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Danger in the Dealership

Sexual harassment is becoming more of an issue in the workplace. A claim can divide the workforce, create tremendous distraction, waste untold hours and end up costing a dealership plenty of money. Improperly monitored employees who banter on the showroom floor, jokes, use of the Internet, drinking and socializing after work all of these things can create a liability for the dealership when they take

Sexual harassment is becoming more of an issue in the workplace. A claim can divide the workforce, create tremendous distraction, waste untold hours and end up costing a dealership plenty of money.

Improperly monitored employees who banter on the showroom floor, jokes, use of the Internet, drinking and socializing after work — all of these things can create a liability for the dealership when they take on an inappropriate sexual overtone.

For example, Internet usage has created new and creative ways for an employee to harass a co-worker. Any inappropriate images on the computer can create an atmosphere of harassment because an unexpected person (including a customer) can potentially see it.

Auto dealerships contain some ingredients for potential employee harassment claims:

  • Many socially oriented people, particularly on the showroom floor; people who work long hours together, often with stretches of time without much to do.
  • Managers who are often promoted because of their ability to sell — not necessarily because of their management know-how. This lack of formal training can be a problem if there is a complaint from an employee that needs to be dealt with, but isn't.

Dealerships can also be liable for the behavior of someone who isn't even an employee. Here is a scenario based on an actual event:

Mr. Carbucks, a rich and regular customer, comes into your dealership looking for a new luxury car. Wanda, an attractive sales representative moves forward to deal with him. The conversation goes like this:

Wanda: Hello sir, can I show you something you may like?

Carbucks: I think I'm looking at something I like right now.

Wanda: How about this nice sedan? It has all the options and we probably can reach a price you can live with.

Carbucks: You tell me your price honey, that's what I would like to know.

Wanda: Would you be interested in taking the sedan out for a test drive?

Carbucks: Sure. Sure. Let's take 'er for a spin.

While on the test drive, Carbucks uses inappropriate language towards Wanda and manhandles her. When they get back to the dealership, Wanda complains about this to her sales manager. The manager knows that Carbucks is good for several new vehicle purchases. What to do?

No question the manager needs to do something. The question is what. The answer is not simple, and can cost a dealership if mishandled.

Let's look at the choices.

  1. Do nothing and hope it all blows over.

  2. Tell Wanda that a professional should be able to handle issues like this.

  3. Tell Wanda that in the future, James, another sales representative, will handle all sales transactions with Carbucks.

  4. Talk to Carbucks and ask him to tone it down.

  5. Tell Human Resources (or its equivalent) that Wanda has made a complaint regarding sexual harassment and let the appropriate managers handle the issue.

The correct choice, at least initially, is No.5. However, it has been my experience that dealerships are as likely to opt for the other choices. The possibility of losing a good customer creates a tough choice for the sales manager.

Let's consider the pros and cons of each choice.

  1. Do nothing. Very tempting in that sometimes it works and it entails a lot less hassle. The problem is that it doesn't actually solve the problem, so it is likely to occur again and maybe even get worse.

    Consider one scenario, Carbucks returns, asks for Wanda again, goes out on a test drive and assaults her. Aside from the personal tragedy, the liability for the dealership is extreme.

    Wanda complained about an act that the dealership ignored (the initial harassment) and if it hadn't it might have been able to prevent a greater injury (the assault). A jury could easily find that the assault could have been avoided but for the negligence of the dealership. Big damages!

  2. Telling Wanda to tough it up may work in the short term. After all, Wanda doesn't want to lose the big fish any more than the manager does. The problem is that when times go badly, this becomes Wanda's biggest card to play.

    For instance, the manager does nothing but tell Wanda to act professionally. Wanda says nothing else. Later, the manager disciplines or even terminates her for legitimate reasons. Wanda sues for sexual harassment stating that she was terminated in retaliation for complaining about sexual harassment (an illegal termination). Failure to investigate Wanda's initial complaint can create an implication that our actions towards Wanda were less than above board.

    It often becomes a testimony match in a courtroom between Wanda and the manager. And if the jury ends up believing Wanda? Big damages!

  3. Have another sales person handle Carbucks. This can look as if we are retaliating against Wanda for making a complaint about sexual harassment. As mentioned, it's illegal to retaliate against anyone who has made a complaint or participated in a sexual harassment investigation. Wanda doesn't want to lose out on the big commission that Carbucks brings. She just wants him to act correctly.

  4. Talk to Carbucks. Obviously not a bad thing to do, but it doesn't replace an investigation. First, you don't know that Wanda is telling the truth. Do not ever presume that you know everything your employees are doing.

    There are a number of reasons why Wanda may be lying about Carbucks. Do your investigation and you may find them out — or you may not — but at least you have done the process, which brings me to the second reason.

    You need to do an investigation because your policy states you should (I hope that's your policy). No matter how small the claim, you should always follow your policy and do an investigation.

    An investigation done properly can be a defense to a sexual harassment claim. Another defense is that if an employee doesn't make a complaint and then tries to sue, failure to complain is a defense if you can show that if she had complained, you would have investigated. So you investigate all complaints, no matter how minor. It doesn't have to take a lot of time. Just be thorough.

  5. Tell Human Resources. Shift the problem to the person who is supposed to know how to deal with it. How can that be a bad thing? An investigation does sometimes cause a fuss on the showroom floor. That's not necessarily a bad thing. It sensitizes all your employees to the idea that they will be accountable for their behavior and gives you an opportunity to emphasize the type of behavior you expect from your employees.

Do a policy audit

I've referred to policies and practices that you should have in place. It takes little time to ensure that you do have the processes needed to avoid a sexual harassment claim.

Audit your human resource policies to make sure that you have the following:

  1. An Equal Employment Opportunity statement.

  2. A policy describing the types of behavior that are forbidden in the workplace along with the possible penalties for violations.

  3. An “open door” policy that designates the supervisors to whom a sexual harassment complaint may be made and a statement that no retaliation will occur for making a complaint. There should be more than one person to complain to in order to give employees some choices. This policy should map out how an investigation will proceed. This helps your managers be consistent and explains the process to your employees.

  4. A method to determine that every employee receives a copy of these policies and a method to verify who received these policies with these records preferably kept in employee personnel files.

  5. A way to monitor Internet usage. The Internet creates a number of problems for dealers and there is a variety of software that can monitor usage. Get one! (To avoid invasion of privacy claims, no employee should get Internet access at work without first signing a policy acknowledging the employer's right to monitor usage.)

  6. Training for all employees periodically. This does not have to be expensive or time consuming but should be on a regular basis to sensitize employees to the type of behavior that you expect on the showroom floor.

Inaction is costly

Since 2000, the Equal Employment Opportunity Commission has handled an average of more than 25,000 sex discrimination charges per year.

During the 1990s, U.S. employers paid out in the neighborhood of $1 billion.

There is a cost incentive as well as a grief incentive to avoid employee lawsuits. Have good policies in place, train your employees and managers on these policies and, above all, respond appropriately to complaints.

Art Lambert, a law partner with Epstein Becker Green Wickliff & Hall, ( is a Texas board-certified specialist in labor and employment law.

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