In his newly-released book, Catch and Kill, former NBC reporter Ronan Farrow recounts previously-unreleased details surrounding rape accusations against Matt Lauer, the former host of NBC’s “Today” show. Farrow provides a revealing, comprehensive account of accusations made by Brooke Nevils, a former NBC employee who maintained that Lauer sexually assaulted her in 2014. Lauer has denied the charges and asserted that his sexual encounters with Nevils were consensual.
Within 24 hours of Nevils’ formal complaint to NBC in 2017, Lauer was fired. NBC Universal conducted a five-month-long investigation and reported in 2018 that network leaders were unaware of any prior complaints about Lauer’s conduct before Nevils’ complaint.
Farrow asserts multiple employees complained about Lauer’s inappropriate sexual conduct prior to his firing. He reports that NBC Universal chairman, Andrew Lack, and NBC president, Noah Oppenheim, were openly dismissive of the seriousness and criminality of the allegations, causing Nevils tremendous distress. She went on medical leave in 2018 and was eventually paid a seven-figure settlement by NBC, according to Farrow.
Allegations of sexual harassment rise
“In 2018, the number of sexual harassment charges received by the Equal Employment Opportunity Commission (EEOC) increased 13.6 percent from 2017,” said Matthew Baxter, Vice President, Burns & Wilcox Brokerage, Atlanta, Georgia.
The EEOC also reported that it obtained $70 million in monetary benefits for victims of sexual harassment through its fiscal 2018 administrative enforcement and litigation efforts.
“Insurance is a good back-up plan to help pay for claims and legal defense, but it is not a replacement for having guidelines and changing company culture. That starts at the top, and executives should make sure that it is well understood that there is zero tolerance.” – Matthew Baxter, Burns & Wilcox Brokerage
Out of 66 workplace harassment lawsuits brought by the EEOC in 2018, 41 alleged sexual harassment—up more than 50 percent from 2017. In addition, almost three-quarters of sexual harassment charges filed in 2018 included an allegation of retaliation against the victim.
In 2016, 4 percent of Canadian women reported they were sexually harassed in the workplace. Of these, 15 percent identified supervisors or management and 44 percent colleagues or peers as the perpetrators.
While all companies should invest in Employment Practices Liability Insurance (EPLI) and Directors & Officers Liability Insurance (D&O) to help mitigate the financial costs of sexual harassment claims, it is not a replacement for implementing preventative measures, said Baxter.
“Insurance is a good back-up plan to help pay for claims and legal defense, but it is not a replacement for having guidelines and changing company culture. That starts at the top, and executives should make sure that it is well understood that there is zero tolerance.”
Protecting assets and stakeholders
D&O Insurance coverage can mitigate an organization’s exposures for legal and other costs stemming from perceived or actual mismanagement of harassment or discrimination complaints, which may adversely affect its shareholders, company officers and other stakeholders.
In Catch and Kill, Farrow accuses NBC Universal chairman Andrew Lack of obstructing his investigation of sexual assault and harassment allegations against Hollywood producer Harvey Weinstein; Lack categorically denied the accusations.
Eventually more than 90 women came forward to accuse Weinstein of sexual assault and harassment, resulting in his dismissal from his own company, criminal assault charges and tens of millions of dollars in civil lawsuit settlements. In March 2018, the Weinstein Company filed for bankruptcy and nullified NDAs that had silenced its employees from speaking out on the allegations against their former boss.
“If it turned out that a company did engage in a cover-up of harassment, it could turn into claims of negligence or mismanagement,” Baxter said. In such cases D&O Insurance coverage can help to pay legal defense and settlement costs.
“The panel counsel that an EPLI or D&O Insurance carrier has on staff deal with employment practices and D&O coverage issues constantly, so they are able to get a handle on an allegation quickly, before it escalates.” – Heather Schaaf, Burns & Wilcox
Heather Schaaf, Underwriting Director, Executive Liability, Burns & Wilcox, Chicago, Illinois, said news media entities face additional challenges with respect to sexual harassment because they are high profile, operate on a 24-hour basis and employees often work off-site and travel together. “Those types of situations can more easily lead to harassment happening because there are fewer onlookers to call out (one employee’s harassment of another),” she explained.
“Say, for example, you are a small manufacturing company,” Schaaf offered. “(An employee) comes forward with allegations and it is the first time the HR person is dealing with (a sexual harassment complaint).” That HR staff member could call the company’s EPLI carrier’s helpline for advice on how to address the complaint before the company even submits a claim, Schaaf said.
“The panel counsel that an EPLI or D&O Insurance carrier has on staff deal with employment practices and D&O coverage issues constantly, so they are able to get a handle on an allegation quickly, before it escalates,” Schaaf said. Taking early, decisive action following a harassment allegation helps everyone, she said. Employees are protected from further harassment or assault and an employer can send a clear message that it is committed to doing the right thing.
Schaaf pointed out that a company’s entire executive team and board of directors are put at risk when there are allegations of harassment or assault against an employee and management appears to minimize, suppress or dismiss them outright. “Companies need to take a hard-line approach to curb that type of behavior,” she asserted.
Combating harassment, managing its aftermath
Farrow’s allegations that NBC mismanaged the Lauer allegations and tried to obstruct his investigations of sexual assault and harassment have once again cast into the spotlight how organizations should address sexual harassment and create an open, welcoming and respectful workplace culture.
According to Baxter, comprehensive education and training of all employees is essential to any risk management strategy. “All companies—not just large media companies, but mom-and-pop, small-market companies—need to provide sexual discrimination and harassment training for all employees, especially management and executive-level employees,” said Baxter. “Make it clear what is acceptable and not acceptable and make sure everyone is up to date on discrimination and harassment laws and procedures.”
“Make sure you have a safe environment so if there is harassment going on, employees are comfortable reporting it early.” – Baxter
Baxter advised that business leaders should implement education and training programs to prevent sexual harassment and assault and establish clear procedures for handling complaints. A broad EPLI policy and a plan that addresses allegations such as workplace bullying, harassment, discrimination and unequal pay are also advisable, he said.
Human resources and internal legal departments should collaborate to observe and assess how employees are interacting with each other, Baxter said. Building a culture in which employees are well educated about harassment and encouraged to report it to the appropriate personnel without fear of retaliation is key, he stressed. “Make sure you have a safe environment so if there is harassment going on, employees are comfortable reporting it early.”
Many EPLI policies will also provide insured parties with access to a helpline staffed by lawyers and a website that provides legal advice to help create a solid company handbook on discrimination and harassment issues, Schaaf noted.
“Business leaders should assess their companies’ approach to sexual harassment yearly, versus putting out a handbook and thinking that they are good. They need to continually bring it to front of mind that the company will not tolerate that kind of behavior.”
Schaaf identified bullying and harassment (including sexual) on social media as a growing trend that companies should address with education and training efforts. Employees need to be aware that posting unwanted messages or pictures to co-workers or others will not be tolerated (even if they are not using a company sponsored device to send such messages) and that such actions are against company policy and can endanger the entire company.
This information was provided by Burns & Wilcox, North America’s leading insurance broker and underwriting manager. As with any coverage need, an insurance broker or agent must be consulted.