Sexual Harassment Law

What kind of anti-harassment policies must I have in place as a small business owner?

Several discrimination laws apply to small businesses, including Title VII of the Civil Rights Act, which deals with discrimination based on race, color, sex, religion, or national origin, the Age Discrimination in Employment Act, which focuses on employees over the age of forty, and the Americans with Disabilities Act, which addresses employees with disabilities. Additionally, all of these laws prohibit retaliation for complaining about or reporting discrimination. For example, an employer cannot fire an employee who files a claim against the employer with the Equal Opportunity Employment Commission (“EEOC”) for racial discrimination. As a small business owner, you should be knowledgeable about these laws and institute necessary policies in your workplace in order to comply with these laws. 
Generally, harassment involves discriminatory treatment based on one of the above listed characteristics, or retaliation for complaining about discrimination. Mere teasing or joking does not rise to the level of harassment; harassment must be so continuing that it results in a hostile work environment or some change in job status, such as firing, or failing to hire, in order to constitute prohibited discrimination.
Under federal law and EEOC guidelines, it is clear that a business owner should institute a clear policy about sexual harassment, as well as other types of harassment, and provide all employees with periodic training regarding these policies and harassment in general. In fact, such policies and training are essential to being able to defend your business against harassment lawsuits. Your policy should be in writing, and should generally state that your business will tolerate harassment and/or discrimination of any kind; violations of the policy should result in punishment, just as violations of other workplaces policies result in punishment. 
Furthermore, it is not enough to simply establish a policy regarding harassment in the workplace; you also must take prompt action to address any claims of harassment, and to enforce the terms of your policy. To that end, your policy should contain clear procedures for an employee to make a complaint of harassment, whether the complaint concerns another employee or a supervisor. These procedures should allow employees to make a complaint to more than one person; it is not enough for an employee to be able to complain to his or her direct supervisor, as it may be the supervisor who is causing the problem. In any case, once you receive a complaint of harassment, you should immediately investigate the complaint and take any steps necessary in order to stop the behavior about which the employee is complaining.
Business owners must also ensure that any supervisors, or employees who have authority to direct the activities of and discipline employees, are well-trained on harassment issues. If harassment by a supervisor results in some change in job status, such as the employee being fired, then your business will be legally liable for the harassment. Even if the harassment by a supervisor does not result in a change in job status, your business can be liable unless you can show that you used reasonable care to avoid and correct harassment in your workplace, and that the employee did not make you aware of the harassment.
By taking these simple steps, a small business owner cannot only easily comply with anti-harassment laws, but can also save money by avoiding costly harassment lawsuits.