The U.S. Equal Employment Opportunity Commission also proposed creating a "victim advocate" position and reviewing the department's discriminatory harassment policy, the Detroit Free Press reported .
The proposals are part of a conciliation agreement under negotiation in a case involving Jennifer Farley, an administrative assistant to the warden at Newberry Correctional Facility.
"If we fail to resolve this matter through conciliation," either the EEOC or the victim "may proceed by initiating a lawsuit in federal court," the federal agency said in an April 2 letter.
Farley has accused the prison's former deputy warden, Cecil Daley, of sexually harassing her for years by texting her unwanted sexual messages. She alleged the department knew of the behavior but failed to act.
She alleges the department retaliated against her for complaining about the harassment.
"The evidence suggests (Farley) reported the sexual harassment on numerous occasions, yet (the department) made no good-faith effort to correct the condition," the commission said.
The allegations fit a pattern revealed in the newspaper's broader investigation into many female employees' allegations of sexual harassment in the prison system. Current and former Corrections Department employees have noted retaliation against people who file complaints about sexual harassment, the newspaper found.
Farley sued the department and Daley last month, independent of the EEOC.
Daley couldn't be reached for comment. The department declined to comment due to the pending litigation.
Spokeswoman Holly Kramer said the department revised its sexual harassment training two years ago and continues to make improvements every year. She said the department has spent months working on updating its sexual harassment policy to change how investigations and discipline are conducted.