There’s No Such Thing as a Cheap Harassment Suit

While the headlines about the latest sexual harassment claims may go to big names in Hollywood, Washington, and Silicon Valley, co-op and condo boards in New York City need to realize they’re not immune. And they need to develop a harassment policy right now to protect themselves. 

The seriousness of harassment claims came home to the board at the Foundry at Hunters Point Condominium, a 57-unit association in Long Island City, Queens. In a federal civil rights lawsuit, Jerry Laraque, a former doorman, alleged discriminatory treatment and routine harassment by the condo, its management company, property manager, and super. A black man from Haiti, Laraque claimed in the suit that his white boss, superintendent John Olivieri, persistently verbally and physically abused him at work, including mocking him in racist terms – calling him names such as “monkey” and “black bastard” – and fondling him against his will. Laraque further claimed that when he complained about Olivieri’s behavior to some board members, their only response was to refer him to the property manager. Laraque claims he did that as well, but the manager also failed to act. Not long after, Laraque was fired. 

In a response filed with the court, the defendants described a different scenario: Laraque had been involved in many altercations with co-workers, they claimed, and didn’t complain about harassment until around the time he was issued a written warning about his job performance. His firing, they said, was because of his performance, not his harassment charges. 

The two sides settled before the case went to trial. Laraque was represented by Lawrence M. Pearson, a partner at the Wigdor law firm. Though Pearson can’t discuss the terms of the settlement, he says the case clearly demonstrates the potential legal peril facing co-op and condo boards when someone in the building raises a charge of sexual harassment or discrimination. 

In addition to protecting boards against litigation, a written policy can also serve as a solid basis for disciplining or terminating a problem employee, says attorney Jeffrey Schwartz, the managing partner at Schwartz Sladkus Reich Greenberg Atlas. 

The 32BJ contract covering workers in union buildings also provides a process for members to address harassment on the job. “If members face harassment in their building, the building’s shop steward or union representative may try to mediate and resolve the situation informally,” says Rachel Cohen, a spokesperson for the union. “There is also a formal grievance procedure that members can use to report harassment to the union and have it resolved through the legal process.” 

But attorney Ken Jacobs, a partner at Smith, Buss & Jacobs, says that having such a procedure does not mean boards in union buildings can simply expect the union to take care of harassment complaints. Workers can still take up their complaints directly with their employers. 

And it’s not enough to put a policy in writing – the co-op or condo has to follow through. “If you get a bunch of complaints and you do nothing, that’s as bad as not having a policy,” says attorney Andrew P. Brucker, a partner at Montgomery, McCracken, Walker & Rhoads. In some cases, it might be necessary to bring in an outside investigator – someone completely independent – to thoroughly look into a complaint. “Remember,” Brucker says, “this is a lawsuit waiting to explode in your face.” 

Along with instituting a policy, boards should also check with their insurer to make sure they are covered for harassment suits. Such coverage typically covers legal defense costs. Employment practices liability insurance, known as EPLI, covers harassment claims from employees. Claims outside of that employer relationship – such as a shareholder vs. a board member – fall under directors and officers liability insurance, often called D & O. 

“These are not cheap suits,” cautions Edward Mackoul, president of the insurance brokerage Mackoul Risk Solutions. “The awards can be very high.”