Follow Five Rules to Reduce Risk of Sexual Harassment Claims

Claims for sexual harassment, which is considered a form of housing discrimination based on sex, can cost thousands—if not millions—in settlements or court awards, civil penalties, and attorney’s fees—not to mention lasting damage to the reputation of the site, management, and individuals involved.

In one case, a California owner agreed to pay $2.13 million to settle allegations of sexual harassment against female prospects and residents. This amount represented the largest monetary settlement of a sexual harassment lawsuit brought by the Justice Department under federal fair housing law [Hawdecker v. Sorensen, September 2012].

We’ll explain fair housing rules banning sexual harassment and offer five rules to help you minimize the risk of such a claim at your site.

The FHA and Sexual Harassment Claims

The Fair Housing Act (FHA) prohibits discrimination in housing because of race, color, national origin, sex, familial status, disability, or religion.

The FHA itself doesn’t mention sexual harassment, but courts have consistently recognized sexual harassment—that is, unwelcome sexual conduct—as a form of discrimination based on sex, according to HUD. It’s generally understood that the law applies to harassment of women by men, but the law is broader than that. The law protects both men and women from sexual harassment, whether the perpetrator is male or female. The key is that the unwelcome sexual conduct is directed at a particular individual because of his or her gender, so it doesn’t matter whether the harassment is motivated by sexual desire or by hostility toward a particular gender—or if the harasser and the victim are of the same sex.

Courts generally recognize two types of sexual harassment, though both may be present in a particular case:

“Quid pro quo” harassment (in Latin, meaning "this for that”) occurs when housing benefits are explicitly or implicitly conditioned on sexual favors. In other words, an applicant or resident is pressured to accept unwelcome sexual advances in exchange for getting or keeping the housing—or obtaining housing-related services, such as maintenance requests. Claims may be pursued regardless of whether the victim submitted to the sexual conduct or lost a housing opportunity for refusing to do so.

Hostile housing environment means sexual behavior that’s so severe and pervasive that it interferes with the resident’s use and enjoyment of her home. Usually, a single incident isn’t enough to establish a hostile housing environment claim because “isolated or sporadic” sexually inappropriate conduct isn’t sufficiently pervasive or severe enough to interfere with the resident’s tenancy. In general, courts look at the “totality of the circumstances” to determine whether the conduct is sufficiently pervasive and severe, including the context, nature, severity, scope, frequency, duration, and location of the incidents, as well as the characteristics of the people involved.

Owners and managers may face liability for sexual harassment, even if they weren’t directly involved in any misconduct. In general, the law holds owners and managers accountable if they knew or should have known about sexual harassment committed by their employees or agents, but failed to do anything to stop it.

HUD takes an even stronger stance, asserting that owners or managers may be liable for the acts of employees or agents—regardless of whether they knew of or intended the wrongful conduct or were negligent in failing to prevent it from occurring. HUD says that if a manager authorizes a maintenance worker to enter a resident’s unit to make repairs, and the worker sexually harasses the resident, then the management company is legally responsible for the discriminatory actions of the maintenance worker. 

Rule #1: Establish a Zero-Tolerance Policy Against Sexual Harassment

Adopt a zero-tolerance policy against sexual harassment at your site. It doesn’t matter whether it’s part of your general fair housing policy or a stand-alone policy. What’s important is to have a clear, written policy that sexual harassment of any kind will not be tolerated at your site and that violations will bring prompt disciplinary action, up to and including termination.

Thoroughly explain that sexual harassment consists of unwelcome sexual conduct—through words or actions—toward prospects, applicants, residents, guests, and other visitors, regardless of their gender. Reinforce that employees should treat applicants and residents professionally and offer examples of prohibited conduct, such as:

• Explicitly or implicitly suggesting sex in return for living at the site, receipt of services, or otherwise related to the terms and conditions of the tenancy;
• Suggesting or implying that failure to accept a date or sex would adversely affect the resident’s tenancy;
• Initiating unwanted physical contact, such as touching, grabbing, or pinching;
• Making sexually suggestive or obscene comments, jokes, or propositions; and
• Displaying sexually suggestive photos, cartoons, videos, or objects.

The policy should encourage anyone who believes she has been subjected to sexual harassment to file a complaint. Identify whom to contact and explain how sexual harassment complaints will be handled, such as where they go and how they are investigated. Emphasize that there will be no retaliation against anyone for reporting sexual harassment.

Rule #2: Focus on Employee Hiring and Training

Pay attention to your employee hiring and training practices. To put your sexual harassment policy into practice, you must make sure that your employees are capable of—and trained to—follow the rules.

Do your homework when hiring new employees. Check references and, if allowed in your jurisdiction, consider a policy requiring criminal background checks as part of the hiring process for new employees, particularly those in key positions.

Require all employees—from leasing agents to maintenance workers, whether full- or part-time—to receive fair housing training, including your sexual harassment policy. New hires should get the basics before they’re allowed to interact with the public, and get more in-depth training as soon as possible after starting work. Give them a copy of your sexual harassment policy and have them sign an acknowledgement that they received it.

During employee training, explain what sexual harassment is—with examples of prohibited conduct—and that any sexual harassment will bring prompt disciplinary action, up to and including dismissal. Tell employees to treat everyone with courtesy and to report anything that they may see or hear that might suggest discrimination or sexual harassment by coworkers, contractors, or residents. Keep records of the training, to document who attended, what was covered, and when it occurred.

As part of employee training, make sure to review policies and procedures to reduce the risk of a sexual harassment claim, particularly related to maintenance or other staff members with access to residents’ units. For example, you could adopt rules and train employees to:

• Enter units only for repairs or maintenance or in case of emergency;
• Give reasonable notice before repair or maintenance visits;
• If the resident is home, don’t enter the unit unless the resident lets you in;
• Don’t enter units if anyone under 18 is home without an adult present; and
• Don’t fraternize with residents or put yourself in a compromising position.

Rule #3: Don’t Ignore Sexual Harassment Complaints

Take it seriously if someone raises the possibility of sexual harassment at your site. If you witness or get a report from a resident or employee about questionable conduct, it’s important to investigate and resolve the problem as quickly as you can.

Contact your attorney and begin a prompt investigation by interviewing anyone involved. Explain your sexual harassment policy and that the investigation will be fair and impartial. Listen carefully, be respectful, and take detailed notes.

Speak with the person making the complaint to get the details of what occurred. Ask about any witnesses and contact them to find out what they saw or heard. Speak to the person accused of sexual harassment and ask for his or her side of the story.

The worst thing you can do is to ignore a sexual harassment complaint—either because you don’t believe it or don’t think it’s that bad. Courts are more than willing to find owners responsible for sexual harassment if they knew or should have known about it, but didn’t take adequate steps to stop it.

Rule #4: Take Prompt Action to Halt Harassment

After completing your investigation, analyze all the information received to decide whether sexual harassment occurred and to identify the appropriate response.

If you find that a sexual harassment complaint is justified, then you should promptly take steps reasonably designed to end the harassment. Ask your attorney about how best to proceed because the appropriate response depends on several factors, including who’s involved and what’s alleged.

If it’s against an employee, take appropriate disciplinary action as provided in your employment policies. Depending on the severity of the misconduct, such disciplinary action may involve a reprimand, suspension, or even termination—whatever level of discipline you reasonably believe will be effective in stopping the misconduct.

Get legal advice about complaints about vendors or other residents. It may be a bit more complicated to investigate and resolve such complaints, but it’s necessary to do so promptly and effectively. Courts have been willing to hold owners liable for sexual harassment by third parties, such as contractors and other residents, if they knew or should have known about problem behavior but didn’t do enough to stop it.

For example, in a case involving workplace harassment, a court recently ruled that an employer may be liable for a hostile work environment based on a contractor’s alleged racial and sexual harassment. The employer was a tile manufacturer with sales operations in several states, including North Carolina, where the employee, an African-American woman, worked in sales and customer service.

The complaint alleged that over a three-year period, an independent sales contractor, who visited the office daily, made repeated racially and sexually inappropriate remarks, such as referring to “black b****es” and bragging about sexual exploits. The employee claimed that she complained to her supervisor, who witnessed his behavior but didn’t do anything to stop it. The complaint alleged that she eventually reported it to a human resources representative, who promised to ban him from the facility, but the company later lifted the ban and instead prohibited him from contact with the employee. The employee said she was so upset at the prospect of seeing him again, that she took a medical leave for anxiety and later resigned.

The employee sued for racial and sexual harassment. The claims against the employer were dismissed, but the appeals court reversed, ruling that the employer could be liable for hostile work environment based on race and sex by the contractor. The employer could be liable because of allegations that it knew—or should have known—about the harassment because of complaints to and observations made by the supervisor.

The complaint also alleged that the employer failed to take prompt remedial action reasonably calculated to end the harassment. While a communications ban might have been adequate if it had been put in place sooner, the employer could be liable for failure to take action for three years despite the contractor’s alleged ongoing harassment [Freeman v. Dal-Tile Corp., April 2014].

Rule #5: Don’t Retaliate Against Anyone Complaining About Sexual Harassment

Be on guard against a retaliation claim—a separate offense under fair housing law—when dealing with residents who’ve complained about sexual harassment. Under the FHA, it’s unlawful to “coerce, intimidate, threaten, or interfere with” anyone who has exercised her rights under fair housing law—as well as anyone who has helped or encouraged someone to do so.

You could face a retaliation claim if you take action against a resident—by evicting or not renewing her lease, for example—because she lodged a sexual harassment complaint against your site. The law punishes owners for retaliating against residents for filing a sexual harassment complaint, even if the harassment complaint is eventually dismissed.

For example, in August 2013, a court dismissed a New York resident’s sexual harassment claim under federal law, but ruled that she could still pursue retaliation claims for nonrenewal of her lease.

The complaint alleged that for five years, the building superintendent repeatedly “made unwelcome sexual advances” toward her and “sexually explicit and humiliating comments about her anatomy,” though she didn’t provide any details. Ultimately, she allegedly called police and filed charges against the super for inappropriately touching her during a confrontation in the hallway. Soon after, the owners allegedly notified her that they were not renewing her lease because of the incident.

The resident sued for sexual harassment and retaliation under the FHA and New York City’s human rights law. The owners, manager, and super denied the charges and asked the court to dismiss the case.

The court dismissed her sexual harassment claim under federal law, but allowed her to pursue her sexual harassment claim under local law. She couldn’t establish a federal claim based on a hostile housing environment because her complaint contained only general accusations against the superintendent, but no details, such as the frequency of his alleged advances or content of his comments. She described only one incident, but a single, isolated episode of sexually inappropriate acts wasn’t sufficiently pervasive and severe be considered sexual harassment under federal fair housing law.

Even though the federal sexual harassment claim was dismissed, the owners and manager could be liable for retaliation under federal and local law. The FHA makes it unlawful to retaliate against a resident for engaging in a protected activity under federal fair housing law. To establish a valid retaliation complaint, the resident had to show that she engaged in a protected activity, the owners knew about it, and the owners took adverse action against her because of the protected activity.

The complaint alleged that the resident engaged in protected activity by filing a police complaint against the superintendent for conduct that she considered to be sexual harassment. She also alleged that the owners knew about it and took action against her by refusing to renew her lease [Ponce v. 480 East 21st Street, LLC, August 2013].