It should be clear to every employer in the post-Harvey Weinstein world that sexual harassment has very, very severe consequences. The real costs of workplace sexual harassment are often outside of the courtroom, and usually have a much bigger impact.
A 2016 report on workplace sexual harassment by the Equal Employment Opportunity Commission (EEOC) describes in detail the various ways sexual harassment claims impact employers. For employers that think they’re immune or unlikely to have issues with sexual harassment, a staggering 25% to 85% of women report experiencing some form of sexual harassment on the job.
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Direct Costs Of Workplace Sexual Harassment
The numbers involved in resolving sexual harassment claims are truly staggering. Resolving a sexual harassment claim from an employee is often a very expensive proposition. From the EEOC report:
Charges of harassment come at a steep cost for employers. The Commission resolved 28,642 harassment allegations in 2015. Of those, 5,518 charges involving allegations of harassment were resolved in favor of the charging party through the administrative process, resulting in $125.5 million in benefits for employees. Since 2010, employers have paid out $698.7 million to employees alleging harassment through the Commission’s administrative enforcement pre-litigation process alone.
If that doesn’t scare the living crap out you as an employer responsible for the safety, security, and well-being of every employee in your organization, maybe this will:
Litigation of harassment claims tends to be even more expensive. One estimate of settlement payments and court judgments solely in 2012 for harassment lawsuits clocked in at over $356 million. The largest sexual harassment jury award in 2012 totaled $168 million.
The key takeaway here: Do everything in your power as an employer to resolve sexual harassment complaints before they get out of hand. Remember, there is a process for dealing with workplace sexual harassment before it goes to the EEOC and/or a lawyer.
Indirect Costs Of Sexual Harassment
While cutting big checks to settle sexual harassment claims is an easy-to-assess direct cost, the indirect costs of sexual harassment claims often have far broader consequences for an organization.
The three main indirect costs are:
- Decreased Productivity: Employees that suffer sexual harassment at work are often far less productive. Stress, anxiety, and fear take a massive toll on the victims, and many simply do the bare minimum necessary to retain their jobs.
- Increased Turnover: Systemic harassment can lead to high turnover, which can cost even medium-size employers hundreds of thousands of dollars a year in hiring and training costs.
- Reputational Damage: Having a reputation for a culture of sexual harassment is an excellent way to scare off talented and desirable employees. If the general public becomes aware of your reputation, you’re likely to see a dramatic impact on your bottom line as well.
Each of these indirect costs alone can bring a business to a near-standstill. Together, they can cripple an organization so severely that it’s chances of recovery are only slightly above zero.
From a legal perspective, allegations of workplace sexual harassment should be at or near the top of the list of things every employer should strive to avoid.
Creating a culture of equality, hiring a dedicated HR team, and constantly soliciting feedback from employees is a good start to keeping this problem at bay. If you organization is struggling with this problem, speaking with an attorney is one of many helpful steps in finding a resolution.