The public's growing focus on corporate governance and ethical conduct has resulted in a wave of civil litigation and criminal charges against not only publicly held companies, but privately held ones as well. Experts predict that requirements similar to those of the Sarbanes-Oxley Act that protects investors in public firms will eventually apply to private firms and non-profit organizations as well. Accordingly, forward-thinking firms are conducting self-audits and are stepping up their legal compliance efforts now.

These efforts apply not only in corporate financial practices, but also in other potentially costly areas. Many real estate firms report that they are increasingly concerned about their liability in the area of employment discrimination and related matters.

Statistics maintained by the U.S. Equal Employment Opportunity Commission (EEOC), one of the federal agencies that enforce employment discrimination rules, show that the overall number of discrimination charges filed has risen significantly since the 1990s. Sexual harassment complaints are among the most frequently cited forms of workplace discrimination covered by the EEOC.

Public awareness of sexual harassment is likely to increase because of a new state law that requires California employers with at least 50 employees to provide all supervisors with two hours of sexual harassment prevention training every two years. The law became effective on Jan. 1, 2006. The training covers sexual harassment prevention and retaliation.

Best practices head east

Whether your firm has a presence in California or not, it makes good business sense to conduct supervisory-level sexual harassment training. According to real estate industry human resources professionals, such training does work to prevent sexual harassment charges. California employment laws tend to migrate eastward over time and may soon cover non-California companies.

In fact, several other states already urge such training (see chart). Employment lawyers say that companies with operations in California and other states have rolled out nationwide training programs rather than limiting their anti-harassment strategies to their California locations.

There are other reasons for creating a sexual harassment prevention training program. The decentralized operations that are common in the real estate industry can mean that there is less “corporate supervision” of managers and other employees. In addition, the human resources department may be entirely separate from other divisions, creating an obstacle to preventing and reporting sexual harassment. At the property level, employees regularly work with limited supervision and outside of the overall corporate culture.

Zero tolerance for retaliation

It is important that sexual harassment prevention training include information about retaliation. Retaliation occurs when an employer makes an “adverse action” against a “covered individual” because that individual has engaged in a “protected activity.”

Employers may not fire, demote, harass or otherwise retaliate against an employee for filing a sexual harassment or other type of discrimination charge, regardless of whether the allegations have merit. It is illegal for an employer to attempt to prevent an employee from making a discrimination charge or otherwise participate in a discrimination proceeding.

Taking steps to prevent retaliation is essential. Companies should create a strong policy against such practices that is separate from the firm's anti-discrimination policy. Manager and supervisor training should provide specific examples of what constitutes retaliation, and it should include reminders of the firm's anti-retaliation policy.

In addition, ongoing corporate-level communication with employees who claim that they are victims of harassment is an important aspect of preventing retaliation. The EEOC offers both no-cost outreach programs and employer-tailored, fee-based training that provide information about anti-discrimination laws.

The penalty for failing to take steps to prevent sexual harassment and retaliation claims can be costly. An employer may be held liable for compensatory and punitive damages as high as $300,000 per victim, as well as back pay and front pay — which is “compensation” for the wages that the victim would have earned by being reinstated.

As the California sexual harassment training law is implemented and the trend toward more retaliation claims continues, firms are strongly encouraged to examine their anti-discrimination policies and training programs. Combining the expertise of your legal counsel, human resources team and risk managers will yield dividends in the future, as the public pressure on companies to adhere to a strong code of ethical conduct and corporate accountability grows.

Elizabeth Feigin Befus is director of property operations for the National Multi Housing Council, where she is responsible for human resources issues that affect the multifamily industry.

STATES THAT REQUIRE SEXUAL HARASSMENT TRAINING

(covered employers and employees vary)

• California
• Connecticut
• Illinois (public employers)
• Maine
• Oklahoma (some public employees)
• Tennessee (public employers)
• Utah (public employees)

Source: NMHC