When the Owner Is the Harasser, Who Takes the Complaint?

On September 16, 2026, the EEOC announced that Moore Comfort Home Care, LLC, a home healthcare provider serving clients in Suffolk, Virginia, will pay $60,000 to resolve a sexual harassment lawsuit. According to the agency, one of the company’s owners subjected at least three women to sexual comments and unwelcome physical touching from at least July 2022 through the fall of 2023, and at least one of them resigned.

The suit also alleged that a second owner knew about the harassment and did nothing to stop it.

The resolution is a three-year consent decree. Beyond the $60,000, the company must revise its anti-harassment policy, hire a third-party monitor, train on the policy, post notices about how to report, and send regular compliance reports to the EEOC.

When the owner is accused of harassment, employees need a credible way to report without going through the accused person or a conflicted contact. For closely held businesses, an outside reporting contact and independent review can be useful safeguards. Those arrangements need a defined path to corrective action. A hotline alone cannot stop misconduct, and an outside provider is not a universal legal requirement.

The Owner Is the Headline. The Reporting Path Is the Problem.

The settlement raises a practical question for employers: can a complaint about the person at the top reach someone able to respond?

Read what the EEOC’s regional attorney, Melinda C. Dugas, chose to emphasize: “To be effective, procedures should include multiple ways an employee can report unlawful conduct. An employee’s only option should not be to report discrimination to the harasser, or to someone in a close relationship with the harasser.”

Now read your own handbook against it. If it says to report to a supervisor or management, trace where a complaint about an owner would go. Does it reach someone able to act independently, or simply return to the accused person or a close associate?

Employees may hesitate to use a channel they believe is conflicted or powerless. Silence is not reliable evidence that nothing is wrong.

Why Owner Harassment Can Take Your Best Defense Off the Table

In some Title VII supervisor-harassment cases, an employer may raise the Faragher/Ellerth affirmative defense. It must show reasonable care to prevent and promptly correct harassment, and that the employee unreasonably failed to use available preventive or corrective opportunities or otherwise avoid harm. The defense is unavailable when the supervisor’s harassment culminates in a tangible employment action, such as a firing or demotion.

There is another limit. In Ackel v. National Communications, Inc., 339 F.3d 376 (5th Cir. 2003), the Fifth Circuit held that the defense is unavailable when the harasser is the employer’s proxy: an official whose sufficiently senior role makes the conduct attributable to the company itself. The accused was a TV station’s president and general manager, a director, and a 2% shareholder. The court sent the case back because the evidence raised a factual question about his proxy status; it did not finally decide that status.

For employers in Texas, the practical point is that ownership percentage alone does not settle the question. Ask employment counsel how the individual’s role and authority affect the available defenses.

Texas Employers Have Less Room Than They Think

If you operate in Texas, state law narrows the gap further. Texas Labor Code Section 21.141, added by SB 45 and effective September 1, 2021, defines an employer for sexual harassment purposes as a person who employs one or more employees, or who acts directly in the interests of an employer in relation to an employee.

Section 21.142 makes it an unlawful employment practice if sexual harassment of an employee occurs and the employer, its agents, or supervisors knew or should have known it was occurring and failed to take immediate and appropriate corrective action.

Moore Comfort is a Virginia case under federal law, not a Texas case. For Texas employers, however, the allegation that a second owner knew and did nothing illustrates why knowledge must lead to action. See what Texas SB 45 requires of small employers.

Five Signs Your Harassment Reporting Channels Dead-End at the Owner

Use these questions to identify weak points in your reporting and response process.

1. Every route returns to the accused owner. Multiple names do not provide meaningful alternatives if the accused can intercept reports or block a response.
2. Conflicts have no bypass. Being hired by an owner does not automatically disqualify HR or an office manager. Close relationships, involvement in the allegation, and lack of authority should trigger an alternative route.
3. The policy does not address owner complaints. Employees and report recipients should know where these concerns go before one arrives.
4. Field staff cannot reach a reporting channel privately. Check access outside the office and across shifts. Anonymous reporting can help, but it is not a substitute for accessibility or follow-up.
5. No one is assigned to act on findings. Identify who can authorize interim protections and corrective action, and what happens if that person is implicated or fails to act.

Build a Reporting Path That Leads to Action

For closely held businesses, we recommend planning three connected responsibilities before a complaint arrives.

Receive the report. Offer accessible alternatives that bypass the accused person. A third-party employee reporting hotline can record concerns and route them to designated recipients. Confirm that reports about an owner will not simply be forwarded back to that owner for screening.

Review the facts. A written conflict rule can send owner complaints to an independent workplace investigation. Define who can retain the investigator, preserve records, and arrange interviews. Outside involvement is a safeguard, not a guarantee of independence.

Authorize action. Identify who receives findings and has actual authority to implement protective measures and corrective action. Depending on the business, that may be an unconflicted board or another authorized decision-maker. An investigator does not gain that authority merely by being hired.

If the business has a sole owner and no independent governing body, say so plainly. Work with employment counsel to define the outside recipient’s authority, escalation steps, and available protective measures. Do not promise that a hotline can override the owner. Employees must also be able to learn about external agency options.

Build retaliation safeguards into the response. Assign someone to check subsequent changes in shifts, pay, assignments, and treatment, and provide a route for reporting new concerns. Explain that information will be shared only as needed for a fair response; do not promise absolute confidentiality. EEOC guidance explains employees’ protection against retaliation.

These steps support prevention, correction, and a reliable record of the response. They can strengthen an affirmative defense program where the defense is available, but they cannot restore a defense barred by proxy liability or a tangible employment action. That distinction is part of understanding what makes the affirmative defense worth having.

What This Means for Your Organization

Four things to do this week.

1. Trace the reporting routes. Give employees accessible alternatives and permission to bypass the accused or a conflicted contact. Consider an outside route for owner complaints.
2. Assign review and response authority. Name who receives owner complaints, who can commission an independent investigation, and who can authorize protective measures and corrective action. Include an escalation route.
3. Agree how knowledge triggers action. Make sure co-owners and other report recipients know how to preserve information, escalate concerns promptly, and monitor for retaliation.
4. Test access with your least powerful employee in mind. Could a new part-time worker on a field shift reach the designated contact without first asking the accused owner’s permission?

The allegation against one owner is the story. The allegation that a partner knew and did nothing is the lesson.

At empathiHR, we help you work through these questions before a complaint comes in. We’ll review your reporting process with you, identify where it could break down, and help you decide what needs to change.

Frequently Asked Questions

What should an employee do if the business owner is the harasser? See the EEOC’s employee guidance and filing-deadline explanation. Use an available reporting channel that bypasses the accused owner or a conflicted contact. Employees can also contact the EEOC or the applicable state agency about eligibility to file a charge, or seek advice from employment counsel. Internal reporting generally does not extend agency filing deadlines. Keep a factual record of the conduct, reports, and any suspected retaliation.

Can an employer use the Faragher/Ellerth defense when an owner harasses an employee? The defense is unavailable under the Fifth Circuit’s Ackel rule when the harasser is the employer’s proxy. Ackel sent the case back for further consideration of proxy status. The individual’s role and authority matter; ownership alone does not answer every case. Ask employment counsel how the rule applies.

Does Texas sexual harassment law apply to very small businesses? Yes. Texas Labor Code Section 21.141 extends sexual-harassment coverage to employers with one or more employees and to persons acting directly in an employer’s interests in relation to an employee. Section 21.142 addresses sexual harassment that occurs when the employer, its agents, or supervisors knew or should have known and failed to take immediate and appropriate corrective action.

How many ways should employees have to report harassment? The EEOC recommends multiple reporting avenues so an employee is not limited to the harasser or a close associate. For owner complaints, an outside contact can provide an additional safeguard. Effectiveness depends on access, conflicts, follow-up, and authority to act, not just the number of channels.