In the Trenches: A not so merry mixer

March 11, 2013
In this edition of In the Trenches, Acme's holiday party jeopardizes relationships with its customers.

2012 had been a banner year for Acme. Business picked up sharply as the company’s manufacturing customers began to rebuild from the long recession. So Acme president Charles Encharge reinstated the company’s holiday party, which had been cancelled the past several years. It would not be a family affair; employees were urged to come, relax and let loose a bit with their colleagues. This year, Charles also decided to invite some of Acme’s loyal, long-term customers. It was a terrific opportunity to wine and dine them and to show them they were valued members of the Acme family.

Barry Nobetter, Acme’s sales manager, had some misgivings. For one, Hank Hansey, the purchasing chief at BigCo, Acme’s largest account, would be there. Hank was a gregarious life-of-the-party type who was always entertaining, but he was notoriously obnoxious when he had a few drinks in him. Even sober, Hank was a bit excessive in his friendliness with women. Greta Gumption, Barry’s assistant, often rolled her eyes and let out an “eeewww” after fielding one of Hank’s calls. When she heard Hank would be at the holiday bash, Greta wanted to bow out altogether. “Hanging out with that creep is hardly my idea of fun,” she said. But Barry urged her to attend. It wasn’t mandatory, but it really wouldn’t look good if she didn’t show up, he advised. And Hank was harmless; he was all talk, Barry assured her.

The party was humming along nicely. Midway through the festivities, Charles gave a brief toast of gratitude to Acme customers and team members, bid his employees a restful break during the plant’s standard Christmas-to-New-Year-shutdown, and headed for home. With the boss gone, the liquor flowed more freely. Several employees became intoxicated, as did Hank, who began to engage in increasingly boorish behavior. Hank’s raunchy jokes were followed up with comments comparing the female partygoers’ breast sizes or noting that a woman should be wearing a tighter top or shorter skirt. Acme’s male sales reps laughed along good-naturedly, continuing to toss back their drinks.

When Greta unwittingly joined the group, Hank immediately began to make sexually explicit comments, telling her that he admired her breasts and teasing that she “could probably make a lot more money working at Hooters than with these Acme buffoons.” Greta politely responded that she didn’t appreciate his comments, and Mike Sells, the eager-to-please Acme rep on the BigCo account, said Greta needed to loosen up and that she probably needed to “get some,” for which Hank volunteered his services.

Barry watched from the bar with dread, observing Greta’s obvious discomfort, but hoping to avoid alienating Acme’s biggest customer. After Mike’s comment, though, Greta came over to tell him she was leaving before she did something to Hank that she’d regret and that Mike was going to need a talking-to as well. “Don’t go, Greta,” Barry urged her. “You don’t want it to look like you don’t fit in. And Hank obviously likes you, we’re scoring some points; just stick it out a little longer.”

She grudgingly agreed to stay but planned to steer clear of Hank and her drunken colleagues. As she headed for the bathroom, though, Hank jumped in front of Greta, blocked her exit, said he wanted to have sex with her, and then groped her buttocks. Then Hank took an ice cube from his drink and dropped it down her cleavage. Greta finally slapped Hank in the face. “Stay away from me!” Barry and Greta’s other colleagues stood silently as she stormed out of the banquet hall.

“Good riddance,” Hank yelled to no one, trying to save face. “What a drag she is. She’s probably sleeping with Jacobs,” referring to Joe Jacobs, his counterpart at GiantCo, a competitor. Once Hank got the laughs he was hoping for, he moved on to torment other unsuspecting female employees. But he could not hide his anger, and he left the party soon thereafter.

When Greta came to work on Jan. 2, she was clearly distraught. She immediately went into Barry’s office to say she wanted to lodge a complaint about Hank, about Mike, and about Barry for not coming to her assistance. Barry tried to calm her down. “Look, Hank has a drinking problem and his marriage is falling apart. Don’t take it personally; he was hitting on half the women there. And you know Mike. With him, the customer always comes first.

“Besides,” Barry pointed out, “what did you expect me to do? BigCo is our biggest customer. You've got to get over it, Greta. Toughen up. It wasn’t that big of a deal. It was the holiday party, and he was drunk. I’m sorry it happened, but drop it. Just forget about it and go back to work.” Greta stewed silently, pondering what to do next.

Later that morning, though, Charles got a call from Hank informing him that BigCo would be taking its business elsewhere. Hank did not appreciate the blatant disrespect with which he was treated by Acme’s sales staff, he said. Charles stormed into Barry’s office. Upon hearing that Greta slapped the company’s biggest customer across the face, Charles fired her on the spot. Greta collected her belongings, left the building sobbing, and headed straight to the EEOC office.

A labor and employment analyst’s response:

Charles unwittingly assumed the liability risks of inebriated employees and customers and then added the ultimate insult to Greta’s injury. And Barry made the wrong move at every turn. Acme would do well to settle this one quickly and quietly.

When Greta complained about Hank’s boorish behavior even before the party, Barry was on notice but took no action to remedy the problem. Instead he strongly encouraged her to go to the party and to submit to what he knew would be a sexually hostile setting. When she complained both at the party and after the fact, Barry took no action except to deride her for complaining and discourage her from escalating the matter further. It’s not clear what Barry told Charles, but at the very least Acme’s president should have encouraged Greta to come forward and directed HR to launch an investigation into the conduct of Hank, Barry, and the sales team, and to hold sorely needed sexual harassment training. A call to Hank’s superior at BigCo might also have been in order. Instead, Charles retaliated against Greta by summarily discharging her for her response to the unwelcome conduct.

Acme might be operating under a misconception that employers can’t be held liable for an employee’s harassment at the hands of a third party, in this case an important customer. However, Acme has an affirmative obligation to provide a harassment-free workplace. Therefore, if a reasonable person in Barry’s or Charles’ position knew or should have known of the harassment and failed to take prompt and reasonable action to remedy it, Acme could be liable. Here, Hank had behaved inappropriately well before the night in question, and Barry knew of Hank’s proclivity to escalate his unwelcome conduct when he drank. Worse still, he directly witnessed the harassment by Hank and watched his own subordinates join in. And he obviously failed to take steps to remedy the situation or to prevent it in the first place.

What’s the damage? Greta has a viable sexual harassment suit against Acme, and a retaliation claim to boot. In addition, in some states, she can sue Barry for aiding and abetting the creation of a hostile work environment. Further, if Greta suffered injurious psychological or medical effects from the assault and termination and was able to demonstrate that the conduct here was “extreme and outrageous,” Acme also could be liable for intentional infliction of emotional distress. Finally, Greta can likely convince a jury that Barry and Acme acted with malice or with reckless indifference, making punitive damages likely, as well.

Acme can implement some common-sense strategies to avert a similar situation at next year’s festivities.

Set the proper tone beforehand.  Make explicit the company’s expectations of partygoers ahead of time. And clearly state that attendance is voluntary. Employees should not be mandated or pressured to attend. They should know that there will be no adverse consequences if they choose not to attend. Also, note on the invitation that excessive alcohol use and inappropriate conduct, whether the result of intoxication or not, will not be tolerated and may be subject to discipline under Acme’s standard code of conduct and employee handbook.  Ideally, those handbook provisions expressly apply to all work-related events and interactions between employees, customers, and vendors. Invite spouses and partners. Their presence may set a tamer atmosphere and rein in improper behavior.  The presence of customers or clients is usually a good way to ensure that employees are on their best behavior, as well. In this case, however, it was the unruly client who caused the trouble. Employees and managers should be prepared to respond appropriately in such cases. Alternatively, if Acme knew they had a Hank on their hands, Charles might have reconsidered altogether whether customers should attend.

The fact that liquor flowed freely at the Acme party increased the likelihood of overconsumption. The easiest solution, of course, is simply to avoid serving alcohol. But if Acme is intent on hosting a more “spirited” event, it should forego an open bar and set up a cash bar or provide guests two free drink tickets each. Hire professional bartenders and instruct them not to serve attendees who appear to be drunk. Close the bar an hour before the party ends. Set an 11 P.M. end time. And ensure that the executive team and managers stay until the bitter end to further discourage unsavory conduct. Finally, if such conduct does arise, follow the golden rule and take every sexual harassment complaint seriously. Don’t jump to conclusions before investigating fully. After investigating, take strong action to remedy issues as quickly as possible.

Of course, it looks like Acme’s problems run deeper than the annual holiday bash. Acme is also going to have to take serious stock of its put-up-or-shut-up corporate culture.

Lisa Milam-Perez, J.D., Labor and Employment Analyst
Wolters Kluwer Law and Business, (773) 866-3908, [email protected]

Reader responses:

Depending on the state, Hank may be charged with sexual assult.

Drink tickets are often emmploed for such events to discourage (but can't prevent) such intocicated behavior.

John Patterson

It would seem that Acme has no desire to remain in business as Acme, and wants to give their company to Greta. With this fiasco, I think they are well on their way to achieving that goal.

Perhaps it is different with sales and distribution companies, but I have never been to a holiday party where customers were present. It is not like a golf outing or other activity where the focus is on the customer; this is for the employees.

Charles leaving early was a mistake; it is the responsibility of top executives to be present, and to have someone in charge, as this party did not seem to have. However, if Barry was in charge, as may have been the case, he failed miserably. While the initial "nudge" to get Greta to attend was not a problem in itself, when Barry was told and observed Hank's behavior, Barry should have allowed Greta to leave and at the same time directed Hank toward a cup of coffee and a cab. There was no reason at all why Greta had to stay there and be abused just because it might "look bad" if she left. If the company President can leave early, why not the sales manager's assistant?

In short, Barry should be the one summarily fired, and the entire Acme sales staff put into sexual harassment training. Also, Charles better learn to gather all the facts before he reacts next time.

Phil Grimes

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