would prefer to keep their association with their client a professional one. If this line of defense does not work, the self-employed worker may wish to consult an attorney about their state's tort law, which regulates conduct between people and provides monetary damages. In addition, national women's organizations can often provide guidance and legal assistance in these matters.


Bahls, Steven C., and Jane Easter Bahls. "Hands-Off Policy." Entrepreneur. July 1997.

Buhler, Patricia M. "The Manager's Role in Preventing Sexual Harassment." Supervision. April 1999.

Egler, Theresa Donahue. "Five Myths About Sexual Harassment." HRMagazine. January 1995.

"Facts About Sexual Harassment." Washington: U.S. Equal Employment Opportunity Commission, 1997.

Gray, Robert T., and Donald H. Weiss. "How to Deal with Sexual Harassment." Nation's Business. December 1991.

Lawlor, Julie. "Stepping Over the Line." Sales and Marketing Management. October 1995.

Petrocelli, William, and Barbara Kate Repa. Sexual Harassment on the Job: What It Is and How to Stop It. 4th ed. Nolo Press, 1998.

Risser, Rita. "Sexual Harassment Training: Truth and Consequences." Training and Development. August 1999.

Verespej, Michael J. "New Age Sexual Harassment: An Increasing Number of Victims are Men or Same-Gender Workers." Industry Week. May 15, 1995.

Wagner, Ellen J. Sexual Harassment in the Workplace: How to Prevent, Investigate, and Resolve Problems in Your Organization. AMACOM, 1992.

SEE ALSO: Gender Discrimination

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