Paul O. Lopez. Paul O. Lopez.

The hits keep coming and we are not talking about box office bonanzas at Weinstein Pictures these days. The sordid sexual harassment allegations that continue to be levied against embattled former CEO and Hollywood mogul, Harvey Weinstein, on a daily basis are as distasteful as they are intriguing. They pique all of our curiosity since they evidence a culture which allows or, at a minimum, turns a blind eye to the exploitation of young vulnerable actresses by a powerful icon within the movie industry. Indeed, the stories that keep coming out of Hollywood suggest that Weinstein’s vulgar conduct has gone on for years and it appears that many employees and even board members at his company may have been aware of his predatory acts but yet no one spoke up for fear of retaliation. If it is proven that company board members and co-workers in fact knew about Weinstein’s penchant for such boorish and, likely, criminal conduct but buried their heads in the sand in order to continue to have a seat at the table in Tinsel Town then it is safe to assume Weinstein Pictures will be no more. But what lessons can companies learn from the Weinstein saga since the sexual harassment at issue was not the classic intra-company workplace harassment of one supervisor sexually badgering a subordinate (as far as we know at the moment)? The answer is: Many.

Under Title VII, companies are vicariously liable for the sexual harassment of their employees if they knew about the conduct of the harasser and failed to take action. Weinstein was the CEO of his company and, essentially, at the top of the food chain not only at his company but, evidently, within the power structure in Hollywood. As a result no one spoke up for years.  When sexual harassment comes from the top, oftentimes employees are unsure of what to do in connection with reporting the harassment. The courts have made it clear that companies will be liable for such harassment if they fail to intervene and stop the workplace harassment.  However, companies can insulate themselves from liability if there are explicit reporting mechanisms in place where the employee can seek relief if they are subjected to sexual harassment. In the case of a CEO (or any top-level manager), companies should identify within their company written policies and employee handbooks several supervisors that employees can report the sexual harassment to in the workplace. That way, if the employee is getting harassed by someone they directly report to or who is at the proverbial top, the employee should know that there are others within the company that they can speak to about the inappropriate conduct. Importantly, the company policies should also make it clear that employees can report such harassment without fear of retribution or retaliation. Title VII makes it clear that companies cannot retaliate against their employees for reporting sexual harassment since this is protected activity under the law. Employees need to know about this so that they are not in fear of their jobs or of any sort of workplace retaliation if they report sexual harassment along proper channels within the company.

When harassment is reported, the company must take action immediately.  If indeed it is the CEO, i.e., the person at the top that is the harasser, then the company, through its board of directors or its managing members, has a fiduciary duty to intervene and investigate. After receiving such complaints, the investigation should be done as quickly and discreetly as possible and the results of the investigation should be shared with the board so that appropriate measures can then be taken to address the situation. If the allegations are corroborated by the investigation, then the harasser should be either dismissed or sent into serious counseling to attempt to rehabilitate him or her. The victim should be re-assigned to a position within the company where the victim and harasser will have little to no contact. Taking minimal action against the harasser is not an option. The law imposes an obligation upon the company to take all reasonable measures it can to ensure that the victim of the harassment is not subjected to further inappropriate conduct and that the employee can work in a safe and secure workplace. Failing to take corrective measures will create substantial exposure for the company.

Overall, one of the key lessons companies should take away from the Weinstein scandal is that the Ostrich defense, i.e., burying your head in the sand and ignoring the problem hoping that it will go away, will lead to disastrous results. Hollywood for years used this approach hoping perhaps that the problem would go away or that it might not surface due to the millions Weinstein and his companies generated for the industry. Now the wreckage of Hollywood’s silence is on full display. This should serve as a stark reminder for companies to be vigilant for similar behavior from senior and top-line managers in the workplace. Burying your head in the sand is a recipe for disaster in dealing with sexual harassment or, frankly, any workplace issues. Be proactive and pre-emptive in handling your employees and make sure your written workplace policies are up-to-date and reviewed on a regular basis by experienced counsel.  More importantly, make sure these written policies are properly communicated and provided to your employees. Ignoring these issues can only lead to substantial exposure for your company either in the short term or in the long term.

Paul O. Lopez is litigation chair, a director and chief operating officer at Tripp Scott in Fort Lauderdale. Contact him at pol@trippscott.com.