“Ask Sheila” Column

Dear Sheila:

I’m a small business owner with 10 employees total and serve as both the owner and general manager. I’ve always been told that small employers can’t be sued for sexual harassment. Is this true? Could I be held individually liable for sexual harassment that occurs in my workplace? As a business owner, what steps can I take to prevent sexual harassment, and what should I do when an allegation of harassment is brought to my attention?

Small Business Owner Concerned about Sexual Harassment Liability

Dear Small Business Owner:

During the latest regular Texas Legislative Session, two new laws (SB 45 and HB 21) were passed that directly relate to your question about small businesses’ exposure to sexual harassment liability.

First, you are correct that the longstanding Texas law was that employees could bring a claim of harassment or discrimination against their employer only if the employer had 15 or more employees. However, SB 45 changed the definition of employer for the limited purpose of sexual harassment to include any person who “employs one or more employees.” Now, even employers with one employee will be liable for sexual harassment in their workplace (though the 15+ employee rule still applies for discrimination claims based on other protected classes, or for claims under federal law).

You also raised the issue of individual liability. Under SB 45, the definition of employer was extended to include not just employers, but any person who “acts directly in the interests of an employer.” Such persons could include managers and supervisors, human resource professionals, and general managers, like yourself. This means that not only could your small business be held liable, but you, or any supervisor or manager at the company, could also be individually liable if you knew or should have known about a claim of sexual harassment and didn’t take “immediate and appropriate” remedial action. While the definition of “immediate” is not yet defined, we anticipate it requires a swift employer response to an allegation of sexual harassment.

Finally, you asked about ways to prevent sexual harassment, and how you should respond to harassment complaints. We recommend your small business adopt a clear anti-harassment policy, and provide sexual harassment training to your employees with specific instruction on how to report harassment. When you receive a complaint, you need to act quickly. Remove the subject from direct contact with the complainant or place the subject on paid administrative leave pending investigation, if separation is impossible. Conduct a fact-finding investigation, or hire an independent investigator to do so, and determine whether the harassment occurred. If evidence of harassment or other wrongdoing is found, address with prompt disciplinary action and keep the complainant informed of all remedial actions taken.

“Ask Sheila” is prepared by Sheila Gladstone, Chair of the Firm’s Employment Practice Group, and Emily Linn, an Associate in the Firm’s Employment Practice Group. If you would like additional information or have questions related to this article or other employment matters, please contact Sheila at 512.322.5863 or sgladstone@lglawfirm.com, or Emily at 512.322.5869 or elinn@lglawfirm.com.

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