Potential liability and sexual harassment

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Many of these new laws are in response to the metoo movement and specifically target sexual harassment. This blog summarizes the key features of these laws and their effect on employers as well as others, such as VCs, who can now be held legally responsible under the sexual harassment laws for harassing non-employee persons who work for actual or potential portfolio companies. These laws highlight the importance of regularly reviewing and revising training as well as anti-harassment, discrimination, and retaliation policies. Additionally, employers must keep these laws in mind in connection with their ability to negotiate effective settlement agreements. Key takeaways Professional services businesses for example, investors can now be liable for sexual harassment even absent an employer-employee relationship, and liability for harassment by nonemployees goes beyond sexual harassment.
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Harassment Claims Highlight Risk For Individual Liability

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Liability for Sexual Harassment

Prevention of Sexual Harassment The most effective weapon against sexual harassment is prevention. Harassment does not disappear on its own. In fact, it is more likely that when the problem is not addressed, the harassment will worsen and become more difficult to remedy as time goes on. Employer Responsibilities The burden of preventing sexual harassment rests on the employer. In the United States, Canada and in some European Union Member States, employers are responsible for providing their employees with a work environment that does not discriminate and is free of harassment.
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Preventing Sexual Harassment in the Workplace

While managers are not liable under every employment law, and many laws actually protect managers from individual liability, there are a vast number of common and statutory laws which can impart individual liability. Claims asserting individual liability can put managers in a terrible position of having to personally defend themselves in a lawsuit, which could mean paying defense costs and attorneys' fees and exposing their personal assets, like their home, car and bank accounts. Rise in Harassment Allegations The rise of harassment allegations has increased claims asserting individual liability under common law theories.
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Ferro joins a long list of high-profile executives who have resigned—or been fired—in recent months due to alleged sexual misconduct. In and the first quarter of , shareholders at four publicly traded firms—Signet Jewelers, Twenty-First Century Fox, Liberty Tax, and Wynn Resorts—filed lawsuits against corporate directors and officers on grounds related to reported sexual misconduct at those companies. These four cases are not the first shareholder suits arising out of workplace sexual misconduct—sex scandals at the pharmaceutical company ICN now Valeant , the tech giant Hewlett-Packard, the clothing brand American Apparel, and the executive search firm CTPartners all have led to shareholder suits in the recent past. And the latest round of lawsuits almost certainly will not be the last: As the MeToo movement gains momentum, we can be confident that allegations of corporate sexual misconduct will continue to surface and that shareholder actions will follow. This ever-more-common category of shareholder litigation raises important doctrinal questions for scholars and practitioners of corporate and securities law.

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