Recent Court Ruling Means HR Personally Liable for Toxic Workplace

As reported in HR Executive, “a Delaware judge issued a landmark decision in a case involving fast-food giant McDonald’s, ruling that shareholders can sue not only the corporation but also its former Chief People Officer (CPO)” (1) for allowing a culture of sexual harassment to flourish. The judge agreed that “Mr. Fairhurst [CPO] failed to appropriately respond to systemic issues of sexual misconduct at the company.” (2)

According to Financial Times, “Shareholders alleged Fairhurst breached his fiduciary duties by allowing a corporate culture to develop that condoned sexual harassment and misconduct. Recruiters were encouraged to hire “young, pretty females” to work at its headquarters, they said, where he and Easterbrook [CEO] hosted weekly happy hours and developed reputations for flirting with female employees. Executives “routinely ma[de] female employees feel uncomfortable”, the investors alleged.

After several colleagues allegedly reported Fairhurst for pulling a female employee on to his lap at a party for human resources staff, shareholders claimed Easterbrook recommended the company deviate from its zero-tolerance policy for acts of sexual harassment by cutting Fairhurst’s bonus but allowing the HR boss to keep his job.” (3)

This ruling makes HR’s role in maintaining a harassment-free workplace increasingly more crucial. Here are some actions that HR can take to reduce the risk of sexual harassment claims:

Review and update, if necessary, the company dating policy. Prohibit dating between bosses and people who work for them. Require disclosure “when a dating situation could pose that type of conflict.” (1) Provide “guidance on how to handle allegations of favoritism and conflicts of interest” (1)
Eliminate company-sponsored happy hours or drinking parties. Company sponsored family picnics are okay.
Insist on professional behavior of employees, especially managers and directors.

(1) https://hrexecutive.com/why-the-mcdonalds-ruling-means-its-time-to-revisit-your-sexual-harassment-policies/
(2) https://www.wsj.com/articles/mcdonalds-ruling-shifts-oversight-liability-focus-to-corporate-officers-11675381792
(3) https://www.ft.com/content/d4528dfd-dc8e-4e83-ae0b-04c56d9e28f9