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Business Deals, 'Weinstein' Clauses, and Harassment Training

It should come as no great surprise that “#MeToo” issues have become part of the mergers and acquisitions landscape.

Increasingly, business lawyers have been adding so-called “Weinstein Clauses” – named for Hollywood producer Harvey Weinstein – in merger and acquisition agreements. Essentially, these clauses, which take different forms, place the burden on the seller to represent to the buyer that there are no known claims of harassment against the company in general and, more particularly, against the seller’s executives. These clauses can be found in representation sections of transactional documents.

The agreements themselves set forth the stern consequences if the representation proves to be false or not fully accurate. The #MeToo movement has also resulted in a greater emphasis on “due diligence” by the buyer of the seller’s employment practices, its immediate and past history of claims of harassment and discrimination, and the measures taken by the seller to prevent such claims.

The implications are clear: harassment allegations, even if not yet established, can have a profound impact upon a company’s brand, reputation, and ultimately, its value. To the extent that employers need an additional reason to take sexual and other types of unlawful harassment seriously, and more, specifically to conduct meaningful harassment training, this unsurprising development in the mergers and acquisition world is sobering.

Eradicating unlawful harassment in the workplace through regular effective harassment training, and instructing managers on how to identify harassing behavior and how to investigate such matters is, of course, the right thing to do. It is now becoming increasingly clear that doing so is also very good for business.

Marc Engel is an employment attorney experienced in providing successful strategies for managing employees and preventing employment claims. For more information, contact Marc at 301-657-0184 or mrengel@lerchearly.com.

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