When Cody Steward exposed himself to three different co-workers at the cheese plant, Southwest Cheese Company said it could not be held liable for sexual harassment, because it did not know of the harassing work environment beforehand.

But the limburger hit the fan in Macias v. Southwest Cheese Co., LLC (10^th Cir. August 24, 2015), when discovery revealed that Mr. Steward, a few months before, had passed around a photo of his genitals to several managers, including the director of human resources, at an off-site work party, and the company apparently did nothing about it.

You may be thinking, “No way!”  Whey.

The distribution of the photo at the party did not contribute to the hostile work environment about which the plaintiff Yvonne Macias complained, because she wasn’t there to witness it and didn’t previously know about it.  However, it was relevant to show that the company might have been negligent in not taking action to stop the flasher from creating a hostile work environment for co-workers like Ms. Macias, the court held.  The incident “could have triggered” the company’s duty to respond “or at least put [the company] on notice that Mr. Steward posed a potential threat to the work environment,” the court wrote. “A reasonable jury could conclude that Mr. Stewart’s act of photographing his genitals to share with managers at an off-site co-worker function sponsored by [the employer] is serious and similar to his act of exposing himself to Ms. Macias at work.”

So what are the lessons of the case?

1. It is not a good defense to ignore or cover up harassing acts against other employees, and then try to tell the plaintiff — “not your problem” (pronounced “nacho problem”).
2. Don’t tolerate flashing of employees – by photo or live, at work or off-site, ever, period. While not quite a sexual assault, it is the next worst thing, the court noted.
3. If your company is faced with defending a case in which an employee has exposed himself to three employees at work and to the HR director at an off-site party, and not been terminated, then get out your checkbook. A bad outcome is a feta-compli.

* Management apologizes for this post.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.