You can’t turn on the news these days, pick up a paper or listen to the radio without hearing about someone else in the entertainment industry being accused of improper sexual behavior towards employees, coworkers or others. Community Associations are microcosms of our culture, and so it should come as no surprise to find that allegations of harassment can and do come up. Recently I received a phone call from a manager dealing with the following scenario: Board President has served for many years, with wide support from the membership. He keeps the budget in check, makes sure the pool is open on time and that the common areas are well maintained. One problem, though: he has an unpleasant tendency to be just a little too touchy with female Board members, the manager, and women who come before the Board on various matters. It may seem silly, but the manager is afraid that owners seeking fine waivers, architectural approvals or other assistance from the Board will feel at least uncomfortable, and at worst pressured for sexual favors. What is a manager to do?
Title VII of the Civil Rights Act of 1968, also known as the Fair Housing Act, explicitly prohibits discrimination in housing and housing-related services due to sex. Community associations are deemed to be “housing providers” and subject to the Fair Housing Act. Effective October 2016, the U.S. Department of Housing and Urban Development (“HUD”) adopted new rules aimed to prevent the use of quid pro quo discrimination and harassment. 24 CFR § 100.600 is designed to define and prohibit the use of an unwelcome request or demand to engage in conduct where submission to the request or demand, either explicitly or implicitly, is made a condition related to the provision of services or facilities. The most typical example of quid pro quo harassment is when a housing provider or property manager demands sexual favors in exchange for certain rights to use the services or facilities in the community. In the community association context, this could translate to the exchange of sexual favors for the overlooking of a violation or debt owed, or the approval of architectural changes that would not otherwise be approved.
If the Board president is engaging in these activities in his role as President, the Association is open to significant liability for his actions. Directors and Officers (“D&O”) coverage may or may not cover these actions. Each situation is different, and the response will require a case by case analysis. In general, however, we would recommend that the Board undertake the following actions immediately to address the perceived improper behavior:
- Investigate the allegations. This can be conducted by a Board member or manager in the early stages, but if the allegation appears serious, involve the Association’s counsel. To the extent that the improper behavior involves a Board member, that member should be kept out of the executive session discussions of the issue.
- Consider steps to limit further problems. Establish new points of contact for the Board or assign a new board member to take over communications with affected individuals.
- Consider corrective action. In some circumstances, a discussion with counsel may be sufficient to stop an improper pattern of behavior. North Carolina’s voluntary mediation option may be a way to handle some minor matters that are appropriate for this type of resolution. If the problem is significant enough, the Board may need to consider a petition for removal of the offending member. This may seem tough, but the unpleasantness stemming from a recall petition will be far less than that caused by a drawn out lawsuit.
- Any written or formal complaints submitted to the Board should be immediately referred to counsel.
- Educate the Board on its obligations under the Fair Housing Act and the potential liability arising from violations of the Act.
These issues are uncomfortable to talk about and tricky to handle, but don’t shy away from doing so. These problems fester if not addressed, and with proper action can be resolved in a way that lets the community move on in the best possible position. If you need assistance, the attorneys at Black, Slaughter & Black, P.A. would be happy assist.