Avoiding liability for sexual harassment.

Through investigations of sexual harassment complaints are an employer's best tool for minimizing liability.

A San Francisco jury's award of more than $7 million to a legal secretary harassed by a male partner in a law firm should serve as a wake-up call to employers throughout the nation. The message: juries will not tolerate sexual harassment in the workplace. They will punish not only the perpetrators, but also those who fail to act swiftly and effectively when faced with an employee's complaint of harassment. Employers will be judged and possibly punished not only for the harassment itself, but also for their response to the complaint of harassment.

The single most important tool for minimizing employer liability in a sexual harassment case is a prompt, thorough investigation of the complaint. The law requires that employers take all reasonable steps to remedy the situation if they receive a complaint or have other knowledge that sexual harassment might be a problem. If the San Francisco law firm had conducted a thorough and fair investigation and imposed appropriate disciplinary action on the harasser, it might have satisfied this duty and avoided the jury's award of $6.9 million in punitive damages.

Employers faced with a complaint or facts suggesting that sexual harassment is occurring in their workplace must respond appropriately. In formulating a response, consider the following guidelines:

Understand the purposes of the investigation. The investigation of a sexual harassment complaint should comply with company policies and procedures, provide a way of objectively obtaining the facts surrounding a complaint, and protect the complainant and others from future or ongoing harassment.

A major benefit of conducting an investigation is the opportunity it gives an employer to determine the company's potential liability and minimize it before the complainant hires a lawyer or files a complaint with a government agency. Issues are easier to resolve at this stage if the complainant believes that the company is acting fairly, effectively and in good faith. Even if a lawsuit is later filed, a prompt and thorough investigation puts the company's conduct in dealing with the complaint in the best possible light.

Define the scope of the investigation. Not every complaint needs to be investigated the same way. The investigation for minor incidents, such as a single off-color joke, need not be as detailed as for allegations of physical harassment. The strategy for investigating each complaint will be different. The time and resources committed depend on such factors as the outrageousness of the conduct, whether there is a pattern of similar conduct, and the effect the conduct has on the morale of the complainant and other employees.

Select the right investigator. The investigator should be a diligent fact-finder who can objectively analyze the facts and come to a conclusion free of outside influences. Objectivity and independence is difficult for employees assigned to investigate sexual harassment allegations against a higher ranking employee. Find an experienced interrogator who is able to cut quickly to the relevant facts. Since the investigator may be called upon to testify in a subsequent lawsuit, the person you select should be articulate and professional. Experience as a witness is a plus.

An attorney may be a good person for this role. In addition to their experience as interrogators, attorneys bring another advantage to the investigation: if a lawsuit is filed, the attorney-client privilege may protect written communications between the attorney and the employer. Other written materials, including reports, conclusions and recommendations prepared by or for the attorney during the course of the investigation also may be protected under the attorney work product doctrine.

Because there are exceptions to these rules, employers should not assume all writings and communications with the attorney will be excluded from disclosure. If an attorney is hired as the investigator, do not use the attorney or firm the company would use to defend against a lawsuit if one is later filed. Because an attorney who serves as investigator may be a witness in a subsequent lawsuit, both the attorney and his or her law firm will be ethically barred from representing the company in the suit.

Deal with the accused employee. When a complaint of sexual harassment is made, one of the first issues that arises is whether to inform the accused employee of the complaint before starting the investigation. Telling the accused employee that he or she is the subject of a sexual harassment complaint adds an element of fairness to the investigation. But disclosing the investigation and details surrounding it may have adverse consequences. For example, an employee angered by the accusation may attempt to influence the complainant to withdraw the complaint, either directly or by enlisting other employees to exert peer pressure. Such behavior may lead to gossip, rumors and morale problems. In addition, if efforts to avoid or stop such conduct are not quickly undertaken, the company runs the risk of appearing to condone retaliation.

If the employee will learn of the complaint and investigation anyway, providing official notice of the investigation, in writing, can accomplish important objectives for the company. The written notice should recite the company's policy of protecting the complainant against retaliation and warn against any conduct that could be construed as retaliation. The notice also should tell the accused employee to cease all communication with the complainant and request that the fact of the investigation not be disclosed, except to the accused employee's attorney.

If the risk of retaliation is high, employers may consider transferring the accused employee to another work area or department, or suspending the accused employee until the investigation has been completed. If the employee is suspended, consider continuing the accused employee's pay during the suspension. Otherwise, the company will appear to have prejudged the case.

Treating an accused employee fairly has a practical purpose - shielding the company from a suit for wrongful termination. Many accused employees respond to an investigation by threatening to take such action. A fair and complete investigation is the best defense.

Review personnel files. The personnel files of both the complainant and the accused employee should be reviewed. Are there past instances of similar conduct on the part of the accused or repetitive complaints made by the complainant? What is the work history of each employee involved? A complaint by a poorly performing employee on the verge of termination may be an effort to influence the company against termination, or an attempt to increase the employee's leverage in negotiations for a termination severance package.

An often overlooked but valuable part of any serious investigation is checking the facts on the resume or job application of both the complainant and the accused employee. Because witnesses are rare in sexual misconduct cases, they often become classic "his word - her word" situations. The credibility of the parties is critical to an analysis of the complaint. Evidence of lying on a resume or job application can shed light on a person's credibility and perhaps help the investigator determine what occurred.

Conduct effective interviews. The investigator must be prepared before meeting with the complainant or the accused employee. Because the investigator must understand the corporate culture and interpersonal relationships the players have with their co-workers and supervisors, he or she should interview the person the complainant first spoke with concerning the harassment and each employee's immediate supervisor. Only when the investigator has a solid understanding of the workplace dynamics and how the parties fit into them should the complainant and the accused employee be interviewed. When conducting the interviews, the investigator should:

* Be sensitive and sympathetic toward the complainant. Stepping forward with a complaint can require much courage and the complainant may be nervous or emotionally fragile. A confrontational approach can cause a complainant to believe the employer is biased against him or her and may motivate a search for a more partisan supporter, such as a lawyer or government agency.

* Get as much detail as possible. Events may have occurred a long time ago and recollections may be fuzzy. The investigator should dig deep for dates, times, places and names. This may be the only opportunity to get the parties to speak freely. Interviews should be detailed and wide-ranging.

* Preserve evidence supporting the company's position. The parties will often make statements favorable to the company. For instance, the complainant may say certain conduct was not particularly offensive or may not want the accused employee disciplined. The most common way of preserving such evidence is to prepare a written statement setting out the details of the interview as soon as possible after its conclusion and have the interviewee review and sign it under penalty of perjury.

Use care when documenting the investigation. Notes and memos prepared during the investigation may have to be disclosed in subsequent litigation. Although the rule "document everything" is deeply ingrained in the psyche of most human resource professionals, investigators should be careful about drawing conclusions or assessing liability before all the facts of the case are known. A casual note in the margin of an interview record may damage the company's legal position, even if evidence uncovered later in the investigation shows those impressions were mistaken.

Conclude the investigation. The most problematic part of an investigation is ending it. At this stage the company must decide whether the complaint has merit and, if misconduct is found, it must determine an appropriate discipline.

Mistakes at this stage create the greatest potential for liability. Employers may be reluctant to deal effectively with a well-founded complaint for fear that a finding of harassment will be viewed as an admission of liability in subsequent litigation. Some have been tempted to ignore the harassment, deny it occurred, minimize the seriousness of the conduct or attack the complainant's motives. But if the complaint is legitimate, the employer that fails to take action paints itself with the same brush as the harasser. A jury may find the complainant was victimized not once, but twice and may find the employer liable for disregarding the rights and safety of the victim or even condoning the harassment.

The investigator must judge the credibility of the complainant and the accused employee. In many investigations, both parties' stories will be equally plausible and there will be no witnesses available to substantiate either party. In such cases, reaching a conclusion may be difficult or impossible. One solution to this dilemma is to notify the accused, in writing, that if the conduct alleged did occur, it would constitute illegal sexual harassment. The notice serves not as an accusation but as an explanation of company policy and a warning against violating it. If another complaint is made against the same employee, he or she will not be able to plead ignorance and there may be greater justification for imposing discipline.

If the investigator believes harassment has occurred, the company can reduce potential liability by taking immediate action. The law requires employers to take "prompt and appropriate remedial action" when harassment is found. One strategy for determining an appropriate discipline is to ask the harassed employee what he or she would like to see happen. Employers are often surprised to find that victims of harassment are more interested in ending the harassment than in punishing the harasser. Still, employers should make clear that they alone retain the authority and legal responsibility for imposing appropriate discipline. In some cases the discipline imposed must be more severe than that requested by the harassed employee.

Remedial action may take many forms, depending on the severity of the harassment. It may include a job transfer for one of the parties, disciplinary action against the harasser, an apology from the harasser or a top officer of the company, a commitment to adopting a policy against discriminatory conduct (or improving an existing policy), counseling for the complainant, sensitivity training for the harasser or a combination of these actions. Acting quickly will give the complainant a sense of vindication and may end the matter. It also sends a message to other employees that sexual harassment is not tolerated by the company. Monetary compensation may be appropriate in serious cases, especially if the victim was denied promotions or raises by the harasser.

The employer's liability will be judged by how the harasser is disciplined. Since harassment can range from a single incident involving non-threatening verbal remarks to a pattern of behavior involving physical touching, the punishment should fit the crime. If the harasser is not disciplined, or receives a "slap on the wrist" for serious misconduct, a jury may see the failure to discipline as harboring a predator. This argument may be especially appealing if the harasser is an officer or highly compensated employee.

Thorough investigations of sexual harassment complaints are an employer's best tool for minimizing liability. A properly handled investigation can preserve employee morale, maintain a safe workplace, discourage inappropriate conduct, save management time and legal expenses and keep the complaint from becoming front-page news. If that is not incentive enough, consider the $7 million verdict.

Gerald D. Bloch, Esq. is an attorney with offices in Orange County, California. He counsels management on employment-related matters including policies and procedures, sexual harassment prevention training and investigation of complaints.