#MeToo brings new expectations

Have you examined how the #MeToo movement changes the way sexual misconduct claims are handled at your organization, in your firm, or for those you advise?

If you haven’t, well, #TimesUp.

These two social media hashtags, made viral after the 2017 downfall of top Hollywood movie executive Harvey Weinstein, led to a national reckoning over sexual misconduct in the workplace. October marks two years since the #MeToo movement started, and the movement’s demands for the protection of women have had implications in all aspects of our communities, businesses, and entertainment industries.

“The risk has changed radically from what it used to be,” said Davia Temin, the president and CEO of the New York City-based Temin and Co., a consulting firm that advises companies, corporate boards, and individuals navigating sexual harassment claims. “This #MeToo movement has exacerbated risk, both financial and reputational, to the point that it doesn’t bear that much resemblance to what existed before.”

Employees in many places are also pushing for change. Thousands of Google employees staged a walkout last year to protest the treatment of women and the handling of sexual harassment claims after The New York Times reported a top executive left the technology giant with a $90 million severance package following a credible sexual misconduct claim.

While much of the #MeToo movement’s focus has been on powerful men accused of lurid behavior, harassment can involve perpetrators of both sexes and cover a variety of scenarios, said Julie Moore, president of Employment Practices Group in Wellesley, Mass., and a lawyer specializing in workplace discrimination issues.

Temin, Moore, and others shared their thoughts on emerging best practices to discourage sexual misconduct and to investigate and respond to reports of sexual harassment in the workplace.

CHANGING REGULATIONS

Several states and localities passed laws in the last two years affecting how sexual misconduct complaints are received and handled, Moore said.

For example, New York expanded protections against sexual harassment to nonemployees such as contractors, vendors, consultants, and other service providers; prohibited nondisclosure agreements related to sexual harassment unless the victim expresses a preference for such an agreement; and created a model policy for employers to adopt. California prohibited provisions in settlement agreements that prevent disclosure of certain claims of sexual assault, sexual harassment, or sexual discrimination.

The AICPA Code of Professional Conduct also has specific guidelines related to harassment and discrimination, which are discreditable to the profession, although they have not changed in recent years (see the sidebar, “AICPA Code Addresses Harassment, Discrimination”). Firms should reevaluate their statutory obligations by going over changes at the state and local levels with human resources or employment law experts to ensure that their practices are up to date.

LEADERS NEED TO PARTICIPATE

Setting the tone at the top is the best way to get the message through to potential perpetrators that harassment isn’t tolerated, said Eric Bachman, a lawyer and chair of the discrimination and retaliation practices at Washington firm Zuckerman Law. Leaders need to create policies prohibiting sexual harassment, make certain those policies are widely understood by employees, and ensure zero-tolerance policies are adhered to at all levels. In word and in action, organizational leaders need to support those policies and set an example by upholding them.

That means senior management, from the CEO on down, should actively engage in any training or employee working groups developing policies.

“They need to be there to show everybody that they take this seriously,” Bachman said.

It also means calling out questionable behavior that happens in front of an executive or is heard about by a top partner, something Moore refers to as the “bystander effect.” If a senior manager makes a joke about a female colleague’s appearance (or even worse), having an executive speak up sends a clear message that a line was crossed.

Staying silent leaves an impression that the behavior is OK, and “that emboldens the harasser,” Moore said.

Calling out the inappropriate behavior should be just the first step. Leaders also need to report the behavior in compliance with company policy to make sure appropriate action is taken.

CHECK-THE-BOX TRAINING NOT ENOUGH

Training on sexual harassment in U.S. workplaces over the past 30 years has largely missed the mark, resulting in just a quarter of suspected sexual misconduct incidents being reported to employers, according to a 2016 task force report on sexual harassment issued by the Equal Employment Opportunity Commission.

That’s because many sexual harassment training courses, whether through annual viewings of a video or generic orientation for new staff, focus on easing legal liabilities for employers and not on discouraging misbehavior under any circumstances, Temin said.

“It has been a sort of legal ‘check the box’ as opposed to something that is really a deterrent,” she said.

Any type of sexual harassment training or policies should reinforce the clear message of zero tolerance for sexual harassment, with actions that back that up, Moore said. Training should be interactive, tailored to individual workplaces, and emphasize cultivating working environments built on civility and respect, she said.

Also needed are opportunities for staff to ask what is and isn’t unwelcome behavior. This can both provide clarity for staff members and open a dialogue for discussing these issues in the workplace.

In an example of an individually tailored workplace policy, if a firm has staff members who travel with colleagues to clients’ businesses for audits, training should cover these scenarios. Training should include clear guidance on how to respond under each scenario to inappropriate behaviors that occur out of the office setting. Training should also describe the mechanisms that are in place if a client engages in harassing behavior, whether it was a firsthand experience or observed.

CLEAR REPORTING PROCESS

Bachman suggests organizations evaluate their current reporting structure and examine whether employees are given clear guidance on how to raise concerns and what happens once an investigation starts.

Staff members need to be reassured that there won’t be repercussions for those who do raise concerns, whether the report is made by a victim or someone who has witnessed questionable behavior.

“You don’t want people to be afraid of coming forward,” he said, adding that every effort should be made to keep the complaint confidential.

Temin said larger employers can set up a hotline hosted by an experienced third party that can report any transgressions directly to the CEO and board. Experienced outside entities are often better equipped than HR departments to receive, evaluate, and forward or address complaints of misconduct, she said.

Regardless of the structure of the reporting process, employers need to make sure they take complaints and reports of misconduct seriously, she said.

“Every allegation must be seriously considered even if you have a strong belief or knowledge that it is unsubstantiated or untrue,” Temin said. “You have to have a process to do this.”

THE BOARD’S HIGHER CALLING

Board members need to ensure complaints are dealt with, said Allan Koltin, CPA, CGMA, the CEO of a Chicago-based consultancy practice for accounting firms.

That means board members are responsible for following up on discussions about complaints and making sure management responds in appropriate ways. Board members have a duty to ensure that the proper HR policies and procedures are in place to safeguard against discrimination and harassment. The board also can make sure that these policies and procedures are being communicated appropriately.

“You can’t just say, ‘I was just a board member,'” Koltin said. “There’s a higher calling that board members are now taking on.”

Board members can set the stage for a harassment-free workplace, according to Temin. She advises requesting an immediate audit of all sexual harassment claims and settlements over the last decade and adopting practices that ensure every complaint is taken seriously while also ensuring those accused of wrongdoing receive their industrial due process.

Consider using incentives to have top management make maintaining a harassment-free atmosphere a priority, Temin said. Some companies are making this part of executive pay packages or part of a bonus structure for top and middle management, she said.

Boards should be pushing for gender diversity in the top ranks of management and the board itself as well, Temin said.

IF THE PROBLEM IS IN THE C-SUITE

Board members have a legal responsibility to vet complaints of questionable behavior and must respond to reports of sexual harassment made against the CEO and other top employees, Moore said.

“You’ve got a duty, and don’t just say, ‘We can’t afford to lose him,'” she said.

Any investigation needs to be conducted by a neutral third party experienced in these matters, she recommended, and not someone within the company like an HR director or general counsel who reports to the CEO.

Corporate directors should consider if it makes sense for the official to take a leave of absence, work from home, or stay on the job while minimizing contact with the complainant while the investigation is conducted, Moore said. Avoid rushing to judgment as well until the investigation is complete.

“You can’t do a rush job; you have to be thorough,” she said. “The board needs to keep an open mind.”

REEXAMINING THE PAST

Past incidents may also need to be examined with 2019 eyes, Koltin said. He has seen accounting firms review incidents of sexual misconduct from a decade or more ago and decide that they no longer want someone on their payroll with a history of harassing behavior, even if it was tepidly dealt with years ago.

“People have been counseled out of a firm,” Koltin said. “It’s just better they not be there, either, ‘You’re a ticking time bomb’ or ‘We can no longer look the other way on the sins of the past.'”

M&A IMPLICATIONS

Heightened awareness of the implications of sexual harassment has affected the due-diligence process in mergers and acquisitions.

Some companies are even writing clauses into purchase agreements regarding accusations of sexual harassment. For example, the agreement covering the purchase of Barteca restaurants by the Del Frisco’s restaurant chain in May 2018 stated that Barteca is not party to any settlement agreements related to sexual harassment claims and stated that there are no sexual harassment allegations claimed or threatened against Barteca executives or managers.

Koltin said he has seen increased attention paid in the negotiation process to finding out about previous incidents or problem employees.

“It’s a tighter ship in terms of what I’ve ever seen,” he said. “It’s just zero tolerance.”

New owners don’t want to keep people who are liabilities and are making clear that those with histories of sexual misconduct need to be let go before any acquisition goes through.

The message is, “You’ve got to take care of your dirty laundry first,” Koltin said. “They’re culling them out in advance.”

DON’T OSTRACIZE WOMEN

Since #MeToo exploded into the public sphere, Moore has heard male professionals voice concerns about having work-related dinners with female subordinates or one-on-one meetings behind closed office doors with women in their firm.

Male managers who take that approach could face gender discrimination challenges for treating women in the business substantially different from their male colleagues, Moore said. Like sexual harassment, sexual discrimination is illegal and can open a company up to a lawsuit, and it can send a message to talented staff that women aren’t supported.

“You can’t disadvantage women,” she said, adding that access to mentorship cannot be available to just one gender.

It’s also important to realize that these issues of equity aren’t limited to the treatment of women. Men and those who may identify with traditionally marginalized groups such as the LGBTQ communities also have been affected. Moore’s advice returns to the themes of civility and respect. If meetings and meals are kept within the widely accepted lines of professional work settings, then there won’t be a problem, she said.

“Act responsibly and always double-check your behavior,” she said.

AICPA Code addresses harassment, discrimination

Harassment and discrimination are specifically cited as acts discreditable to the accounting profession in the AICPA Code of Professional Conduct.

The “Discrimination and Harassment in Employment Practices” interpretation (ET §1.400.010) states that a member would be presumed to have committed an act discreditable to the profession if a court or administrative agency makes a determination not subject to appeal that a member has violated any antidiscrimination law of the United States, a state, or municipality, including those related to sexual and other forms of harassment.

About the author

Sarah Ovaska-Few is a freelance writer based in North Carolina.

To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA’s editorial director, at Kenneth.Tysiac@aicpa-cima.com or 919-402-2112.

AICPA resources

Articles

• “Women’s Initiatives: A Step-by-Step Plan,” JofA, Sept. 2018
• “More Women With CFO Titles, but Still Far Behind Men,” JofA, Jan. 23, 2018
• “How Firms Can Close the Gender Gap,” CPA Insider, Sept. 26, 2016
• “Creating and Shaping an Ethical Culture,” Corporate Finance Insider, Oct. 1, 2015