Can Cancel Culture Create a Legal Liability for Companies?

Cancel culture is often a reaction to inequality, b/contactut those reactions are often emotionally charged and can become extreme. When that happens, it can cause liability issues for companies. This article discusses how you can address issues of equality in your business to create a better business culture while also being insured against the legal liability that cancel culture can create.


In this article, you will learn:


Typewriter displaying words "Cancel Culture"

A major topic of discussion among business leaders involves the idea of corporate culture and how to promote consistency in the work environment from the top down. Much of this concern stems from problems with discrimination and harassment and claims that are on the rise in the aspect of operations.


Organizational leaders have widely implemented company protocols for responding to such actions and the discipline that needs to be enforced in these situations. But a relatively new aspect of corporate culture involves the social issue of "cancel culture".


Can an employer be held legally responsible for failure to address "cancel culture", and if so, how? We will explore a few considerations around this new social issue that has filtered into many aspects of life, including the workplace.


What is “Cancel Culture?”


"Cancel culture" means ostracizing someone who doesn't fit the current social norms or because they have said or done something that offends people. Famous cases included Louis C.K. who couldn't book a comedy club show after confessing sexual misconduct and Rosanne Barr who made a racist tweet and lost her comedy show.


However, cancelling someone was initially just another way of saying that one person doesn't want to deal with someone else. For instance, in VH1's Love and Hip-Hop: New York, a couple were fighting on the show when the man yelled "Your cancelled" to his girlfriend. This one quote went viral and is credited with helping to drive the phrase on social media and eventually into the woman's rights movement.


Although most canceling is done on social media, it also finds its way into the office. It is entirely possible that a group of co-workers or even an entire organization may choose to shun or completely ignore individuals who do not fit in with their organizational culture, no matter what they've done. This creates an uncomfortable and maybe even intolerable work situation.


However, very few organizations actively train employees that are management level in vital areas of diversity, Emotional Intelligence, empathy, and mentor leadership. This factor, along with the lack of training specific to cancel culture leaves a gap in upper-management perspectives on corporate culture and how personnel interact amongst themselves.


What are the Risks with Cancel Culture?


If management tolerates staff ostracizing an individual who does not "fit in", there may be a risk of high turnovers and possible formal complaints. According to a recent Gallup study, 67% of US employees feel disengaged from their work organizations; 51% say they are actively seeking for and are willing to take a new job; 47% of US employees believe the job market is favorable to them; and as high as 70% of the variance in the degree of employee engagement is directly related to the environment encouraged by the manager. Lack of opportunity and employee development is a common thread for most employees who are discontent in their careers (www.thebalancecareers.com, “What Makes a Work Environment Hostile?”).


These factors may create a hostile environment from the employee’s perspective, but there are certain characteristics that must be at play for a hostile work environment claim to be credible. Some factors to consider –

  1. Behavior – If there is cancelling, does the behavior disrupt the terms of employment or impede the employee’s ability to do his or her job? Rude behavior from co-workers can certainly create work performance barriers, but the activity may not rise to the legal definition of a hostile work environment.

  2. Discrimination – Could the activity that's directed toward an employee be considered discriminatory? For an employee to lodge a complaint of a hostile work environment, there must be a pattern of discrimination based on the protected classes under the Equal Employment & Opportunity Commission and as defined in the Civil Rights Act of 1964 (www.thebalancecareers.com). This discrimination must be based on race, age, religion, gender, color, sexual orientation, ancestry, national origin, pregnancy, or disability (www.thebalancecareers.com, Title VII of the Civil Rights Act of 1964). If one of these aspects of discrimination is taking place at work, an employee has a legitimate claim for a hostile work environment.

  3. Time Element – Was the activity ongoing for an extended time frame or did the employee receive unfair treatment in a one-time situation? For a hostile work environment to exist, one employee’s behavior toward another must be protracted and occurring over a period of time. Otherwise, there is no consistent pattern of an environmental situation that would interfere with an employee’s ability to continue to work.


Who is responsible for employee behavior?


Ultimately, it's the organization that may be held legally liable for actionable claims related to a hostile work environment involving harassment and discrimination in the day-to-day operations. This means that a timely response from leadership is vital to bring about a solution that could avoid legal action. Some ways employers can respond in a positive manner might include:

  1. Listening – When an employee voices an issue with leaders or managers, this demands a quick response. In most cases, if an employee is willing to confront the situation, they are counting on management to assist in coming to a resolution. For managers and supervisors to ignore an interpersonal issue amongst employees will not make it simply go away. In fact, failure to address the issue with concrete actions may only exacerbate the problem as well as encourage the cancel mentality.

  2. Responding – The right response may take the form of disciplinary action towards the offending employee or training for staff who prove difficult to deal with. Responses from management carry more credibility and create more opportunity for change if they're followed by written policies and procedures that address these core issues. Posting information related to discrimination and workplace bullying will strengthen the organization’s cultural stand and may deter those who would not follow company-approved behavior.

  3. Consistency – While all claims are unique and individual, business leaders must be consistent in how a complaint is to be handled. Inconsistency in following protocols by management may make management culpable for discriminatory employment practices.


What Happens when "Cancelling" is the Right Thing to do?


When looking at cancel culture in a company, you also have to consider that sometimes "cancelling" is the right thing to do. For instance, if a woman faced sexual harassment from her boss and management didn't address the issue, a logical outcome is other employees taking the matter in their own hands and "cancelling" that boss.


This outcome shows the company didn't address a serious issue and could be held liable. It would be the same outcome as if bullies in a company practiced rampant harassment and the company didn't interfere.


When there are indications of an unsafe workplace, companies need to "listen", then "respond" appropriately with company policies that are "consistently" applied. That way, it's the company that takes control of its work culture instead of leaving it solely to employees.



How do Leaders Protect against Legal Action?


Most importantly, the best way to protect against legal action stemming from reckless activity is to practice prevention through training and awareness. In this way, business leaders are practicing risk avoidance by simply not leaving an open door for these types of claims.

Another protective layer for companies is to purchase Employment Practices Liability Insurance (EPLI). This specific coverage provides protection for the business when a worker claims that his or her rights as an employee of the organization have been violated. Some of the types of claims falling under this coverage include:

  • Sexual Harassment

  • Discrimination

  • Wrongful Termination

  • Breach of Contract

  • Negligent Evaluation

  • Wrongful Discipline

  • Deprivation of Career Opportunity

  • Wrongful Infliction of Emotional Distress

  • Mismanagement of Employee Benefit Plans

(https://www.iii.org/article/what-employment-practices-liability-insurance-epli)


Some insurance carriers offer EPLI as an endorsement to package policies which typically will include both Property and Liability coverage. Other carriers sell a stand-alone EPLI policy. Your agent should advise and assist you in placing coverage depending on the type of business organization you lead and the availability of coverage options. Adding this coverage is not a guarantee that the organization will be covered against all claims, but it will serve to mitigate the risks in this area of business operations.


In the final assessment, "Cancel Culture" is a valid concern in the marketplace and employers must be consistent in promoting integrity in dealing with staff members. Fairness and awareness are essential to effectively navigate the new cancel culture, promote an inclusive environment, and be aware of how to protect with insurance coverage.



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Still have questions?

Contact the insurance experts at the Loomis Insurance Agency. We're available to discuss anything related to insurance, even concerns you might have about Employment Practices Liability protection. We are here to assist you.




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