Sexual Harassment and Corporate Law

73 Pages Posted: 25 Mar 2018 Last revised: 27 Apr 2018

Daniel Jacob Hemel

University of Chicago - Law School

Dorothy Lund

University of Chicago Law School

Date Written: March 22, 2018

Abstract

The year 2017 marked an inflection point in the evolution of social norms regarding sexual harassment. While victims of workplace harassment had long suffered in silence, the surfacing of serious sexual misconduct allegations against Hollywood producer Harvey Weinstein encouraged many more victims to tell their personal stories of abuse. These scandals have spread beyond Hollywood to the rest of corporate America, leading to the departures of several high-profile executives as well as sharp stock price declines at a number of firms. In the past year, shareholders at four publicly traded companies have filed lawsuits alleging that corporate directors and officers breached their fiduciary duties and/or violated federal securities laws in connection with sexual harassment scandals at those firms. More such suits are likely to follow in the months ahead.

In this Article, we examine the role of corporate and securities law in regulating and remedying workplace sexual misconduct. We specify the conditions under which corporate fiduciaries can be held liable to shareholders under state corporation law for perpetrating sexual misconduct or allowing it to occur at their firms. We also discuss the circumstances under which federal securities law requires issuers to disclose sexual misconduct allegations against top executives and to reveal payments made to settle sexual misconduct claims. After building a doctrinal framework for analyzing potential liability, we consider the strategic and normative implications of using corporate and securities law as tools to address workplace-based sexual misconduct. We conclude that corporate and securities law can serve to publicize the scope and severity of sexual harassment, incentivize proactive and productive interventions by corporate fiduciaries, and punish individuals and entities that commit, conceal, and abet sexual misconduct in the workplace. But we also address the potential discursive and distributional implications of using laws designed to protect shareholders as tools to regulate sexual harassment. We end by emphasizing the promise as well as the pitfalls of corporate law as a catalyst for organizational and social change.

Keywords: Sexual Harassment, Corporate Law

JEL Classification: K22, K38

Suggested Citation

Hemel, Daniel Jacob and Lund, Dorothy, Sexual Harassment and Corporate Law (March 22, 2018). Columbia Law Review, Forthcoming; University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 847; U of Chicago, Public Law Working Paper No. 661. Available at SSRN: https://ssrn.com/abstract=3147130

Daniel Jacob Hemel (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Dorothy Lund

University of Chicago Law School ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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