Harassment Charges Hit Manufacturing Hard: The Cost of Turning a Blind Eye

Josh Fragoso September 26, 2018

The potential for employment practices claims such as sexual harassment allegations, discrimination and wrongful termination has manufacturers on edge, according to the 400 respondents to MAGNET’s Manufacturing Survey. The survey, sponsored by Oswald, asked manufacturers to identify their top concerns and employee lawsuits sit in the top ten.

While major manufacturers are most likely to make headlines, small to mid-size manufacturers are also at risk with 41.5% of all employee lawsuits targeting companies with 100 or fewer employees. Given the recent focus on sexual harassment and the #Metoo movement, this segment of employee lawsuits warrants additional attention by manufacturers.

We are proud to be helping manufacturers address this concern and to work together to provide services that can mitigate risk and offer protection if harassment accusations arise, litigation is pursued and settlements are granted.

  • The Environment

Manufacturing places third in the industries facing the most sexual harassment charges. Although the number of charges brought by men has doubled in the past 15 years, females in manufacturing are often targeted for several reasons including:

  1. Less than one 30 percent of manufacturing workers are female
  2. Women who enter the field may lack power or be seen as outsiders
  3. Fear of retaliation if concern is expressed
  4. Policies and procedures to recognize and deal with harassment are often not in place or lax in nature, especially for small and mid-size companies
  5. Actions that can legally be defined as sexual harassment are not recognized as such

While other industries face similar challenges, the uniqueness of manufacturing places special concern on the shoulders of owners and leaders in this segment. While the largest may be able to withstand the extended length of time to investigate and settle, many small to mid-sized manufacturers will not survive the storm of publicity, litigation and settlement costs.

  • The Costs

Sexual harassment charges cost manufacturers hard dollars and soft expenses, too. Hard dollar costs can stagger, cripple or even close a manufacturer for good. While the EEOC estimates that only 6 to 13 percent of sexual harassment allegations become formal charges, when it happens, the hard dollar costs are high:

  1. Out of court settlements average $75,000
  2. If taken to trial, the average jury award is $217,000
  3. Total costs can be $1 million or more

In many cases, settlements include confidentiality agreements so the true average costs remain difficult to estimate.Manufacturing

There are many soft cost as well that can be hard to measure but have the ability to impact profits:

  • Brand damage that can impact customer and vendor relationships
  • Ability to attract and retain employees
  • Rising absenteeism impacts production flow
  • Distracted employees which lessens productivity

In addition, for the manufacturer, the time and energy expended on the allegations, litigation and remedies can distract from business operations.

  • The ACT Solution

Unfortunately, for manufactures whether a claim of harassment is frivolous or not, it is the responsibility of the company to address the suit and absorb the cost of defense. The impact of these cost as well as potential settlement amounts can be substantially reduced with proper procedures in place and appropriate insurance coverage.

At Oswald, we partner with our manufacturing clients using a comprehensive risk identification, risk mitigation and risk transfer process specifically designed to address sexual harassment in the work place.

Using ACT, we will work with you to:

  • Assess your areas of exposure with our brief checklist assessment.
  • Create procedures to address risk and communicate to employees.
  • Transfer risk via Insurance and leverage policy resources

You need to understand the vulnerabilities your company faces, take the right steps to close gaps and find the best ways to address issues now and in the future. Our professionals will work with you every step of the way to help you create manufacturing success with the protection you need.

To learn more about the ways you can protect your business, contact:

Josh FragosoJosh Fragoso,CIC, REBC
VP, Director of Sales

Connect with Josh on LinkedIn.

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.