Joanna Grossman
Attorney suggests ways to prevent harassment problems
By Bruce Hicks, CPCU
Joanna Grossman
To gain insight into employment-related practices liability (ERPL) coverage, Bruce Hicks, CPCU, editor of Rough Notes' PF&M Analysis Service, interviewed Joanna Grossman, an associate professor of law at Hofstra Law School in Hempstead, New York. Professor Grossman is also a regular columnist for Findlaw.com's "Writ," where a variety of experts discuss various legal topics, many of them related to insurance issues.
Previously, Professor Grossman taught at Tulane Law School. She graduated with distinction from Stanford Law School. She has served as a staff attorney at the National Women's Law Center in Washington, D.C., where she litigated cases involving sexual harassment in schools, employment, and prisons. She has written about sexual harassment, race discrimination in employment, women's jury service, and the history of marriage, guardianship, annulment, and adoption. Her other research interests include sex-based discrimination, trusts and estates, and legal history.
The workplace has become an insurance coverage battleground, with conflicts involving employment ranging from minor skirmishes to full-fledged wars. Claims related to problems in the workplace--particularly hiring, firing, evaluations and work environment--are the domain of employment-related practices liability (ERPL) coverage.
More employers are purchasing ERPL coverage to protect themselves from their employees. Of course, just because an employee files a lawsuit does not mean that the employer will be found guilty. In fact, employers who can show evidence that they are sensitive to employee concerns and have taken steps to address their problems are quite successful at avoiding judgments.
Insurers that offer ERPL policies often include questions regarding procedures and statements on employee behavior as part of their application and underwriting process. Essentially, an eligible applicant must have proof that employees have been given the necessary information concerning workplace behavior as well as some procedures for reporting problems.
When defending an ERPL claim, insurers prefer a defendant who has attempted to address adverse workplace issues. However, considering the cost of defending claims and the difficulty of offering affordable coverage, should insurers be satisfied with the status quo of the typical workplace? ERPL is among the lines of business where insurers share most of the same exposures as the customers they insure. Therefore, it is appropriate that insurers step outside of their focus upon loss ratios. They must understand workplace issues from the standpoint of employers as well as providers of ERPL protection.
RN:Why are you so interested in sexual harassment issues?
Grossman: I first became interested in sexual harassment while working on a case involving women in prison who were being severely and pervasively harassed by male correctional officers. Although the problem of harassment in prison is somewhat different in form from the problem of harassment in the workplace, the basic problem of harassment as a form of gender inequality is the same. In my academic work, both teaching and research, I have focused on many aspects of sex discrimination, but most intensively on sexual harassment.
RN:Ironically, law firms are among the toughest classes in ERPL coverage. Would you give us your thoughts on why law firms are less likely to address harassment problems?
Grossman: I think law firms tend to assume that because they are generally familiar with law and capable of counseling and representing their clients that they are somehow immune to lawsuits themselves. Like doctors who smoke, lawyers tend to be better at assessing risk facing others than themselves. In fact, many firms give specific advice to clients on EEO issues that they themselves do not follow. Harassment clearly continues to be a problem in law firms, which are still male-dominated and infused with hierarchical relationships, with the potential for authority to be abused. Law firms should consider hiring outside counsel to review their harassment policies and procedures and to recommend any changes that might be necessary.
RN:How has the workplace environment changed over the last few years?
Grossman: Almost all employers now have written policies and grievance procedures designed to deal with the problem of harassment. Many also offer anti-harassment training, or take other preventive measures. Workers are generally more aware of the problem of harassment, particularly after highly publicized events like Anita Hill's allegations of harassment against now-Justice Clarence Thomas, and more attuned to the fact that certain types of behavior are inappropriate.
Unfortunately, one of the lessons for researchers in this area is that despite increased precautions and awareness, the actual level and frequency of sexual harassment has not changed much over time. Surveys over a period of 20 years have continued to show an almost constant level of harassment in the workplace. As many as four in 10 women responding to surveys report having been harassed within two years of the time the survey was conducted. Thus, despite the many improvements in employers' EEO practices, little has been done to attack the underlying problem.
RN: What are some of the consequences of sexual harassment?
Grossman: The consequences of sexual harassment are serious. Studies and surveys show that many victims experience physical effects such as headaches, weight gain, insomnia, lethargy, panic attacks, and stomach problems. Many also experience emotional effects including depression, anxiety, insecurity, confusion, low self-esteem, guilt, isolation, anger, fear, thoughts of suicide, and post-traumatic stress disorder. Because of time spent avoiding a harassing situation or otherwise coping with it, victims also experience career damage such as unfavorable evaluations, absenteeism, and job loss.
Companies suffer significant negative consequences of harassment. They see a loss of time and productivity from both the victim and the harasser, as well as other employees who may be involved in creating or resolving the situation. They also spend time and resources responding to complaints of harass-ment. Surveys estimate that Fortune 500 companies lose $6.7 million annually due to harassment.
RN: You made a point in a recent Findlaw.com column that employers may have been given a safe harbor in dealing with their exposure to sexual harassment claims. What do you mean by "safe harbor"?
Grossman: Employers have a "safe harbor" in the sense that the law spells out specific things employers can do to minimize or avoid liability for harassment even where they are not successful in preventing it. In 1998, the Supreme Court decided two important cases about employer liability for sexual harassment, Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth. In those cases, the Court adopted a rule of automatic employer liability for harassment by supervisors but made it subject to an affirmative defense. To make use of the affirmative defense, the employer must, among other things, show that it made a reasonable effort to prevent and correct harassment. (The employer must also show that the victim unreasonably failed to take advantage of internal grievance procedures, but this prong is usually outside of the employer's control.)
In practice, the affirmative defense means that an employer who enacts a formal anti-harassment policy, distributes it to employees, and responds appropriately to complaints stands a good chance of avoiding liability for harassment that occurs in spite of the employer's efforts. These preventive and corrective measures might also serve to insulate the employer from an award of punitive damages--which is often the biggest part of a damages award--based on the Supreme Court's 1999 decision in Kolstad v. American Dental Association.
RN: What can employers do to assess their workplace environment?
Grossman: The first thing to do is to designate a group or committee to be responsible for dealing with the problem of harassment. That committee should evaluate the history of complaints in the company, both formal and informal, to gauge the level and type of problems the company faces. The committee should also talk to employees, using focus groups or anonymous surveys, to get a sense of harassing or potentially harassing behaviors that might not have resulted in formal complaints. Armed with that information, the committee should recommend any changes that might be necessary to make the employer's policies or grievance procedures more effective or usable.
RN:What mistakes do employers sometimes make in their efforts to address harassment problems?
Grossman: There are many mistakes employers make in dealing with the problem of harassment that may create or increase their liability. An extremely common mistake is for employers to focus only on sexual harassment and ignore other illegal conduct like harassment on the basis of race. The rules of liability discussed in this interview apply with equal force to any type of harassment on the basis of a prohibited characteristic, which, under Title VII, includes race, color, national origin, sex, and religion. State laws may also prohibit other forms of harassment, like sexual orientation harassment.
One common mistake is to sit back and wait for complaints before taking any steps to address problems of harassment. Employers must, as a legal matter, be proactive in establishing policies and grievance procedures that are calculated to encourage victims to come forward. This strikes most employers as counterintuitive, since they equate complaints with lawsuits. But, in fact, an employer's prompt and effective response to an internal complaint can often have the effect not only of allowing them to win any subsequent lawsuit, but also of negating the victim's anger or basis for filing one.
Insisting on formal, written complaints as a prerequisite to an investigation is another common employer mistake. Employers must also respond to all known incidents of harassment, even if their "knowledge" comes from rumors or informal reports rather than formal complaints. Employers cannot, therefore, ignore harassment that is observable; nor can it safely honor a complainant's request for inaction without risking liability in any subsequent lawsuit.
Many employers conduct inadequate investigations, a mistake that will haunt them in lawsuits. An investigation can be inadequate because the individual charged with conducting it is poorly trained, allows personal bias to affect the outcome, fails to take a thorough approach to finding out what happened, or allows too much time to pass without action. If the investigation is done internally, employers must ensure that they designate individuals (preferably at least two) who can avoid these pitfalls.
Another common mistake is to take or tolerate punitive action against the complainant. In taking action to stop harassment, employers must take care not to do anything that might be perceived as punitive toward the complainant. If an interim transfer or separation is necessary while a complaint is being investigated, the employer should move the accused rather than the complainant. Likewise, the employer must make a serious effort to prevent retaliation against the complainant from any source. Retaliation is one of the most common allegations in cases brought to the EEOC for investigation, and employers need to ensure that it doesn't occur.
Employers sometimes hesitate to impose severe discipline on an employee found to have committed harassment for fear of so-called whipsaw liability--a lawsuit by the accused against the employer. But in a non-unionized, private workplace, there is almost nothing an employer can do that will generate such liability. Most workers are "at-will" employees, which means they can be terminated or disciplined without cause, as long as the employer follows its own handbook procedures.
RN:Does it make sense for an insurer or risk manager to have a goal beyond encouraging the client or employer to establish an affirmative defense?
Grossman:The basic steps--policies and procedures--rarely reduce the level of harassment; and when harassment occurs, employers can expect lawsuits. The affirmative defense will not save employers (or their insurers) the cost of defending against lawsuits, even if they ultimately prevail in the case. Moreover, the affirmative defense applies only to hostile environment harassment created by supervisors. Strict liability applies to any harassment that is either perpetrated by an owner or other high-ranking officer in a company, or that results in a tangible employment action against the victim. Employers (and insurers) thus have an incentive to eliminate harassment altogether, rather than just taking the minimum measures required to prove the affirmative defense.
Insurers should encourage employers to undertake measures that are encouraged, but not required by law. For example, studies show that anti-harassment training has the potential to affect both attitudes and behavior in the area of harassment. It is thus sensible for employers to offer such training to their employees, particularly to those in supervisory positions.
RN:Do you see how insurance companies might help improve employer involvement in creating harassment-free workplaces?
Grossman: Employers tend to respond to the incentives created by rules of liability, but even more so to mandatory directives like those an insurance company might impose as a condition of coverage. Insurance companies issuing EPRL policies should insist that employers not only take the basic steps required by law to sustain the affirmative defense, but also that they think self-critically and creatively about what might be necessary to really squelch harassment in their workplaces.
RN:What do you think of employers using arbitration clauses as a way to minimize lawsuits involving harassment?
Grossman: Arbitration clauses, which constitute an agreement between the employer and employee to resolve disputes in front of an arbitrator rather than through a lawsuit, are becoming more and more common. Although the legal status of so-called "mandatory arbitration clauses"--ones which force employees to waive their right to sue in court before any dispute arises--was for many years unclear, the Supreme Court has recently given them the green light.
The benefit to employers is that damage awards tend to be lower, although the cost of arbitrating the claim may be just as high as defending a lawsuit. Victims may obtain a quicker resolution of their claims but be awarded fewer damages. From a public policy standpoint, mandatory arbitration clauses are undesirable because they prevent public vindication of civil rights violations and impede the development of legal standards to govern future cases.
RN: Considering that harassment issues are dominated by various Acts (ADA, EEOC, Equal Rights, etc.), is it realistic to expect employers/insurers to be concerned beyond creating procedures denoting compliance?
Grossman: Although employers do have to comply with a variety of federal and state anti-discrimination laws, they should not focus only on minimum compliance but also on setting higher standards for themselves. Among other things, maintaining a workplace in which there is little or no discrimination on any basis can affect recruiting, reputation, and even stock price. With the Internet, employers are finding that there is much more information available to the general public than there was a decade ago. Treating employees fairly and decently, even where the law does not require it, can help employers in tangible ways beyond simply the avoidance of lawsuits.
RN: Is there a profile of a company or industry where sexual harassment is more likely to occur?
Grossman: Harassment is everywhere. Recent cases in the news have revealed terrible problems of harassment in a wide range of industries, from car manufacturers and pharmaceutical companies to cruise lines. Surveys suggest that while there is some variation between industries, none are immune from the problem. With respect to specific companies, size, hierarchical structure, and the amount of control the employer exercises over the workplace environment can all affect the level and frequency of harassment.
RN:Do you know whether harassment is less prevalent in companies headed by women?
Grossman: Because there are so few companies meeting that description, there is no reliable data to support that assertion. There are studies, however, showing that harassment proliferates in certain work environments and is less frequent in others. Workplaces that are tightly controlled by the employer tend to allow less harassment than more lightly controlled ones. Environments that tolerate other forms of gender hostility, like the display of pornography, tend also to support a high level of harassment. Women in male-dominated professions tend to report higher rates of harassment than those in female-dominated or gender-integrated jobs.
RN:Can you recommend any cases that would provide insight into the ramifications of not addressing harassment issues?
Grossman: The best case to demonstrate the "worst-case scenario" for an employer who fails to address harassment is Mitsubishi. Mitsubishi paid over $40 million to settle lawsuits brought by the Equal Employment Opportunity Commission on behalf of several hundred female employees and a separate group of private plaintiffs. Beyond the settlement costs, Mitsubishi had to spend millions more to hire a consultant to audit and revamp the company's entire approach to monitoring EEO problems and responding to complaints. Although these measures have ultimately helped reduce the amount of harassment in the company, they paid a high price for failing to attend to the problem sooner.
RN:Besides the cases you've already mentioned, are you aware of any other court cases or legislation that may have a significant impact on harassment in the workplace?
Grossman: There is no pending federal legislation that deals with harassment. The important Supreme Court cases for employer liability were decided in 1998 and 1999. Since then, however, there have been many lower court decisions interpreting those cases and implementing them.
The focus of recent cases has been the adequacy of particular policies, procedures, and responses to complaints of harassment. Courts have emphasized the importance of taking preventive measures like policies and training, but also of responding quickly and thoroughly to complaints. State appellate courts, meanwhile, have issued a number of opinions deciding whether to adopt the same standards under their own anti-discrimination laws as apply under Title VII. Many have adopted stricter standards for employer liability under state law than federal law.
RN:Would you please share a prediction on what the future holds for this issue?
Grossman: I think the big changes in the next decade will not be in law, but in practice. As the law in this area has become fairly developed and settled, the focus is shifting to its implementation in the American workplace. My hope is that employers will look beyond mere compliance with the law and really tackle the tough questions about why harassment persists despite their efforts. *