IHOP owners flipped, harassment onus didn’t — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Flipmeastack, an Illinois franchisee for the International House of Pancakes restaurant chain, will have to implement sexual harassment training and pay out $105,000 following a federal judge’s decision. The decision upheld an earlier jury award to two teenage employees at the franchisee’s Racine, Wis., location.

Flipmeastack, owned by Victoria Janmohammed, claimed it wasn’t the girls’ employer, since their paychecks came from a company called Management Hospitality of Racine (MHR). But MHR was, at the time of the harassment, partly owned by Victoria’s husband, Salauddin Janmohammed. He was also the owner of the restaurant when the harassment occurred in 2005. He sold his interest in MHR in 2006.

The court ruled that Salauddin Janmohammed was responsible for $15,000 of the settlement, the amount he received from the sale of MHR. The court found, for the purposes of federal anti-discrimination laws, Flipmeastack and MHR were both employers.

Note: Complicated ownership structures may slow down the eventual reckoning, but federal courts are predisposed to find deep pockets once a jury has ruled. The best approach is to train management and implement a system where harassment is not tolerated and is immediately addressed when it does occur.

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