Pinups on the warehouse wall. A pat on the fanny at the water cooler. Sexy remarks in the hallway. Innocent enough, you may think. But such practices can make your company an uncomfortable place for many of your employees. So uncomfortable, in fact, that you are running the risk of being sued if you choose to ignore what the courts call a sexually hostile environment.

It was nearly a year ago, in June 1986, that the U.S. Supreme Court, in Meritor Savings Bank v. Vinson, confirmed what some lower courts around the country have told employers for years: if your employees have to contend with sexual innuendo as part of the daily nine-to-five, your company -- not just the offending employee -- could be held liable for violating federal and some state laws against sexual harassment. An employee no longer has to show a tangible loss, such as missing out on a promotion or losing a job, to win a sexual-harassment case. A hostile or offensive work environment can be grounds for a successful lawsuit.

What some people might think of as mere pranks -- exposing undershorts covered with hearts, for example -- the courts may call sexual harassment. Requiring an employee to wear a uniform because of his or her sex can be the basis for a sexual-harassment claim, whether the employee is a bank teller, bartender, elevator operator, or whatever.

Of course, not every dirty joke amounts to sexual harassment. Courts recognize that antidiscrimination laws aren't intended to mandate clean language. When do sexually aggressive words, touching, flashing, or the prominent display of girlie posters and the like cross the line from legally accpetable behavior to sexual harassment for which you may be legally liable? That's exactly the rub: courts will continue to decide case by case. If I had to give you a rule of thumb, I'd suggest you put yourself in the shoes of those likely to be harassed by what they encounter on the job. Is unwelcome sexual innuendo more than trivial or occasional? Does it significantly color the work environment?

While the Meritor Savings Bank case extended employer liability by one measure, it has also offered employers greater protection. Until Meritor, many courts around the country had said that you as a top manager are always responsible if one of your managers or supervisors creates a hostile working environment, even though you may have known nothing about the problem. In the Meritor case, the Supreme Court decided that whether or not you'll be held responsible depends on the particular circumstances. Three issues are likely to be critical:

1. Did your managers use the stature that comes from their jobs to create the hostile environment, or was their behavior purely personal?

2. Did you know about the problem -- or should you have known about it -- and did you take effective action to stop it?

3. Did you have a well-articulated grievance procedure that made it reasonably easy for employees to discuss sexual harassment with managers who could do something about it?

The dollar consequences of losing a sexual-harassment claim can be substantial even when the victim is an employee with limited earning power. In addition to back pay, an employee can seek actual damages, which may include pain and suffering, and punitive damages. The court can also order you to change the way you run your business. It may require that you hire extra managers, for example, or that you separate certain workers from one another.

Your best protection against claims, of course, is to be genuinely concerned about your employees and to do what you can to make your company a good place for people to work. And that probably includes not only a particular attitude on your part, but also a program to prevent sexual harassment. Here are some suggestions:

* Discuss the issue of sexual harassment with all employees and advise them that harassing another employee violates federal law and, in some situations, state law.

Make sure your employees understand what sexual harassment includes. It will probably come as a surprise to many that offensive words and pictures can be illegal. Announce -- and post -- a clear policy stating that victims will get help and offenders will be disciplined. It's not enough just to have a policy, however; you must enforce it as well. The Federal Aviation Administration, for example, had a policy forbidding sexual harassment and even had seminars for its supervisors. It lost a case brought against it, however, because it was clear from the testimony in court that the policy wasn't effective enough. The managers knew about the harassment and even participated in it.

* Establish a procedure that harassed employees can use to get help from management. It should provide for quick action and confidentiality, and it should ensure that any employee can easily speak to a manager not involved with the harassment.

Just having a general procedure isn't good enough. The Meritor Bank had an established grievance procedure, but the plaintiff was afraid she'd lose her job if she used it, and the court deemed it ineffective. One fatal flaw: the plaintiff would have had to take her complaint to the manager who was harassing her. A procedure doesn't have to be complicated to be effective. You may send a letter to all employees advising them of your policy on sexual harassment. Tell them if they're concerned about this problem, they needn't go through usual reporting procedures. They can talk to anyone in management. In addition, you may want to identify one person whom they can contact about sexual-harassment claims, so employees who may be timid about raising the issue will have an easy entry into the management hierarchy.

To help assure a speedy response, give your managers deadlines. For instance, require that they begin their investigation within 24 hours after receiving a complaint about sexual harassment. At a minimum, this would mean meeting with a harassed employee, discussing the situation, and identifying other people to talk with.

* Meet with all managers to remind them of their special responsibility to guard against sexual harassment.

Make sure your managers understand the different kinds of behavior that can support a sexual-harassment claim. A single mention of their responsibilities probably won't do. Just as with other legal responsibilities, such as complying with labor laws and race- and age-discrimination laws, management must be aware of the need for constant vigilance against sexual harassment. Provide for periodic review of management obligations, such as the need to be reasonably well informed about what goes on among nonmanagerial employees -- your potential liability isn't limited to actions by a management employee. You also can be hit with claims if one worker sexually harasses another.

Whatever steps your managers take can't be halfhearted if they're to be effective or to stand up in court. The West Bend Co., for example, lost a sexual-harassment suit even though its supervisors had held a few general meetings to explain the company's policy against abusive language and offensive posters targeted at one employee. What they didn't do was address her specific complaints directly.

* Promptly investigate any claims of sexual harassment or situations that indicate an employee may be subject to sexual harassment.

Your managers may feel squeamish about talking with a concerned employee -- the easiest reaction for them may be to joke about the problem and hope it will go away. Or they may tell the employee to handle it one way or another, or to tough it out. Managers may even make their own assumptions about what's going on and decide that the employee "deserves" whatever sexually provocative behavior he or she is concerned about. This kind of reaction on their part could lead to a law-suit against you.

Approach a complaint about sexual harassment systemically, as you would less emotional problems. Arrange for private conferences and learn the facts. Ask the harassed employee to be as specific as possible about what happened, when, and where. Determine whether other employees may have witnessed the incidents described. Conduct confidential discussions with accused employees.

When there are no witnesses to help resolve conflicting stories, the best step may be to separate involved employees by giving them different assignments. But be careful: if you move an employee to a less desirable position after a complaint about sexual harassment, you may be charged with unlawfully retaliating against the employee for exercising his or her rights.

* Provide for a quick remedy if sexual harassment is confirmed.

The severity of a remedy will depend on circumstances. Merely reprimanding an employee may be enough. Separating employees may resolve a situation. Firing the offender may be the only choice, but again, be careful. You may be subject to legal action by the fired employee. One manager who had been demoted because of a sexual-harassment claim was reinstated when a court decided his comments to another employee were trivial incidents in an otherwise completely professional relationship that had to be judged in context -- the complaining employee often called him at home late at night to discuss her personal problems.

An adequate remedy must also consider the harassed employees who may need extra help. Their performance may have suffered, or they may have lost time from work, and you may have to compensate for this by providing back pay or extra training.

It's possible, of course, they you'll do all that is in your power to provide a good working environment and still be sued for sexual harassment. If that's the case, you have a handful of defenses.

It didn't happen. Seldom do employees venture a complete fabrication, but I've seen cases in which an emotionally disturbed employee has just imagined things. Whenever you are alerted to the possibility that an employee is being sexually harassed, however, your first step is to investigate. Dismissing an employee's concerns as trivial before you get the facts is sure to count against you.

It happened, but it was part of a consensual relationship. Courts may be wary of this defense. Because an employee submits to a supervisor's or co-worker's aggression doesn't make the relationship consensual.

It happened, but it was trivial. Even a single incident may be enough to give an employee reason to complain about sexual harassment, but courts have found that a comment on someone's physique, an off-color joke, or even a little touching doesn't add up to sexual harassment when a long relationship between the employees involved had otherwise been entirely professional, and when the affected employee had admittedly been rewarded for professional performance.

It happened, but I didn't condone it, and there was no way I could have known about it. This will be especially tough to prove if the offending employee is a supervisor or manager. Generally, since you've given these people substantial authority over other employees, you'll be held responsible for how they use their power. Courts will consider such points as how prominent the behavior was, how long it had been going on, whether other employees were aware of it, whether the victimized employee tried to talk to management about the problem, and whether you make it reasonably easy for employees to talk about such problems.

It happened, but I made a real effort to correct the problem as soon as I learned of it. Courts will ask if you learned about the problem as soon as you should have, and whether your efforts were effective. They're likely to consider whether you disciplined the offender, how you responded to the victim, and whether you've made reasonable efforts to prevent similar problems in the future.