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The hospitality industry, which includes restaurants, bars, hotels, and other businesses that provide lodging and food services, has been plagued by sexual harassment for decades. A study by the National Restaurant Association found that 37% of women and 14% of men in the restaurant industry had experienced sexual harassment. Similarly, a survey by the AFL-CIO found that 53% of hotel workers had experienced sexual harassment on the job. These numbers demonstrate that sexual harassment is a pervasive issue in the hospitality industry, and businesses must take steps to address and prevent it.
Why Sexual Harassment is Prevalent in Hospitality
The hospitality industry is known for having a culture of long hours, low wages, and a high turnover rate. These factors can create an environment in which workers are vulnerable to harassment and may not feel empowered to speak out. Additionally, the industry is often dependent on customer service, which can create a power dynamic in which workers may feel pressure to tolerate harassment from customers to maintain their jobs.
Impact of Sexual Harassment on Hospitality Businesses
Sexual harassment not only affects the well-being of workers but can also have severe consequences for businesses. In addition to potential legal liabilities, businesses may experience reputational damage, decreased employee morale, and a loss of customers. Furthermore, harassment can result in high turnover rates and difficulty recruiting new employees.
Examples that demonstrate the significant financial impact that sexual harassment can have on businesses in the hospitality industry are plentiful:
- In 2018, the owner of a New York City restaurant group was ordered to pay $2.3 million to five former employees who had experienced sexual harassment and retaliation. The employees had reported incidents of sexual harassment by a supervisor, and after reporting the harassment, they were subjected to retaliation and eventually fired. The verdict included $1.3 million in punitive damages.
- In 2019, a hotel chain in the United Kingdom was fined £100,000 (approximately $136,000) after a female employee reported sexual harassment by a male colleague. The hotel chain was found to have failed to take appropriate action to address the harassment, which continued for several months.
- In 2020, a luxury hotel in California agreed to pay $2.5 million to settle a lawsuit filed by a former employee who had experienced sexual harassment and retaliation. The employee had reported the harassment to management, but the hotel failed to take appropriate action. The lawsuit alleged that the employee was subjected to ongoing harassment, including inappropriate touching, and eventually fired in retaliation for reporting the harassment.
Preventing Sexual Harassment in the Hospitality Industry
Businesses in the hospitality industry must take proactive steps to prevent and address sexual harassment. Here are some strategies they can implement:
- Develop clear policies and procedures for reporting and responding to harassment. Train employees and management on these policies regularly.
- Encourage employees to report incidents of harassment and create an environment in which they feel comfortable doing so.
- Ensure that employees are aware of their rights and protections under state and federal law.
- Provide resources for employees who have experienced harassment, such as counseling services and legal support.
- Foster a workplace culture that values respect and dignity for all employees.
Consequences of Failing to Address Sexual Harassment
Businesses that fail to address sexual harassment risk significant financial and reputational damage.
Legal settlements, legal fees, and loss of customers and employees can all add up to a significant financial impact. In addition, businesses may face negative media attention, which can lead to long-term reputational damage.
How EPLI Insurance Can Help Hospitality Businesses Mitigate Harassment Risks
Hospitality businesses should consider purchasing Employment Practices Liability Insurance (EPLI) to protect themselves against sexual harassment claims. EPLI is a type of insurance that provides coverage for claims related to discrimination, harassment, wrongful termination, and other employment-related issues.
EPLI policies typically cover defense costs and damages related to lawsuits brought by current, former, or prospective employees. They may also provide coverage for investigations by government agencies such as the Equal Employment Opportunity Commission (EEOC).
EPLI coverage can help protect businesses from significant financial losses due to sexual harassment claims, which can include legal fees, settlements, and damage to reputation.
It's important to note that EPLI policies may have exclusions or limitations, so it's essential to carefully review the policy and work with an experienced insurance broker to ensure that the policy provides the necessary coverage.
Additionally, businesses should prioritize prevention and education efforts to reduce the risk of harassment claims in the first place. By developing clear policies and procedures, providing regular training, and fostering a culture of respect and inclusivity, businesses can create a safer and more welcoming workplace for all employees.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.