Could Direct Selling be the Next #MeToo Controversy?

Companies may be liable for behavior of independent representatives

“You need to be able to take action if someone is harassing someone else, and do it in a way that provides control yet balances the independent contractor aspect of the relationship.”
—Matt Dorny, General Counsel Nu Skin

“Technically under the law a company may not be liable but what would a jury do in the situation? You don’t know what will happen.”
—Jane Fergason, Partner Foley & Lardner

Imagine the following scenario: It’s the third night of your company’s annual convention. People are celebrating, alcohol is flowing. At the bar, one of your celebrity-status top leaders sits with a junior-ranked person in his or her downline. The conversation becomes increasingly personal and ultimately, the distributor feels pressured when the leader turns the conversation into an unwanted sexual invitation. Considering neither participant is an employee, does this situation open the company to a sexual harassment risk?

Legally, the answer is not totally clear. Gig economy workers, including direct selling independent contractors (IC’s), have little recourse for reporting sexual harassment because they aren’t employees, have no ‘official’ workplace, and are not bound by human resources policies. In fact, outside of an employer/employee workplace situation, few if any reporting mechanisms exist for conveying sexual harassment complaints.