Small Businesses Most Vulnerable to Sexual Harassment Claims



In wake of the #MeToo movement, awareness of sexual harassment has increased, but not necessarily at small businesses. Unlike their larger counterparts, small businesses are more vulnerable to sexual harassment claims because they’re less likely to have formal workplace policies in place.


According to the CNBC/SurveyMonkey Small Business Survey of more than 2,000 small business owners, only half of businesses with 5-49 employees had formal sexual harassment policies in place. That number decreased to 39 percent at businesses with less than five employees. That’s a stark contrast to businesses with 50 or more employees, as 85 percent said they had formal sexual harassment policies in place.


Eleven percent of the businesses surveyed said they issued companywide reminders of their sexual harassment policies and reporting procedures as a result of the #MeToo movement and other high-profile sexual harassment accusations. Nine percent said they've reviewed policies regarding diversity and gender equality. Seven percent have required new or additional training, and 4 percent have issued new reporting procedures. However, 61 percent of all businesses surveyed did not take any of the above precautions.


Role of HR


Complicating matters for small businesses is that two-thirds of those surveyed lacked an official human resources professional, meaning that the business owner was responsible for handling any harassment claims. Only 3 percent said it was the job of human resources personnel to handle harassment issues and 10 percent said they had no specified way to handle harassment at all. Without a designated, unbiased person to speak to about harassment, employees may be afraid to report it for fear of retaliation.


Protect Your Business


A lack of a formal policy and procedures for handling sexual harassment in the workplace doesn’t mean that a business owner is exempt from liability. Although federal law exempts small businesses with less than 15 employees from the requirement to have a sexual harassment policy, it’s in their best interest to establish one.


Other than the fact that state laws may have smaller thresholds for requiring a formal policy, the financial and reputational costs are too high to risk running a business without one.

To learn more about how to protect your small business, contact the Risk Management team at E.B Cohen at (973)-403-9500.

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