Sexual Harassment Lawsuit Against Tech Finance Company, Described as “Frat House,” Follows CEO’s Resignation

Legal News GavelRecent media and public attention has helped shed light on sexual harassment in workplaces all over the country, including New York City. Employees have several means to fight back against such unlawful employment practices, but the attention to the issue since last fall has helped many employers identify and deal with individuals, policies, and practices that contribute to workplace sexual harassment. Laws like the New York City Human Rights Law (NYCHRL) allow employees to recover damages once New York City sexual harassment has occurred. The hope, of course, is that this attention will make workplace sexual harassment less common in general. Allegations of sexual harassment at a finance and technology startup company last year led to the CEO’s resignation, between the filing of two lawsuits against the company. Charles v. Social Finance, Inc., No. CGC-17-560682, complaint (Cal. Super. Ct., San Francisco Cty., Aug. 11, 2017); Zamora vs Social Finance, Inc., No. SCV-261312, complaint (Cal. Super. Ct., Sonoma Cty., Sep. 21, 2017).

In New York City, laws at the city, state, and federal levels prohibit sex discrimination in employment. Each of these statutes, while not expressly mentioning sexual harassment, has been construed to prohibit sexual harassment as part of its provisions on sex discrimination. One particular form of prohibited sexual harassment under the NYCHRL and other laws is known as “hostile work environment.” This involves a pattern of unwanted sexual behavior, ranging from remarks, comments, or jokes to overtures or actual physical contact, that is pervasive enough to interfere with a person’s ability to do their job. The behavior does not necessarily have to come from individuals in a superior workplace position to the complainant, provided that the employer knows about it but has failed to act.

The defendant in the lawsuits mentioned above is a Silicon Valley startup that provides online lending services. The company received positive coverage in the media for “stretching the definition of what a lender should do” by providing services beyond those directly related to a lender/borrower relationship. Beginning in early to mid-2017, however, stories began to emerge that showed a very different side of the company. Not at all unlike many New York City finance companies, current and former employees described an alleged “frat house culture” that included frequent sexual banter and actual sexual activity on company property.

In mid-September 2017, the company’s CEO announced that he would step down from his position by the end of the year, citing the “negative press” from the various sexual harassment allegations as one reason. Media reports also noted allegations of “skirting risk and compliance controls,” which might have been a factor in the resignation. The plaintiff in Zamora was also a plaintiff in a putative class action against the company, alleging violations of state wage and hour laws. Pullen, et al. v. Social Finance, Inc., No. CGC-17-560700, complaint (Cal. Super. Ct., San Francisco Cty., Aug. 14, 2017). The CEO’s resignation announcement came on a Monday, and he actually resigned that Friday. Both lawsuits connected to the sexual harassment allegations were dismissed with prejudice in the spring of 2018.

Phillips & Associates’ sexual harassment attorneys bring claims in New York City courts for unlawful workplace practices like sexual harassment and hostile work environment on behalf of employees, former employees, and job seekers on Wall Street and in other industries. To schedule a free and confidential consultation to discuss your case, contact us today at (212) 248-7431 or online.

More Blog Posts:

Virtual Reality Technology Offers Opportunities to Address, and Perpetrate, Sexual Harassment in New York City and Elsewhere, New York Employment Attorney Blog, May 31, 2018

Lawsuit Alleges Retaliation by University in Upstate New York for Reports of Sexual Harassment, New York Employment Attorney Blog, May 23, 2018

Survey Reveals Rampant Sexual and Racial Harassment Among Space Scientists, New York Employment Attorney Blog, April 10, 2018

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