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The cost of sexual harassment in the workplace

Sexual harassment in the workplace comes at an emotional and financial cost for victims, offenders and companies. But quantifying that cost is not a perfect science.

For victims, there’s the incalculable cost of the emotional and mental stress, but how do you put a price tag on lost job opportunities for people who dare to speak out? And what about the mounting legal bills victims face if they bring their perpetrators to court?

For many companies, paying thousands and sometimes millions of dollars to settle sexual harassment claims has been treated as a cost of doing business. According to the Equal Employment Opportunity Commission (EEOC), in the past seven years, US companies paid out more than $295 million in public penalties over sexual harassment claims. That doesn’t account for untold amounts more in cases settled privately.

A 2015 EEOC study estimates that 75% of all workplace harassment incidents go unreported, mostly because victims feel shame or fear. Those fears appear to be valid. An EEOC study from 2003 found 75% of employees who spoke out against sexual harassment experiences retaliation when they spoke up.

Insurance policies

With the recent wave of high-profile sexual harassment scandals, a growing number of companies are running for cover and buying “Employment Practices Liability Insurance.” The policy insures them against sexual harassment claims, and most of that growth is coming from small and mid-size businesses.

In 2016 alone, U.S. companies spent an estimated $2.2 billion on insurance policies that included covering the legal fallout from sexual harassment, according to insurance analytics firm, MarketStance.

Insurance giant Nationwide saw a 15% jump in Employment Practices Liability Insurance from the fall of 2016 to September 2017. That timeline coincides with Roger Ailes and Bill O’Reilly being ousted from Fox News over sexual harassment allegations.

As always, prevention is the best cure. Expect to see companies doing more to step up workplace training to create a safe work environment and to stamp out offenders, no matter who they are. For businesses, the cost of a sexual harassment claim can be high, but the value of a great corporate image is priceless.