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Harrassment - are you liable?

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Sexual innuendo, pornographic pictures, leering and wolf-whistling all constitute sexual harassment. As an employer, you could also be held liable for that offending remark or whistle made by one of your employees.

How exposed are you to claims of discrimination and harassment? The answer to this question is unfortunately often addressed at a time when it’s too late for good news.

It’s clearly not the most appropriate time to assess how your business will cope with a claim of unlawful discrimination or sexual harassment the moment a letter unexpectedly arrives advising that a complaint has been made against you or your business. Nevertheless, this is often the scenario which prompts the first thought.

It’s generally accepted that measures to minimise exposure to claims for workers compensation, product defects, or public accident liability make good business sense. However, many employers don’t realise that they should also be taking positive steps to minimise their liability for claims of unlawful discrimination or harassment.

Employees and agents – are you liable?

You or your business may also be indirectly liable for discriminatory conduct of your employees or agents.

Consider this – one of your employees lodges a complaint with the Anti-Discrimination Board alleging that another employee sexually harassed him/her on the job. Should the complaint succeed, both the perpetrator and your business can be found liable.

Employers and their businesses are caught in this way because anti-discrimination and equal opportunity legislation deem an employer liable for the conduct of employees or agents (this is known as vicarious liability).

The only defence available to an employer for vicarious liability in most circumstances is to prove that all reasonable steps were taken to prevent the employee from doing the alleged acts.

While this defence varies slightly under different Acts, there would be no defence for an employer who was aware of a ‘problem’ between two employees, but did not intervene in the hope that they would ‘sort it out themselves’.

Under the Federal Disability Discrimination Act, it must be shown that in addition to taking all reasonable steps, ‘due diligence’ was exercised to prevent the alleged act.

The intention of this Act is for an employee to take steps to avoid a contravention of the Act. Similarly, it would not be sufficient to prove that action was taken after becoming aware of the problem.

Why prevention is also the cure

There have only been a small number of cases where an employer has successfully avoided vicarious liability for the discriminatory acts of their employees. In almost all these cases, the employer demonstrated they had in place an effective Equal Employment Opportunity (EEO) program.

An effective EEO program is more than a policy statement pronouncing the virtues of anti-discrimination and equal opportunity. For an EEO program to satisfy the minimum legal requirements, it must demonstrate that measures are in place to prevent discrimination and harassment and these measures are systematically reviewed and improved.

There are also commercial reasons why using an EEO program for prevention can also be the cure.

A few years back, the Human Rights and Equal Opportunity Commission published a report estimating that by the time a complaint has been through the Commission’s informal conciliation process, the average cost to an employer in lost time and productivity was $35,500. This was a cost incurred before resorting to litigation!

Should a complaint proceed to a public hearing, there are legal fees incurred to defend a claim and the possibility that the employer may be ordered to pay damages. Traditionally, damages in anti-discrimination cases have been low.  

In the late ‘80s, it was uncommon to see awards for damages exceed $5000, but in recent years, damages awarded have been on the rise.

Other costs are more difficult to measure.

Discrimination and sexual harassment hearings always attract adverse media attention and regardless of the outcome, the harm caused to business reputation, goodwill and employee relations can be irreparable.

A case example

A 16-year-old girl was awarded $10,000 by the NSW Equal Opportunity Tribunal for sexual harassment at a Parramatta secondhand car yard where she worked. This was her first job after leaving school.  

After two months of employment, she resigned because of numerous acts of sexual harassment by the sales manager and his cousin. The receptionist worked in the sales manager’s small office. He was in the office with her most of the day. She sat on one side of the desk, he on the other. She was required to eat her lunch at her desk while she worked.  

The sales manager repeatedly used obscene language when speaking to her and made sexual propositions like: “If you have sex with my friend, I’ll give you a car.” On two occasions, he brought a dictaphone into the office and played a recording of himself having sex with a woman.

The tribunal found the receptionist was subject to an offensive, intimidating and sexually permeated work environment “which was sufficiently pervasive to affect the terms and conditions of her employment”.

It said the employer was personally liable for the conduct of the sales manager.

“By condoning the instances encouraging it, the sales manager failed to take any steps to rectify the adverse working conditions provided to the receptionist, or remove the detriment to which she was subjected.”

The EEO Tribunal awarded damages for loss of wages of approximately $2,000; $650 for expenses incurred for psychological assessment and treatment and $8,000 in general damages. (NSW EEO Tribunal 59 or 1994)

It is illegal for employees to be harassed at work because of their sex, pregnancy, race, marital status, disability, homosexuality or age.

The Anti-Discrimination Board describes harassment as “any form of behaviour that is not wanted and not asked for” and that:

  • Humiliates someone (puts them down)
  • Offends someone
  • Intimidates them.

There are no hard and fast rules about what constitutes harassment.

The key is how the action or behaviour affects the person it’s directed against.

Even if the person doing the harassing does not intend to harass or offend, if someone thinks they’re being harassed and has tried to stop it, this could constitute harassment. Just one incident can be sufficient although harassment is usually a series of ongoing events.

In its guidelines on harassment in the workplace, the Anti-Discrimination Board of NSW gives examples of what may constitute harassment, which include:

  • Making fun of someone
  • Imitating someone’s accent
  • Offensive jokes
  • Ignoring someone, or being particularly cold or distant
  • Unnecessarily leaning over someone
  • Continually ignoring or dismissing someone’s contribution in a meeting/discussion.

Work on your business, not in it. To learn how, book a complimentary business assessment today with a Switzer Business Coach.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Tuesday, September 29, 2009

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