Sexual harassment in the workplace can come from two sources of employees: (1) co-workers; and (2) supervisors. Whether or not an employer is liable for the harassment is viewed differently depending on the type of harasser.
(1) Co-Worker Harassment
If the employee is being harassed by a co-worker, the employer must know about the harassment and have an opportunity to solve the problem before the employer can be held liable. After learning of co-worker harassment, if the employer then fails to take reasonable steps to prevent it, then and only then is the employer is liable. What is reasonable depends on the circumstances.
The bottom line is that employers must be given a chance to solve the problem. Employees being victimized by a co-worker's sexual harassment should document their complaints in writing to the company. In fact, if the harassment is serious enough, the employee should consult an attorney on how to best proceed with documentation.
(2) Harassment by a Supervisor
If a supervisor is the harasser, then the company is strictly liable for any unlawful harassment. The employer is liable even if the employee never complained. However, it is still important that employees do document their complaints in writing. While there are valid reasons employees fail to document harassment and discrimination claims, such as shame, embarrassment, fear of losing one's job, etc., and the failure to complain can be overcome at trial, a well documented complaint is still the best and safest practice. And again, consulting an attorney on how to best proceed with documentation is a good choice.
Employers may also be liable for harassment by independent contractors, vendors and other persons within the company's control.