Firms need to protect themselves against potential harassment lawsuits

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Despite data showing that as much as one-third of women in accounting have been sexually harassed, the profession has yet to see a significant increase in harassment-related insurance claims for accounting firms, say insurance executives and loss prevention specialists — but they add that that doesn’t mean firms shouldn’t prepare for the possibility.

While a recent SourceMedia survey of sexual harassment across white-collar professions found that two-thirds of accountants believe that there is only low prevalence of sexual harassment in the profession, it also reported that 34% of women in accounting said they have been victims of some form of sexual harassment in their careers. That figure rises to 37% for women at firms with fewer than 50 employees.

Highlighting the problem is a recent complaint filed by a female partner against Ernst & Young with the Equal Employment Opportunity Commission, accusing the firm of ignoring her harassment at the hands of colleagues. (See "Ernst & Young accused of failing to act on groping complaint.")

One major reason for the gulf between perception and the reality of sexual harassment in the workplace is likely due to incidents being underreported. The SourceMedia survey found that two-fifths of accountants said they think harassment is “rarely” reported (43%), and more than a third said that it only “occasionally” reported (37%).

According to Ken Kumor, senior vice president of corporate development at Aon, this is not unusual.

“Statistically, 75 percent of actual instances of sexual harassment go unrecorded,” said Kumor. “We talk to our clients and they say, ‘We’ve never had a complaint — we have a hotline and never heard anything,’ but that could be because people are afraid to report it. That’s an [Equal Employment Opportunity Commission] statistic. Another statistic that is relevant is that of the instances of sexual harassment that are reported, 75 percent of those who report the instances feel that they then get retaliated against by their employer. There might be more harassment, but victims feel their career path might be stopped because they will be viewed as a troublemaker.”

Accounting Today spoke to several victims of sexual harassment and inappropriate behavior in the workplace, and fear of retaliation was a common reason for those who did not report incidents. In addition, the gender disparity in accounting leadership roles and the smaller staffs of many practices can make reporting these incidents more difficult. “For a lot of companies that are really small, people doing the harassing are the people you would tell,” noted one victim of harassment who spoke on condition of anonymity.

“Certainly we have seen different kinds of harassment claims over the years — different professional service firms see different rates,” Kumor explained. “I wouldn’t say we’ve seen a high volume in the current environment, where there’s a lot of press around the issue. We’re having conversations with our clients but haven’t yet seen any spike [regarding] sexual harassment claims. It may be a timing issue; it can be a process, depending on how they bring a claim. Title VII of the CRA [Civil Rights Act] through the EEOC— there’s a process where they file Notice of Right to Sue. Where sexual harassment is considered some form of sexual discrimination, that’s one of the paths you can bring under the CRA, through the EEOC. That can be a bit of a process.”

The pace of legal proceedings could also have a hand in the relatively low number of claims against accounting firms that insurance executives are currently handling. At the same time, while sexual harassment claims have not increased significantly, insurance professionals are seeing the related area of gender discrimination cases against accounting firms become more prevalent.

Realities of the profession

“We see more discrimination than harassment complaints, and complaints about not being promoted or becoming partner,” shared John Raspante, director of risk management for CPA Protector Plan, a professional liability program for CPA-owned firms. “Those are more common perils that we see as a claim that develops against an accounting firm that has [employment practice liability insurance] — wrongful termination [or] not becoming partner, as opposed to harassment claims. Accountants are conservative and by virtue of that don’t take liberties or act carelessly as much as other professions … the conservative nature sort of leads to practices and policies that warrant less claims for harassment.”

Raspante’s assessment was echoed frequently in the SourceMedia survey, with many respondents mentioning the professionalism and conservative nature of accounting as a reason for their low perception or lack of encounters with sexual harassment in the profession.

But harassment and inappropriate behavior does occur in accounting, according to the survey, which found that almost two-fifths of female survey respondents were aware of others who have been harassed (39%), increasing to almost half (47%) of women who work at firms with more than 50 employees. Men were just as just likely to be aware of someone else who experienced harassment in the workplace.

The nature of the profession can lead to trends in bad behavior, according to Emily Franchi, loss prevention specialist for employment practices liability insurance at Camico, a CPA-directed program of insurance products and risk management solutions.

“A common circumstance in the accounting world is busy season — there are crazy hours for four months, and it’s almost like having a family type of environment,” she said. “People’s guard is not up as much and they are a little more relaxed, which can lend itself to making inappropriate comments, inappropriate or off-color jokes, in terms of culture [and] that ‘families’ sort of feel. At times a little too relaxed.”

More generally, Ron Parisi, a partner at Fremont Ohio-based Orchard Accounting and former professional liability insurance company executive, categorizes event-specific behavior as one of two types of claims he has come across. “Many claims involve abuse of alcohol,” he explained. “There are two patterns of sexual harassment claims: the continued unchecked behavior of those in power, and … one-time events involving company events and abuse of alcohol.”

Either way, in Franchi’s experience, claims do not typically result in many viable cases. “I would say there is an uptick in the number of claims, but we haven’t seen a lot of them come to fruition in terms of having teeth,” she explained. “People are not putting up with as much as typically they would have in the past.”

While the low number of claims reported by insurance experts is good news for the profession, they warn that the statistics could be influenced by a lag between the time of the incidents and any claims filed. Especially given the current climate, with the rise of the #MeToo and Time’s Up movements against sexual harassment, many experts anticipate that the numbers could still rise in the coming months.

“Insurers and underwriters are certainly wary and have expectations that [they] will see an increase —[we] need the rest of 2018 to see if there is data that will support that at end-of-year,” said Aon’s Kumor. “[We’re] keeping an eye out for that to be a potential trend, to have cases because of the extra spotlight. No firm would want a situation like that to come out in the press. Underwriters will get pressure with the insured to settle as quickly as possible. The thought process is, if [they] have sexual harassment today, because of all the media spotlight, that will be something that they won’t want any press [for]. Claims can be handled quickly, keep litigation out of the public eye, because it will have a reputational impact on accounting firms when out trying to attract talent.”

An ounce of prevention

Long before accounting firms worry about handling claims discreetly, what steps can they take to prevent or avoid sexual harassment and inappropriate behavior in their offices?

“In terms of advice, the first thing would be to do an honest assessment of work environment and culture within the firm,” advised Camico’s Franchi. “Take off the rose-colored glasses and really look at what’s going on, and if any embers are smoldering, see [that] they are extinguished or addressed. … The biggest thing is make sure the firm has an employee handbook and the authors take time to reflect what they want the culture to be in the firm, and pay attention to policies such as the sexual harassment policy … what to do at social events, if people are drinking — do employees know they still need to behave professionally at the holiday party? Look at things [like] what’s the policy re: employees dating each other or clients; [or having an] open-door policy [so they] feel comfortable in bringing forward complaints and will they be addressed.”

John Raspante has not witnessed an increase in claims against accounting firms, but has noticed some prepare for the possibility.

“What we have seen is really good best practices that accounting firms have adopted,” he said. “For example, we have seen larger firms that have conference rooms that have clouded glass where [people] couldn’t see in from the outside, so it gives privacy. No more: Now it’s completely clear glass. Holiday parties historically have been the most common for charges where allegations of harassment have taken place. Now they’re curtailing the amount of parties that accounting firms host, and also combating driving while intoxicated and having enough Ubers available. These are best practices that accounting firms have adopted.”

Ilana Hanau, partner at Shendell & Pollock PL, a law firm specializing in the defense of professional liability claims against accountants, believes that an absence of cases may be deceiving. “I can’t imagine that accountants will be any less susceptible than anyone else; [I] have not seen any, but predominantly, clients are male,” she shared. “Cases might not have surfaced yet because the victim might not be filing criminal charges in the first instance. The accounting profession is not quite egalitarian yet. There’s also the generational issue. Women from my generation are less likely to say anything, but millennials are more likely to do so.”

Insurance and legal experts agree, then, that accounting firms should not be preparing for if, but when. Firms can do this by formalizing or improving their sexual harassment policies, education, and system for reporting incidents, Aon’s Kumor advised.

“So as far as what we talk to clients about, to avoid having this type of behavior at their firm, it’s all about education and making sure firms not only have sound policies that prohibit any kind of harassment, including age, and that there are mechanisms to report, and communicate through training that [the firms] have this kind of culture that will investigate any instance to the fullest extent possible and take any action that is needed,” he said. “Fear of consequences is one of the best deterrents for sexual harassment. It goes to the culture of the firm.”

As far as the culture outside the firm, some experts are hopeful that the turning tide of awareness will make potential harassers reconsider their behavior.

“If nothing else, every week what we see on the news and in social media has created an awareness, [to] make people a little more gun-shy in perceiving how behavior is perceived on the other end,” said Camico’s Franchi. “Antennas are up a little more — and [there’s] awareness.”

For more, see "Sexual harassment is a bigger problem than accountants think."

(SourceMedia, which publishes Accounting Today, conducted its online survey of more than 3,000 professionals across multiple industries in the first quarter of 2018. The study, “Sexual Harassment in the Professional Workplace,” is a joint project of SourceMedia’s editorial and research departments.)

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Sexual harassment Professional liability insurance Practice management