Employers can hit sexual harassers hard—in the pocketbook. There are a variety of channels by which to claw back compensation and benefits from bad-acting employees. The smartest employers have for years aimed those threats at employees who violate noncompete and trade secret protections. Now, they may want to toughen up their benefit plans and stock awards, because routine harassment training may not have the in terrorem effect that could come through broad-based forfeitures and clawbacks.

As a general matter, employees who are terminated for “cause” will forfeit outstanding stock awards and nonqualified plan benefits, as well as any rights to severance and unpaid cash bonuses. By statute, bad actors could also forfeit Consolidated Omnibus Budget Reconciliation Act rights (assuming there has been gross misconduct).

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