My advice to employers is colored in part by my past experience representing employees. When representing an employee in litigation, I always looked for evidence of the employer’s sloppy management style. The more clueless the business owner, the better things tended to be for my case.

One matter from several years ago comes to mind. The firm that I was with at the time represented two women who claimed “hostile environment” sexual harassment. According to our clients, several male colleagues – including a mid-level supervisor – repeatedly made vulgar remarks and gestures to them, requested sex, and groped them. During the case, we learned that (i) one of the regional managers in charge of supervising these gents sometimes took them to strip clubs during work hours; (ii) the company’s off-site human resource department had failed to follow its own “official” procedures for handling internal complaints of harassment; and (iii) responsibility for conducting the sham “investigation” of my clients’ complaints had been delegated to the very same mid-level supervisor who had allegedly participated in the harassment. While we genuinely empathized with our clients, we were practically ecstatic that the employer – which was headquartered in a different state and apparently took a hands-off approach to this branch – had made so many unforced errors. Those errors greatly increased our odds of litigation success and therefore helped lead to a satisfactory settlement.

If you’re an employer, you must make yourself aware of anti-discrimination laws forbidding workplace harassment based on sex, race, ethnicity, or any other “protected” characteristic. There are two types of sexual harassment: per se harassment (which is not the subject of this post), and “hostile environment” harassment.

To maintain a claim of “hostile environment” sexual harassment against her employer under Title VII of the Civil Rights Act of 1964, an employee must allege that (i) because of her sex, she encountered unwelcome workplace behavior that was “sufficiently severe or pervasive” to alter her employment conditions and create an abusive atmosphere; and (ii) the offending behavior should be attributed to the employer (even if no one in management participated). There is no bright line for determining what conduct is “sufficiently severe or pervasive” for “hostile environment” purposes – though it’s safe to assume that the fact pattern described above more than satisfies this test.

Some federal courts have held that the employer is liable for “hostile environment” harassment if it either failed to provide a reasonable avenue for complaint or knew about the harassment and failed to address it. See, e.g., Reed v. A.W. Lawrence & Co., Inc., 95 F3d 1170, 1180 (2nd Cir. 1996), cited in Harris v. L & L Wings, Inc., 132 F.2d 978, 983 (4th Cir. 1997). Assuming that she can prove the existence of a hostile environment and the employer’s liability, the employee can obtain additional “punitive” damages if she can prove aggravating circumstances such as the employer’s indifference to sexual harassment allegations and particularly egregious conduct.

Although the factual scenario from my old firm’s matter was extreme – and although the business involved might be much larger than your own – there are some lessons to take from that case. First, show your seriousness about sexual harassment before it occurs. At a minimum, provide your employees with a written policy that clearly establishes the boundaries of permissible behavior, your intent to punish violations, and a fair and practicable complaint procedure for victims. Also be sure to personally avoid any behavior or comments that could be interpreted as a lack of sensitivity. (Keep dirty jokes to yourself and don’t take employees to strip clubs.) Such an approach hopefully will succeed in preventing harassment in your workplace. If your business one day gets sued for harassment despite your best efforts, however, evidence of those efforts could only help your case. In contrast, the lack of a clear policy and the appearance of an “anything goes” attitude could only hurt – from both a liability perspective and a damages perspective.

Second, remain familiar with your company’s anti-harassment rules and actually apply them if and when appropriate. You should not only refuse to tolerate transgressions in your presence, but also respond to any internal allegations or suggestions of harassment by conducting – and documenting – a thorough investigation. If your investigation reveals that harassment did in fact occur, be sure to remedy the situation in a manner consistent with your written policy (and again, be sure to document your efforts in writing). You must act to contain whatever damage has occurred.

A sexual harassment complaint can be scary for a business owner. You should do everything in your power to meet your legal obligations and protect yourself. The good news is that those goals are not mutually exclusive.