Whitney Wolfe, the former marketing director at Tinder (a popular mobile dating app), is suing the company for sexual harassment and discrimination. According to an article on The Verge, the lawsuit’s primary defendant is Tinder’s marketing chief Justin Mateen, who allegedly wrongfully stripped Wolfe of her “co-founder” title and harassed her to the point where she left the company.
Tinder founder and CEO Sean Rad is also named in the suit, along with IAC and Match.com (Tinder’s owners). Rad denies the allegations and maintains that the company takes gender equality seriously.
If the case settles, we may never know if Tinder is guilty of sexual harassment and discrimination. But the allegations of the lawsuit are enough to send a message to other small-business owners and startups: you are not immune to employment lawsuits.
How Startups Are Vulnerable to Employment Lawsuits
Tinder launched two years ago with six employees. Since then, the app has seen exponential growth in users. Today, it’s estimated that 10 million people use the app daily.
When a business suddenly takes off the way Tinder did, management issues can be a struggle – and addressing workplace discrimination and harassment risks may not always be a top priority.
Perhaps that is one of the reasons why the higher ups at Tinder let the situation get out of hand. After all, the lawsuit alleges Mateen…
- Created a hostile work environment for Wolfe by sending her racist, homophobic, and sexist text messages.
- Discriminated against Wolfe because of her gender by calling her a “24-year-old girl” who “devalues” the company and by calling her a “whore” in front of Rad.
It’s illegal to discriminate or harass employees based on their gender, race, ethnicity, pregnancy status, disability, age, or national origin. (For more on these regulations, see “Employee Rights: What Small-Business Owners Need to Know.”)
Among friends and lovers (Wolfe and Mateen were dating before the suit), disagreements or unsavory jokes might not seem like a big deal – but there’s a reason why professional and personal relationships should be kept separate. Wolfe allegedly tried to alert her bosses of the harassment, but both Tinder’s CEO and owners didn’t take her claims seriously.
A Gender Discrimination Lawsuit’s Hefty Price Tag
A workplace discrimination or harassment suit strikes fear in the hearts of most employers. For one thing, employers generally don’t like to hear that one of their employees feels unsafe or uncomfortable at work. For another, employment lawsuits are among the most expensive lawsuits a business owner can face. You may have to pay for…
- Lawyer fees. These may only be a few thousand dollars for cases that settle quickly out of court, but expect to spend hundreds of thousands of dollars if the case goes to trial.
- Witness / expert fees. In order to strengthen your defense, your lawyer may call in a witness or expert to testify on your behalf. Unfortunately, this costs money.
- Settlements. Even if you can resolve the dispute out of court, you’ll have to settle the claim with cold, hard cash.
- Judgments. If you lose the case, a judge will order you to pay the employee damages, which can easily drain your bank account (and then some).
- Other costs. If you lose your case, you might have to pay for your employee’s defense as well as your own.
And these are just monetary losses. Your business may also suffer from loss of productivity and morale throughout the lawsuit.
Shielding Your Small Business from the Cost of Employment Lawsuits
Employment lawsuits may sound grim, but there are steps you can take to avoid them. First of all, even the newest and smallest of businesses should take workplace harassment and discrimination seriously. Every business should have written protocol in place that details how to handle these issues. For more tips, read “The Small Business Guide to Avoiding Discrimination and Harassment in the Workplace.”
You can also purchase Employment Practices Liability Insurance (EPLI), which covers the cost of employment lawsuits. This policy can be purchased on its own or as an “add on” to your Professional Liability Insurance policy.