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Hiring Executives: Find #MeToo Problems Before It’s Too Late

While sexual harassment has been a longstanding problem in America’s workplaces, it’s not an issue that typically preoccupies governing boards in either the corporate or non-profit sectors. Historically, human resources managers and in-house lawyers have handled most sexual harassment complaints – even the rare cases that have gone to trial – without ever notifying their companies’ boards. That is no longer the case.

Well-known companies and non-profits are learning that sexual harassment complaints against someone – or multiple persons – in the c-suite can threaten a company’s stock price and reputation. Major entertainment and media companies are even more vulnerable because, in addition to their top executives, their brands are defined by their top talent. An accusation against that top talent can scare off advertisers or cause consumers to boycott company products, resulting in significant financial losses.

Unlike the indispensable medical researcher at the pharmaceutical company or the brilliant engineer at the chemical plant, the “stars” of entertainment and media companies are known by everyone, not simply their peers in the industry. An accusation can go viral instantly. In fact, in the media industry, spreading your bad news may fit neatly into your competitors’ business plan.

Board members of all types of companies are increasingly asking questions about their company’s efforts to prevent sexual harassment. Unfortunately, directors may get a false sense of security from the answers they receive. Simply having policies in place and training your employees to implement those policies correctly does not necessarily protect the company from every type of sexual harassment-related risk. And although most companies also provide their employees with some training on that policy, the quality of those training programs can vary widely.

Executives and Top Talent are Different

There are two areas where companies continue to fall short in addressing sexual harassment complaints notwithstanding their seemingly adequate compliance programs. The first is how complaints against the “indispensable” talent are handled. As we have seen in many media companies, human resources personnel have often lacked real authority to address issues involving the most powerful executives in an organization. In some of the most publicized harassment scandals in the media industry over the last several years, despite victims following their companies’ policies and reporting instances of harassment and hostile work environments to the human resources department, those human resources departments failed to resolve the issue. While those departments had been generally effective in responding to complaints against “ordinary” co-workers and supervisors, it had become clear that they were often powerless when it came to addressing complaints about the company’s top talent or executives in the c-suite.

Fortunately, many companies have already recognized this deficiency in their prevention programs and have established procedures to ensure that complaints against the top talent are not brushed aside. These measures include establishing hotlines operated by third parties and policies which ensure that issues involving executives and major stars are brought to the attention of a committee – often an audit committee – of the board.

Doing Background Checks

The second area where companies have fallen short in addressing sexual harassment complaints is in their screening of executives and top talent at the time they are hired. In other words, doing some “due diligence” before employing someone. Unfortunately though, unless the applicant has a prior conviction for domestic violence, assault, or some similar criminal offense, a standard background check is unlikely to flag those candidates who have a history of problematic interactions with subordinates of a particular gender.

For top level executives and talent, the first thing that companies should consider doing is a more thorough “investigative report” on the candidate, by having a background-check company conduct personal interviews concerning the applicant’s character, general reputation, personal characteristics, and lifestyle. Bear in mind, however, that “investigative reports” will not always uncover prior harassment complaints against an executive since most companies work hard at keeping such personnel information confidential. They are also substantially more expensive than a normal background check. While there have been efforts made in some states, such as New York, to outlaw confidentiality clauses relating to claims of sexual harassment in settlement agreements, those clauses are still commonplace in settlement agreements and preclude many victims of sexual harassment from discussing their harassment. Additionally, if a company chooses to do a more thorough investigative report, they will need to comply with additional obligations under the Fair Credit Report Act (and potentially other state-level restrictions).

Companies can also conduct some types of background investigations on their own. For example, companies can perform their own searches to uncover inconsistencies in the candidate’s information provided to the company. Does the candidate’s resume on his LinkedIn page list jobs that were not listed on the resume he submitted to your company? Do the candidate’s Facebook, Instagram or Twitter pages raise any red flags such as issues dealing with women or people of color? Do any postings provide evidence of poor judgment? But, two caveats about conducting your own internet searches. First, rely only on information the candidate has made public for all to see; don’t engage in any deception to get access to a candidate’s information. Second, it’s usually a good idea to have internet searches conducted by persons in human resources who will not be making any final employment decisions. That way you can ensure that the decision makers are not privy to any information – health information, information about religious beliefs, number of children, sexual orientation, marital status – that would not be relevant to the search.

Using the Job Interview to Uncover Problems

While background checks are helpful, perhaps the most effective tool for uncovering potential “#MeToo” problems is a good interview. Interviewers should always explore in a job interview how a candidate would handle work relationships since a candidate’s responses (or non-responses) may provide insight into the candidate’s views about women and persons of color.

Consider the following questions:

  • A female employee in our company comes to you and complains that she does not feel that women are given sufficient opportunities to develop in the company. How do you handle the conversation?
  • Have you ever had such a conversation in prior executive positions?
  • An employee in our company comes to you and complains that her supervisor has been making subtle but persistent comments to her regarding a romantic relationship, despite her having communicated that she is not interested. What do you do?
  • Without identifying any names, tell me how you handled such complaints in the past?

Engaging a prospective executive in a conversation about these issues gives you an opportunity to explore the candidate’s workplace values and attitudes towards others. In today’s climate, a great “vision” for business issues can be easily undermined by a candidate’s inability to empathize with diverse subordinates or appreciate the importance of maintaining a work culture where women are treated with respect. A candidate’s answers, and reactions, to these types of questions may demonstrate that he not only lacks the leadership skills that your company needs but could also become a serious liability.

While some interviewers may feel awkward asking a candidate if he or she has ever been accused of harassment, if you are serious about doing due diligence, the following questions should be asked:

  • Have you ever been in a situation at another company where an employee accused you of harassment or that you subjected them to a hostile environment?
  • Was there any basis to employee’s claims?
  • How did this make you feel?
  • How did you react? How did the company react?
  • Have you ever felt that you might have had any subconscious biases towards women in the workplace?

An admission that an employee was accused of something should not necessarily be disqualifying. Much will depend on the circumstances and how the candidate discusses the incident. A candidate who admits to past mistakes and now expresses regret and embarrassment may end up being a great manager while the candidate who seems clueless about the existence of subconscious biases likely will not.

Using the Executive Contract to Address #MeToo Problems

You should also consider documenting the candidate’s responses to questions about whether he has ever been accused of harassment, especially if the candidate answers “No” to such questions. If the employee is being given an employment contract, some thought should be given to including the response as a “Warranty and Representation” that would allow the company to terminate employment without severance if the response is later proved false.

Sometimes companies inherit new employees when they acquire new businesses and may not get the benefit of vetting the talent that they are acquiring.  Recognizing the potential risks of bringing on a problem employee, buyers of businesses are increasingly using “Weinstein reps” in corporate transactional agreements in order to ensure they are not acquiring companies vulnerable to harassment litigation which could result in a financial or reputational liability.

Conclusion

No screening system is perfect. Someone who has an impeccable record in lesser positions could ultimately become a serial harasser when placed in a position of power. Even companies with the most robust training and reporting systems will sometimes end up with a bad apple that could embarrass the company. But there is nothing worse than the company that ignores the issue or, worse yet, engages in its cover-up. What matters most is how an organization responds when confronted with such allegations.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.