This manuscript explores the various ways in which sexual harassment may impact the business and social culture of an organization. The presentation of the theoretical foundation and legal ramifications of this study is based upon the definitions of sexual harassment and type, as well as statistics and the results of existing research on whether sexual harassment impacts organizations negatively and society in general is explored. A review of current and past precedent setting cases and current and past events provide a foundation for the impact on organizations and individual employees. Additional presented points further solidify the presented facts by describing the job-related, psychological and physical impact of illegal and unethical behavior of the leadership of organizations. Many known theories of leadership and motivation are impacted. One can draw a conclusion and see the impact based on knowledge of the different theories. For example, Maslow’s Theory of Needs, Douglas McGregor’s Theory “X” and Theory “Y”, as well as Hofstede’s Power Distance whereas, Power Distance is the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.