The “#MeToo” Impact on Sexual Harassment Claims

    In the #MeToo era, consequences of harassment allegations are far-reaching and often take effect without the filing of a lawsuit. Last week Steve Wynn, CEO of Wynn Resorts, stepped down after allegations of sexual misconduct put pressure on his ability to remain in his former position and shares of Wynn Resorts stock plummeted nearly 20%.[1]

    For BetterWorks Systems Inc, a Northern California human resources software start-up company, allegations against the CEO for sexual harassment and assault resulted in widespread hardships for the company.[2] The CEO disputed the allegations, but nevertheless stepped down from his role. Before the lawsuit was filed, BetterWorks was set to raise nearly $40 million from investors. After the lawsuit, the company lost business and struggled to raise funds from investors, and a book co-authored by the CEO was put on hold. Although BetterWorks has settled that initial lawsuit, it now faces a second lawsuit from another employee alleging that the company, and several executives, turned a blind eye to the alleged behavior. 

    The #MeToo movement is changing how companies deal with sexual harassment allegations. In most public cases, company leaders resign or step down before an investigation is conducted or a lawsuit is filed. Depending on the facts, companies may find that they are trying the alleged sexual harassment claim in the court of “public opinion,” and their employees, customers, shareholders, and the public may demand that immediate action be taken against the accused. These consequences demonstrate the importance for companies to embrace a culture that does not tolerate harassment and not only encourages, but requires reporting of harassment. As outlined in a previous blog post,[3] companies should take the following steps to minimize the possibility that a company’s valued employees will be victims of a hostile work environment, and in turn to minimize exposure to the various negative consequences of harassment allegations:

(1)               Maintain a clear anti-harassment policy;

(2)               Train managers and ensure non-managers are well-aware of anti-harassment policies and reporting expectations; 

(3)               Thoroughly investigate complaints of harassment; and 

(4)               Consider engaging an outside public relations firm to develop a strategy for continuing to do business, in light of the sexual harassment allegations, regardless of whether the accused remains employed.

[1] Jethro Mullen, Steve Wynn Steps Down as CEO of Wynn Resorts after Misconduct Allegations, CNN Money (February 7, 2018), http://money.cnn.com/2018/02/06/news/companies/steve-wynn-stepping-down-ceo-wynn-resorts/.

[2] Cromwell Schubarth, BetterWorks faces new sex harassment suit as it settles first one, picks new CEO, Silicon Valley Business Journal (February 12, 2018), https://www.bizjournals.com/sanjose/news/2018/02/12/betterworks-harassment-lawsuit-ceo.html

[3] See Guidance for Employers in the Wake of the #MeToo Movement, The Rocky Mountain Employers Blog, November 30, 2017, http://www.rockymountainemployersblog.com/blog/2017/11/30/guidance-for-employers-in-the-wake-of-the-metoo-movement.