North Carolina: (919) 847-8632


Shawn D. Mercer, Esq.



It does not seem that a day goes by when the news does not include high-profile allegations, lawsuits, firings or resignations on account of sexual harassment allegations made by a coworker.  We at BSM are likewise seeing an increase in harassment claims in dealerships.

Sexual harassment claims have been brought against dealerships for years, with the most common claims being brought in the sales department.  However, we are now also seeing a significant number of complaints in F&I and service as well.

Complaints to the Equal Employment Opportunity Commission (“EEOC”) and subsequent lawsuits against the dealership can prove to be extremely costly for a dealer in terms of both dollars and employee morale.  A few recent judgments and settlements include a $2 million-dollar resolution to a New Mexico dealership lawsuit following allegations that a dealership manager subjected coworkers to inappropriate comments and unwanted touching.  A Texas dealership recently incurred a $325,000.00 jury award following outgoing allegations that a female sales manager had been repeatedly asked out on dates by another manager, and that she had been hugged and been subjected to suggestive comments.  Further, a Massachusetts jury awarded over $500,000.00 to a finance manager who had also claimed inappropriate behavior, including crude jokes made during sexual harassment training.

It is imperative that dealerships be proactive with employee anti-harassment training.  All stores must have a written policy prohibiting harassment in the workplace.  Most importantly, the policy must be enforced so as to ensure a workplace that is free of hostility.

Title VII of the Civil Rights Act of 1964, as amended, prohibits discrimination and harassment in the workplace.  The most common harassment claims are a “hostile work environment”, which generally arises when repeated unwelcome conduct creates an environment where an employee feels forced to resign to get away from such conduct, and “quid pro quo”, which typically involves a supervisor seeking to exchange sexual favors from a subordinate for a favorable treatment.

Dealerships must implement appropriate policies and procedures that are designed to prevent harassment from occurring in the first place.  These policies should include a definition of harassment, examples of harassment, instructions on how an employee can report harassment that they believe they have experienced or witnessed.  Finally, the dealership’s policy should include language stating that an employee who reports harassment will not be retaliated against.  The dealership must routinely update its policies where appropriate.

Dealerships must also have a written plan in place to facilitate investigation of a complaint as well as a defined range of resolutions to complaints, up to and including immediate employment termination for a violating party.  Inappropriately handling a complaint can lead to severe negative consequences for the dealership, including being named in a lawsuit filed by the EEOC, or by a plaintiff’s attorney.  Settlements and jury awards can be significant.

A mere allegation of harassment can be crippling to a dealership’s reputation, even if the complaint is without merit.  That is why it is imperative that dealerships properly train their personnel, implement appropriate written policies and procedures and immediately investigate and take action where a policy violation may have occurred.  

Fostering a workplace that is free of harassment will undoubtedly result in more satisfied employees and increased productivity. Questions concerning your dealership’s legal obligation should be directed to your dealer lawyer.

Skip to content