BOSTON – On June 17, Senator Cindy F. Friedman (D-Arlington) testified before the Joint Committee on the Judiciary in support of a bill she filed that would address a loophole in Massachusetts law to ensure that sexual harassment and anti-discrimination laws extend to the investment community.
Under current law, employees are protected from sexual harassment and discrimination in the workplace, but it is not explicitly clear that those engaging in alternative business transactions – like venture capitalists and entrepreneurs – must also comply with this law.
The bill, S.939, would ensure that workplace sexual harassment and discrimination protections extend to investor-investee relationships, not just the traditional employer-employee relationship.
“I introduced this bill to address a glaring loophole in state law,” said Friedman. “Because of the ambiguity of our current statute, bad actors in the investment community continue to get away with sexual harassment and discrimination, harming women entrepreneurs and putting them at a huge disadvantage.”
As reported in recent news stories across the country, women entrepreneurs often face sexual harassment and discrimination from private investors – like those working at venture capitalist firms – and, as a result, have an increasingly difficult time receiving funds to start their businesses. At the same time, these women are silenced since they cannot file a lawsuit if no existing law protects them from harassment. As a result, women investors who wish to start their own businesses could be subject to sexual harassment or discrimination with no legal protection or recourse.
According to an analysis by Fortune Magazine, companies founded by women received less than 3% of venture capital funds in 2017 and far less (0.2%) went to women of color. In addition, while women start companies at twice the rate of men, women entrepreneurs receive only a fraction of the funding available.
This disparity, Friedman explained, is due in no small part to the predatory and discriminatory behaviors that women entrepreneurs frequently face in accessing funds, which ultimately hurts business and results in poor investment performance.
“There is a shortage of women in this industry, and we know very clearly that it is not due to the lack of smart, capable or creative women who are every bit equal to their male counterparts,” said Friedman. “We need more women in this pipeline and more women investing. We must empower them by providing necessary protections against sexual harassment and discrimination.”
The passage of this bill, Friedman explained, would be a step toward holding venture capital firms and investors accountable for discriminatory behavior; remove a barrier for women seeking the funding they need to start their own businesses; encourage more women to join the business pipeline and become entrepreneurs; and benefit the business community overall.
The issue was brought to Friedman’s attention by a group of women entrepreneurs from Burlington and Lexington, who described their own personal experiences with sexual harassment and discrimination when attempting to request funds to start their own businesses.
A similar bill was recently passed in California and it is Friedman’s goal to achieve the same protections here in Massachusetts through her legislation.
To continue tracking the bill, visit https://malegislature.gov/Bills/191/S939.