Sexual harassment allegations brought against virtual reality co-working facility Upload Productions Inc. and its principals last month have again cast a spotlight on the tech industry’s corporate culture.

The Marina del Rey company and co-founders Will Mason and Taylor Freeman are named as defendants in a suit filed by Elizabeth Scott, the startup’s former director of social media, who alleged they operated a “boys club” that encouraged drinking during work, furnished an in-office “kink room” for sex, encouraged demeaning statements about female staffers, and turned a blind eye to an employee bringing prostitutes and strippers to a company event – among other allegations.

Neither Upload nor Scott’s attorney, Carolyn H. Cottrell, a partner with Schneider Wallace Cottrell Konecky Wotkyns in San Francisco, responded to requests for comment.

Inappropriate behavior in an environment of lax corporate oversight is a familiar refrain in the tech industry, according to sector executives and employment lawyers.

“I think the startup culture is a mess without having any structure and lacking HR outlets,” said Kelly Dermody, partner with Lieff Cabraser Heimann & Bernstein of San Francisco, who is not involved in the Upload case. “What is described in that case was not surprising to me. I have seen very similar allegations from my clients.”

Snap Inc. of Venice reportedly created a human resources department in 2014 only after sexist emails sent by Chief Executive Evan Spiegel while he was an undergraduate at Stanford University were leaked to the press. The company had by then raised more than $160 million and had been in business since 2011.

Sean Rad stepped down in 2014 as chief executive of West Hollywood’s Tinder in the wake of a sexual harassment and discrimination suit filed against the dating app by Whitney Wolfe, a co-founder and former vice president of marketing, who detailed allegations against Rad and co-founder Justin Mateen, former chief marketing officer. The parties settled the lawsuit in September of that year without an admission of wrongdoing, and Rad returned to his former role after five months.

The speed at which startups and venture capitalist operate, combined with male-dominated workplaces accustomed to beer taps and company parties, can create a toxic situation, Dermody said about the industry in general.

“You end up with these dynamics where there are a lot of rowdy guys getting drunk and a few women around who are often the subject of their attention,” she said, noting that drinking can quickly become an all-company affair in open-office plans. “If you don’t have any structure … and there are not rules around formality, then lines do get crossed.”

Questionable culture

Upload runs co-working spaces for VR startups in San Francisco and Los Angeles, publishes content about virtual reality through its website UploadVR, and runs production workshops. The company was launched in 2014 and relocated from San Francisco in March. It has raised nearly $6 million from investors including downtown’s Greycroft Partners.

In an industry where startups are pressed to seize market share by offering competitive salaries to recruit top talent – often young male engineers fresh from the college party scene – human resources staff and company culture guidelines are frequently an afterthought, said Eva Ho, a general partner at West L.A.’s Fika Ventures.

“In terms of screening of companies, the founder’s character is often the last thing looked at,” she said. “A lot of VCs just focus on the first couple of buckets: If the market is great and the founder is from Stanford or MIT, then sure we’ll give you money. I think that perpetuates some of these unfortunate attributes.”

The problem is worsened by disappearing chat messages, informal management structures, open floor plans, and minimal human resources staff, said employment attorney Jenny Schwartz, a partner at San Francisco’s Outten & Golden, who’s also not involved in the Upload case.

“A lot of these startup companies do not have adequately trained or experienced HR managers. A lot have no HR managers,” she said. “A lot of these companies don’t have the money or interest and don’t understand how this could blow back in a lawsuit because they themselves are inexperienced in this area.”

Sonya Merrill, co-founder and chief people officer of Hollywood online lending firm ZestFinance Inc., said she made a conscious effort not to fall into that category of founder when launching ZestFinance, noting the firm’s leadership began outlining a desired corporate culture from inception in 2009, which was passed down to employees.

“Your company culture has already begun whether you’ve thought about it or not,” she said. “Our HR hire was probably our third or fourth paid employee.”

Clearly defining appropriate behavior can be a helpful legal defense if sexual harassment lawsuits do arise, Dermody said.

“By having clear policies and training of decision makers, it helps the company to at least say we weren’t negligent here,” she said.