When Is an Officer’s Sexual Harassment a Fiduciary Breach?

The Delaware courts have held that a director-officer’s sexual harassment of employees, resulting in fines and damages to the corporation, constituted personal misconduct rather than a breach of fiduciary duties.

WHY THIS IS IMPORTANT… Under this ruling, the director-officer was not personally liable to the corporation for its losses. The decision also limits the scope of a 2023 decision. A corporate officer’s sexual harassment of employees will not constitute a breach of fiduciary duties unless the officer’s corporate duties specifically include responsibility for preventing sexual harassment of employees.