Sex Can Kill A Start-Up -- Sexual Harassment, That Is
Start-ups are fertile ground for sexual harassment -- and therefore sexual harassment claims.
Sexual harassment can kill you if you are a start-up company or law firm.
Running a business, or a law firm, is hard work, and starting one is even harder. You enter a vast unknown of market forces, customers and clients, vendors… and not insignificantly, personnel.
Ahhh… personnel! People, employees, workers – each of whom may be a profit generator for you, but also a potential time bomb.
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In my experience with startups, they seemingly care little about — and know little about — HR “best practices.” Or HR at all. They are too busy with all of the many other tasks that go along with birthing a company — and making money. Understandably, they focus less on HR issues and more on things like funding.
And who can blame them?
The unglamorous task of HR is usually left to an overworked manager or assistant who has tons of other things to do, and would rather be doing them, and little or no experience in HR. And the typically very young workforce is left to behave. Or sometimes not.
It should come as no surprise that start-ups are fertile ground for acts of sexual harassment, and therefore sexual harassment claims. As I wrote in an article in Above the Law a few months ago, you are asking for this kind of behavior “when you put just-out-of-school twenty-somethings together in a loose environment with no offices and where there typically are no established rules or codes of conduct or anti-harassment policies or trainings, or often even an HR person or department.”
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Employers are just asking for trouble. The company that they worked so hard to create and build can go down the tubes with a single claim of harassment.
Why Have An HR Department? It Only Costs Money!
Better to have an HR department, no matter how small, than none at all.
As Lauren Weber and Rachel Feintzeig wrote in a Wall Street Journal article, “Sometimes the only thing worse than having an HR department is not having one.… Startups usually launch without personnel teams, but SHRM [Society For Human Resource Management] advises that companies bring on a human-resources staffer once they reach 15 employees, the point at which personnel issues become complex enough to require specialized skills.”
They noted that “Some workers say they feel the absence of an in-house HR staff acutely, especially when it comes to bread-and-butter HR responsibilities such as mediating employee disputes and resolving pay problems.”
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And illustrating perhaps the most serious problem — employment discrimination and harassment — they wrote that Outback Steakhouse “had no HR department before 2008, but created one not long after the Equal Employment Opportunity Commission sued the restaurant chain for sex discrimination. In 2009, Outback paid $19 million to settle the case and agreed to add an executive-level HR position.”
How could a start-up handle such a case?
One expert told them that “Whenever you consider eliminating portions of HR, you have to think of the financial risk, the strategic risk.”
Well put.
Does Size Matter? Start-Ups Are Particularly At Risk
In “growth mode” a start-up, with no HR person, might have no idea what constitutes good hiring practices and could easily violate the anti-discrimination laws. And start-ups, if successful, may grow and hire rapidly, with little or no vetting, and typically foster frat-like behavior, sexual bantering (welcome and unwelcome), and sexual harassment.
And with sexual harassment comes… charges of sexual harassment! Especially when someone is let go or has some other gripe. No surprise again: there is generally an increase in discrimination and harassment claims when there are angry or fired employees, whether meritorious or not. And believe me, there is no shortage of employee anger, or of situations from which these claims spring.
And all of this is multiplied when a start-up is in “downsizing” mode – you can be sure there will be an increase in harassment and discrimination claims as angry, fired employees file such claims.
Iron Law: When an employee has a beef, or is fired, thoughts turn to revenge – which translates to money.
And management in start-ups hardly helps the situation.
In my earlier ATL article, I cited a New York Times article by Dan Lyons to illustrate the nature of some tech companies, and for the purpose of today’s post I want to add a quote from him: “UNFORTUNATELY, working at a start-up all too often involves getting bossed around by undertrained (or untrained) managers and fired on a whim. Bias based on age, race and gender is rampant, as is sexual harassment.”
Takeaway
If you cannot afford or justify hiring an in-house HR person, make sure that you have someone you can turn to who can identify an employment discrimination or harassment issue before it develops or gets worse – be it an attorney, or even an outside vendor who works with employers and knows the terrain. There are many such companies specializing in outsourced HR.
And if you are large enough, spend a few bucks and hire a knowledgeable and experienced HR person – it’s far less expensive, time-consuming and distracting to spend a little time and money now to comply with the law, than not to do so and (perhaps literally) bet the company that you won’t get sued or be targeted by the EEOC.
It’s a sucker’s bet — ask Outback.
A Last Bit Of Advice
Last year the EEOC issued a really good, cheat-sheet-sized fact sheet entitled “Preventing Discrimination is Good Business.” The EEOC noted that the sheet “provides a shortened, user-friendly overview of the legal obligations of small businesses under the anti-discrimination laws. It also provides information about other EEOC resources available for small business owners.” Check it out here.
Richard B. Cohen has litigated and arbitrated complex business and employment disputes for almost 40 years, and is a partner in the NYC office of the national “cloud” law firm FisherBroyles. He is the creator and author of his firm’s Employment Discrimination blog, and received an award from the American Bar Association for his blog posts. You can reach him at Richard.Cohen@fisherbroyles.com and follow him on Twitter at @richard09535496.
