September 1998 Issue

THE SUPREME COURT'S DECISION ON SEXUAL HARASSMENT SPELLS TROUBLE FOR SMALL BUSINESSES.

The recent Supreme Court ruling that an employer can be held liable for sexual harassment conducted by its employees even if that employer is unaware of the harassment, sent a warning to companies large and small. But small businesses are likely to be more vulnerable than large organizations to claims under this ruling. Small companies tend to have a family-like atmosphere that is not conducive to an effective whistle-blowing system.

According to Michael Lotito, a partner with Jackson, Lewis, one of the nation's largest law firms focusing on workplace issues, "We are advising companies to review, revamp, and re-introduce their policies on sexual harassment; to make sure that everyone is aware of and understands the policy; have a clear and open-ended procedure for filing complaints; and to investigate every complaint thoroughly."

Though this advice applies to large as well as small firms, Lotito maintains that small companies will have more difficulty than large organizations for a number of reasons. "For example, what happens if you wish to file a complaint against the boss' son, or against a key employee? In a small organization, where there may be only one key employee, objectivity becomes very difficult, even with a sexual harassment policy in place."

The family feeling of a small company is a double-edged sword. There is intimacy that can be extremely effective, engendering positive camaraderie. But on divisive issues like sexual harassment, a totally objective complaint procedure may be more difficult to execute.

Lotito suggests that small business owners establish and implement a comprehensive policy on sexual harassment quickly and diligently. They should pay particular attention to the complaint process, making sure every employee has a clear way to register a complaint without repercussions. Demonstrating a zero tolerance attitude toward sexual harassment will help yourself immeasurably to reduce liability in this area. For more information, please visit the firm's web site at www.jacksonlewis.com.*

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

Visit the new cpajournal.com.