With an increase of 61% of the sexual harassment denunciations in Quebec in the three months following the outbreak of the #MeToo movement in October 2017, the silence culture slowly gets out of breath leading to a rise in the claims related to such misconducts.
How far will we go? Will class actions become an appropriate procedural vehicle for victims of sexual harassment or sexual assault against their aggressors? Will Les Courageuses1 establish a modus operandi on the part of their alleged aggressor, Gilbert Rozon? What are the directors and officers of companies targeted by sexual misconduct scandals actually exposed to? Will the derivative action against Nike serve as an example to halt the creation of “boys' clubs” within companies?
One year after the #MeToo denunciation movement took off, statistics confirm that the number of denunciations has increased considerably, legal questions continue to multiply, and the insurance industry is directly affected.
In Quebec, the number of complaints made to the police surged 61% in the three months following the start of the movement. In the United States, a major insurer reported a 50% increase in sexual harassment and sexual misconduct claims since October 2017.
This trend is likely to continue. In a recent survey published in l'Actualité, 80% of men and women stated that they were now more likely to report an incident of sexual harassment that they witnessed, whereas many previously thought it was perhaps better to “stay out of it”.
Today, a situation of sexual harassment or sexual misconduct can quickly lead to multiple legal proceedings, sometimes progressing in parallel. It is not unusual for police investigations, leading to potential criminal charges, to short-circuit investigations conducted by the Quebec human rights and youth rights commission, internal investigations conducted by employers or investigations conducted by the Quebec labour standards commission. In the event of misconduct occurring in the professional-client relationship, the "syndic" (investigator) of the professional order may also be asked to investigate.
Our courts are now faced with civil liability actions brought by victims seeking monetary compensation for the damages they have suffered, and the Quebec Court of Appeal will have to address the Superior Court decision authorizing the class action against Rozon in the upcoming months.
In the United States, a derivative action was recently brought by Nike’s shareholders further to the scandal involving its directors. The shareholders claim that the directors caused the company’s shares to lose value by fostering a toxic work environment.
Such claims concerning incidents of sexual harassment or sexual misconduct can also trigger several types of insurance coverage.
Directors & Officers Liability (D&O) insurance may apply regardless of who the alleged aggressor is. Employers have the obligation to provide a sound work environment, prevent harassment and take action to stop it when it is brought to their attention.
Employment Practice Liability (EPL) insurance policies may also be triggered by an employee claim. In fact, it is the most frequently triggered insurance product for this type of claim.
These insurance products are usually triggered on a claims made basis rather than an occurrence basis. Because it is generally accepted that in these cases the trauma suffered by the victim may constitute a legal “impossibility to act” suspending
the limitation period, there may be a lengthy delay between the alleged act and the claim.
General liability insurance coverage may also be triggered, like in cases where parents are sued because of their child’s misconduct.
Potentially applicable exclusions include the aggressor’s intentional fault, as well as the criminal act, prior knowledge, and bodily injury exclusions. The “insured versus insured” exclusion may also apply in the event of a counterclaim for defamation brought by the person targeted by the allegations.
In all cases, it is appropriate from an underwriting perspective to ascertain whether the company has adopted a policy to prevent and address harassment, and ensure that such policies are up to date before accepting to underwrite certain risks.
Moreover, as of January 1, 2019, all Quebec employers will be required to adopt a harassment prevention policy setting out a mechanism for addressing complaints to ensure that a climate of trust is instilled allowing employees to report situations of abuse.
Internal reporting is preferable to disclosure through social media, and a good social media and public relations management policy is essential to making sure that employees are aware of the duty of loyalty they owe to their employer, even outside the office.
The pace at which mindsets are changing on this issue is striking. Comments that were acceptable only a year ago are now considered completely out of line. This change will surely be taken into consideration by the courts and reflected in future case law. The movement, led mainly by and for women, will have an impact on attitudes towards psychological harassment, not only regarding incidents of a sexual nature. All forms of abuse of authority are now more likely to be reported, and in this regard, women in positions of authority are not immune.
1 [translation] “The Courageous Women”, the representative plaintiff in a class action instituted before the Superior Court of Quebec.