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An Inadequate Harassment Report Response Can Mean Big Payouts

Written exclusively for ChubbWorks

The Massachusetts Gaming Commission announced they are fining Wynn Resorts $35 million for the organization's failure to properly investigate sexual assault complaints against its founder and CEO. The commission also outlined additional requirements the resort must follow to continue with their Boston hotel and casino, which is scheduled to open soon.

Although the former CEO denies the allegations, he elected to step down from his position because of the "avalanche of negative publicity."

The commission's investigation also found the current CEO failed to "require an investigation about a specific spa employee complaint brought to his attention," and imposed a $500,000 fine against him.

Rob McLean "Wynn Resorts fined $35 million over allegations levied against Steve Wynn" (Apr. 30, 2019).

Commentary and Checklist

Sexual harassment prevention measures, like clearly written policies and employee training, are essential risk management practices. However, no employer can completely eliminate the risk of sexual harassment, even with these practices. That is why your organization's response, or lack of thereof, to complaints of harassment, can significantly affect your liability risk.

Employers have a duty to have a thorough, prompt, and objective investigation of every complaint of sexual harassment. Ignoring or pre-judging a complaint will only lead to liability.

When the alleged harasser is the head of the organization, the challenge is to have a procedure in place that allows for a third-party investigation. Unless sexual harassment accountability is from the top down in an organization, the culture will allow harassment to continue at all levels.

Consider the following suggestions to create an effective investigative process that will reduce liability risk:

  • Be sure your investigation policy provides that every report of sexual harassment will be investigated.
  • Clearly define the investigator's role. Consider using a third party to manage employee complaint investigations, especially for matters that involve leaders.
  • Select a trained investigator. Make sure the investigator has the ability and experience to be objective, calm, courteous, and professional.
  • Manage the investigation with discretion, but do not promise confidentiality to the parties involved because certain disclosures may need to be made to complete the investigation.
  • Document all interviews and subsequent actions. Notes from all interviews should be recorded at the time or shortly after the interview and reviewed with the interviewee for accuracy.
  • Do not let your investigators draw conclusions. Your investigators should be fact-finders. Allow another body to make decisions regarding the facts revealed in the investigation report.
  • Unless there is a reason why information cannot be shared, such as criminal conduct, be sure to communicate the final resolution to all those involved.
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