When Your Manager IS the Harassment Problem (And Your Reporting System Doesn’t Account for It)

Traliant’s 2026 workplace harassment report included a statistic that should make every small business owner rethink their reporting structure: 35% of workplace harassment comes from supervisors. Not coworkers. Not external clients. The people your employees are explicitly told to report problems to.

Most small and mid-sized companies have a reporting chain that goes something like this: “If you experience harassment, tell your manager. If you’re not comfortable with that, contact HR.”

Do you see the problem?

When more than a third of harassment originates from the management layer, your reporting system has a structural defect. You’ve built a complaint process that requires employees to report their harasser to their harasser, or to report their harasser to someone who works closely with their harasser and has to maintain that working relationship after the complaint is filed.

This isn’t a training gap. It’s an architecture problem that requires structural solutions, particularly for companies without large HR departments or complex organizational hierarchies.

Why the Standard Reporting Chain Breaks Down

The typical SMB has one of two reporting structures:

Option 1: “Talk to your manager first, escalate to HR if needed” Option 2: “You can go to your manager or HR, whichever you’re more comfortable with”

Both assume the manager isn’t the problem. When they are, here’s what actually happens:

The employee realizes their manager is harassing them. They know they’re supposed to report it to HR, but HR is one person who sits 15 feet from the manager. That HR person has lunch with the manager. The HR person and the manager were hired around the same time and have worked together for three years. The HR person has no formal investigation training and is already underwater with benefits administration and recruiting.

So the employee does the math. Report and stay in the same small office with their manager, who now knows they complained? Report and watch HR try to investigate someone they consider a friend? Report and potentially face retaliation from someone who controls their schedule, their assignments, and their performance review?

Or just keep their head down and start looking for a new job quietly?

The Traliant study found that 22% of employees who experienced harassment didn’t report it. When the harasser is a supervisor, that number is almost certainly higher.

The Manager-Harasser Dynamic Creates Specific Risks

When harassment comes from a supervisor rather than a peer, the power differential creates compounding problems:

Retaliation is easier to disguise. A coworker who retaliates has limited options: social exclusion, gossip, maybe interfering with shared work. A manager who retaliates can change your schedule, reassign your projects, document performance issues, deny training opportunities, exclude you from meetings, or tank your annual review. All of these can be framed as legitimate business decisions.

Witnesses are less likely to intervene. The same Traliant report found that 18% of harassment incidents saw no bystander intervention. When the harasser is a manager, that percentage is almost certainly higher. Coworkers understand that contradicting a supervisor has career consequences, especially in small companies where there are limited opportunities to transfer away from a problematic manager.

Investigations become messier. When you’re investigating a supervisor, you have to interview their direct reports, who are now being asked to provide potentially damaging information about someone who controls significant aspects of their work life. Even if you promise confidentiality, everyone knows a small investigation pool makes anonymity nearly impossible.

The company’s liability increases. Courts generally hold employers to a higher standard when harassment comes from someone with supervisory authority. The legal framework assumes supervisors act on behalf of the company, which means their harassment can be directly attributed to the organization in ways that peer harassment isn’t.

What SMBs Get Wrong About Supervisor Bypass Options

Some companies try to solve this by adding language like “you can also report directly to the CEO” or “you can report to any member of leadership you’re comfortable with.”

This sounds good. It doesn’t work.

The CEO option fails for obvious reasons. In a 30-person company, the CEO probably hired the manager. They work together daily. The power differential between an entry-level employee and the CEO is massive. And frankly, most SMB CEOs don’t have investigation training either.

The “any leader” option creates confusion and inconsistency. When you tell employees they can report to any manager, you’ve now got multiple people who might receive complaints without clear protocols for what happens next. You risk duplicative investigations, inconsistent responses, and information getting siloed in ways that increase liability.

Both options still keep everything internal. When all reporting paths lead to people the employee sees every day, you haven’t actually solved the structural problem. You’ve just given them more options within the same broken system.

Building Functional Supervisor-Bypass Reporting

If you’re an SMB with limited HR resources, you need a reporting structure that accounts for supervisor harassment without requiring sophisticated case management infrastructure. Here’s what actually works:

Create a Genuine External Reporting Option

This doesn’t mean hiring an ombudsperson or building a 24/7 hotline. It means establishing a reporting path that goes outside your immediate management structure in a way employees can actually use.

Practical options for SMBs:

Third-party hotline services. Companies like Ethico, Whispli, and CMS provide outsourced reporting hotlines designed for small companies. Cost vary based on company size. The service receives complaints, documents them, and forwards them to a designated company contact (usually the CEO, owner, or board member) who isn’t part of daily operations.

Board-level reporting for companies with boards. If you have a board of directors or advisory board, designate one member as the point of contact for complaints involving senior staff. This works best when the board member has HR or legal background and isn’t involved in day-to-day operations.

Retained HR counsel. Some employment attorneys offer “HR hotline” services where employees can report directly to the attorney, who then notifies company leadership and advises on investigation. This is particularly useful for companies that don’t have dedicated HR staff.

The key characteristic: the reporting path goes to someone who doesn’t have a daily working relationship with the potential harasser and has enough distance to conduct or oversee an investigation without immediate social or professional consequences.

Make Multiple Paths Equally Legitimate

The Traliant study found that HR, managers, and anonymous reporting were the most preferred channels. Notice that employees want options, not a single “correct” path.

Your policy should explicitly state that employees can choose their reporting channel based on the situation. This means:

No requirement to “go through your manager first.” Even if the manager isn’t the harasser, employees should be able to skip that step if they’re uncomfortable or if the manager has a close relationship with the person they’re reporting.

Equal weight given to all reporting paths. If you offer both internal and external reporting, don’t treat external reports as “escalations” or more serious. They’re simply different options for different situations.

Clear documentation that bypass is acceptable. Employees need to see in writing that using a supervisor-bypass option won’t be held against them. This should be explicit in your handbook and in any training you provide.

Address the Retaliation Problem Directly

A quarter of workers in recent surveys report witnessing retaliation for speaking up about misconduct. When the harasser is a supervisor, the retaliation risk is significantly higher because they control so many aspects of the employee’s work experience.

Structural protections that help:

Temporarily reassign reporting relationships during investigation. If an employee reports their direct supervisor, immediately shift their reporting line to someone else pending investigation. This isn’t punishment for the accused manager; it’s protection for the reporting employee and preservation of investigation integrity.

Document baseline performance before investigation. As soon as a complaint is filed against a supervisor, document the reporting employee’s current performance metrics, assignment load, schedule, and any other factors the supervisor controls. This creates a clear before/after record that makes it harder to disguise retaliation as legitimate management.

Monitor for subtle retaliation signals. Retaliation isn’t always obvious. Watch for changes in meeting invitations, project assignments, schedule modifications, or exclusion from informal communication channels. Small companies should assign someone outside the reporting chain to check in with the complainant regularly during and after investigation.

Make retaliation its own terminable offense. Your policy should state clearly that retaliation for reporting harassment will result in disciplinary action up to and including termination, regardless of whether the underlying harassment complaint is substantiated. This sends a clear message that the reporting process itself is protected.

Train Investigators Properly (Or Hire Out)

Here’s an uncomfortable truth: most SMB HR practitioners have never conducted a formal workplace investigation. They know how to hire people, administer benefits, and handle routine employee relations issues. Investigating harassment allegations against a supervisor requires specific skills most don’t have.

If your internal team lacks investigation experience:

Use your external reporting resource to conduct investigations. If you’ve contracted with a hotline service or HR attorney for reporting, have them conduct or oversee investigations too. Yes, this costs more. It’s still cheaper than botching an investigation and ending up in litigation.

Bring in a third-party investigator for supervisor cases. Even if you handle peer-to-peer harassment internally, escalate supervisor harassment to an external investigator. This protects the credibility of your process and removes the appearance that you’re protecting management.

Train your HR person on investigation fundamentals. If you’re going to handle investigations internally, invest in proper training. SHRM, HR Dive, and various employment law firms offer investigation training programs. Don’t learn on the job when the case involves a supervisor.

What This Looks Like in Practice

A functional supervisor-bypass system in an SMB might look like this:

Reporting options clearly stated in handbook:

• Direct supervisor (for issues not involving that supervisor)
• HR Director
• CEO (for issues involving HR or senior management)
• Third-party hotline (anonymous or named reporting available 24/7)

Investigation protocol:

• Complaints involving supervisors automatically trigger external investigation or board notification
• Reporting relationships temporarily modified during investigation
• Regular check-ins with complainant to monitor for retaliation
• Written findings and outcome provided to complainant (within confidentiality limits)

Retaliation monitoring:

• Baseline documentation of complainant’s status captured immediately
• 30, 60, and 90-day check-ins post-resolution
• Clear escalation path if retaliation is suspected

Training requirements:

• Annual harassment prevention training for all employees
• Separate management training that specifically addresses supervisor responsibilities and reporting obligations
• Investigation training for anyone who might handle complaints internally

The Real Cost of Not Fixing This

When 35% of harassment comes from supervisors and your reporting system still assumes managers are always the solution, you’ve built a system that protects harassers rather than targets.

The cost isn’t just moral. It’s practical:

Employees leave instead of reporting. When people don’t trust your reporting process, they quit. You lose institutional knowledge, you pay recruiting and training costs, and you never get the chance to fix the actual problem because you never know it exists.

Your “open door policy” becomes a joke. Once employees figure out that reporting means reporting to someone with a personal stake in the outcome, they stop believing anything you say about wanting to hear concerns. That skepticism spreads to other areas of your HR function.

Your liability increases. Courts look at whether you had an effective reporting and investigation process. “Effective” doesn’t mean you have a written policy. It means employees could actually use it without fear of retaliation, and you actually investigated complaints appropriately. A system that funnels supervisor harassment complaints back through the management chain fails that test.

Good employees protect harassers. When reporting structures are broken, well-meaning employees end up covering for problematic managers because they don’t see a viable alternative. This compounds over time until you have a culture where everyone knows who the problem managers are, but nobody believes anything will be done about it.

Bottom Line

The Traliant data tells us that a third of harassment comes from supervisors. Your reporting system needs to account for this reality instead of pretending it doesn’t exist.

For SMBs, this doesn’t require building a massive HR infrastructure. It requires honest assessment of your current reporting chain and willingness to create legitimate paths around problematic supervisors.

That might mean contracting with an external hotline service. It might mean training your board to handle certain complaints. It might mean accepting that some investigations need to be outsourced to credible third parties.

What it definitely means is stopping the pretense that “talk to your manager or HR” works when your manager is the person harassing you.

Fix the structure, or accept that employees will keep doing the math and deciding silence is safer than reporting.

---

Building the Infrastructure to Support Better Reporting

Getting supervisor-bypass reporting right is one piece of a larger compliance infrastructure. Most SMBs build their compliance programs reactively, adding policies and processes only after something goes wrong. That approach leaves gaps that employees notice, particularly when it comes to reporting mechanisms.

A functional compliance foundation addresses reporting structures alongside policy documentation, training requirements, investigation protocols, and record-keeping systems. These pieces work together: your harassment policy creates reporting obligations, your training explains how to use reporting channels, your investigation process follows through on reports, and your documentation protects everyone involved.

For growing companies, the challenge is building this infrastructure without hiring a full compliance team or paying enterprise-level consulting fees. HR Launcher Lab’s Compliance Hub provides frameworks for developing compliant policies, establishing reporting and investigation processes, and meeting training requirements across federal and state regulations. The focus is on scalable systems that work for companies in the 5-200 employee range, where you need more than basic templates but less than enterprise-grade complexity.

Getting harassment reporting right matters because it’s where policy meets reality. Employees judge your entire compliance program based on whether they believe they can safely report problems and see them addressed. Fix the reporting structure, and you’ve taken a significant step toward building a workplace where compliance actually functions rather than just existing on paper.

---

This information is provided for educational purposes and does not constitute legal advice. Harassment reporting requirements and investigation standards vary by state, industry, and company size. Consult qualified employment counsel for specific compliance obligations.