Organisational impact of sexual harassment – regulatory oversight and the perils of non-disclosure agreements

In the wake of allegations of sexual harassment again Harvey Weinstein, Kevin Spacey and others there have been multiple further allegations arising across a wide breadth of organisations and individuals. Two stories in recent weeks highlight the interest regulatory bodies increasingly take when such incidents occur.

The charity ‘The President’s Club’ closed after a string of allegations were made following an event in the Dorchester Hotel. Women only were hired as ‘hostesses’ and were asked to wear black high heels and black underwear and were given a black short dress to wear on arrival. Hostesses were asked to sign a non-disclosure agreement before they started working and their phones were locked away on the night. It was alleged they were plied with free alcohol.

Undercover reporters from the Financial Times posed as hostesses for the evening and reported that they were repeatedly groped and witnessed other hostesses being victim to sustained sexual harassment throughout the night. One witness said she saw hostesses sitting on men’s laps. Another reported that she was asked whether she was a prostitute.

The charity that has been running for over 30 years has raised millions of pounds which it passed on to a range of organisations including Great Ormond Street Hospital, which is now returning the monies it has been given..

Following the press coverage the President’s Club announced the charity would close. Notwithstanding the Charity Commission has announced an inquiry in to what happened and the trustees of the charity will no doubt be asked to provide an explanation in due course.

Greater external investigation by regulatory bodies is also an issue for the law firm Baker McKenzie (BM). It has been reported that over a year ago a male partner invited several younger employees back to his room after a social event and sexually assaulted a female staff member. Having reported her concerns to human resources.it is alleged that  she was paid a settlement sum and made to sign a non-disclosure agreement. The accused was reprimanded by the firm but has, it is reported, been subsequently promoted.

The Solicitors Regulation Authority (SRA) is now investigating whether the actions of BM amount to professional misconduct. Whatever the SRA decides BM has faced publicity which it inevitably would prefer to have avoided. Clearly if the initial behaviour had not occurred then that would have been the best position. Having occurred the actions which appear to have been taken including the use of a non-disclosure agreement appear to have just made matters worse.

The use of non-disclosure agreements, a feature in both of the above stories, is, in the context of allegations of sexual abuse or harassment, a matter of much debate. This is an issue which the Prime Minister has said will now be considered by the Government. Any organisation which is using such agreements should now consider whether it is appropriate to continue to do so. All organisations should also ensure that within their policy for responding to allegations of this nature they have complied with any obligations set by their external regulatory body.


nicola_aspinwall Written by Nicola Aspinwall, solicitor at BLM

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