Employment Law Group Update: Supreme Court Makes it Easier for Employees to Prevail in Sexual Harassment Cases

In two recent decisions, the United States Supreme Court has significantly increased an employer's potential liability under federal law for sexual harassment claims by employees harassed by their supervisors.

In Burlington Industries, Inc. v. Ellerth (June 26, 1998), the Court held an employer may be held directly liable, i.e. "automatically liable," where a supervisor engages in quid pro quo sexual harassment, even where the employee did not submit to the alleged harasser's sexual demands or suffer any tangible adverse job effects. The Court also confirmed that where such quid pro quo harassment results in an adverse tangible job action (which it defined as those actions resulting in a significant change in employment status, such as a hiring, firing, failure to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits) being taken against the employee, the employer will always be held responsible.

In Faragher v. City of Boca Raton, Fla. (June 26, 1998), the Court held that even where an employee fails to demonstrate an adverse tangible job action, absent certain showings, an employer will nevertheless be found liable to an employee who suffers hostile work environment sexual harassment by the employee's immediate (or successively higher) supervisor.

Key to the holding of both cases, however, is the Court's creation of an affirmative defense for the employer in those cases where the employee can show no adverse tangible job action. In such cases, an employer may escape liability if it can prove that:

1) it exercised reasonable care to prevent or correct promptly any sexually harassing behavior; and

2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

The Court further stated, however, that this two-part defense is unavailable where the supervisor's harassment culminated in a "tangible employment action, such as discharge, demotion, or undesirable reassignment."

Background

Kimberly Ellerth was employed as a salesperson with Burlington Industries and, over the course of her employment, was subjected to repeated sexual advances and threats by a supervisor (her boss' boss). This supervisor repeatedly intimated that Ellerth would not be promoted or otherwise be successful with the company should she reject his advances. Despite such threats, however, Ellerth did not suffer any adverse job consequence for failing to submit to these advances. In fact, Ellerth, received a promotion. Moreover, Ellerth never complained to Burlington Industries about the supervisor's conduct. Upon resigning from the company, however, she sued her former employer under Title VII. Among her claims, Ellerth alleged a quid pro quo theory of sexual harassment; that is, that the supervisor had attempted to make tangible job benefits contingent upon Ellerth's accepting his sexual advances, or that he had threatened tangible job harm should she reject these advances. Because a supervisor had engaged in the alleged discriminatory conduct, Ellerth argued that her employer was liable for the conduct whether or not it knew about the conduct or had taken action to end it.

Beth Ann Faragher was a part time lifeguard for the City of Boca Raton between 1985 and 1990. During that time, she and a female coworker were consistently subjected to unwanted touching and lewd comments by their supervisors - conduct which the lower court found to constitute discriminatory harassment sufficiently serious to alter the conditions of Faragher's employment and to constitute an abusive working environment. Farragher and the other lifeguards performed their duties at a remote location and had no contact with the "higher city officials" located at City Hall. Although the City had a sexual harassment policy, it never distributed the policy to the lifeguards or to the supervisors who engaged in the alleged harassment. While employed, Faragher never complained to anyone in Boca Raton city management, although she did complain to another (non-harassing) supervisor about the harassment. That supervisor failed to report the offensive conduct to anyone in Boca Raton city management, instead telling Faragher that "the City just [doesn't] care." Eventually, Faragher quit and more than one year later sued the City for sexual harassment.

Reasoning

In Ellerth, the Court sought to clarify both the parameters of quid pro quo sexual harassment and the agency principles it had announced should be used in analyzing the extent of employer liability for Title VII claims in Meritor Savings Bank, FSB v. Vinson over ten years ago.

The Court first took up the issue of the distinction between quid pro quo sexual harassment (harassment based on threat) and hostile work environment harassment (bothersome attention or sexual remarks of sufficient severity or pervasiveness). The Court held that unfulfilled quid pro quo threats that do not result in a tangible job benefit or detriment should be considered under the rubric of hostile work environment analysis. As such, unfulfilled quid pro quo threats, if sufficiently severe or pervasive, may form the basis of a sexual harassment claim. The threat need not be carried out and the plaintiff need not show actual economic damages to be able to state a Title VII claim.

Reasoning that harassing supervisors are always aided in carrying out harassment of lower level employees by the authority invested in them by their employer, the Court held that employers can be automatically liable for the sexually harassing conduct of supervisors. With respect to hostile work environment claims, including unfulfilled quid pro quo threat claims, the Court similarly held that an employer can be automatically liable for a hostile environment created by a supervisor with "immediate (or successively higher) authority over the employee." In that subset of cases where the employer takes no tangible employment action against the alleged victim, the Court did provide employers with the affirmative defense outlined above, which they bear the burden of proving by a preponderance of the evidence.

In Faragher, the Court focused on whether an employer should be liable for the acts of supervisors when the employer has no knowledge of the supervisor's actions. The Court noted that because a supervisor is "assisted in his misconduct by the supervisory relationship" (due to the supervisor's access to the employee, his power over the employee and the employee's reticence to "blow the whistle" on the supervisor) one could argue that an employer is always automatically liable for its supervisor's harassment. To hold the employer so liable, however, the Court said more was needed - evidence that the employee had experienced some tangible job detriment. Where the two are present (supervisor harassment and the requisite job detriment), employer liability follows without the availability of any affirmative defense. As explained above, however, where no tangible job detriment exists (and only under such circumstances), the Court concluded that the employer may be able to prevent liability by establishing the defense described above.
Implications

Together, Ellerth and Faragher significantly expand the potential for employer liability under federal law when the alleged sexual harassment is based on the conduct of an employer's supervisory and/or management personnel. In a sense, liability standards under Title VII now more closely resemble those under the Fair Employment and Housing Act ("FEHA") that have governed California employers for years.

These cases will certainly hurt employer efforts to persuade California courts that there should be no automatic liability where a hostile work environment has been created by a supervisor. On a more positive note, the decisions (as well as the Court's recent decision in Oncale v. Sundowner Offshore Services, Inc.) underscore the fact that Title VII does not represent a "general civility code" for the workplace. Rather, in order to establish a hostile work environment claim the allegedly harassing conduct must be sufficiently severe or pervasive before courts will find that it amounts to a change in the terms and conditions of employment. In general, "the ordinary tribulations of the workplace, such as the sporadic use of abusive language, gender-related jokes, and occasional teasing," will be insufficient to support a hostile work environment claim.

The battlefield for employers now becomes determining what efforts will be sufficient to establish that an employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior. Similarly, under what circumstances will courts find that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to "avoid harm otherwise?"

Only time will tell how the courts will apply the Supreme Court's recent pronouncements. Nevertheless, as Wilson Sonsini Goodrich & Rosati's Labor and Employment Group recently noted at its June 26, 1998 Sexual Harassment Symposium, employer diligence is the best strategy to combat sexual harassment claims. To avoid sexual harassment claims, and to position themselves for an affirmative defense under the Ellerth and Faragher holdings, employers would be well-served if they:

1. Prominently display the mandatory workplace posters stating that it is against the law to sexually harass.
a) If you need copies of the posters, give us a call.

2. Adopt a comprehensive sexual harassment policy. A good sexual harassment policy should:
a) Detail the behavior that is against company policy;
b) Make it clear that these behaviors are completely unacceptable and will not be tolerated;
c) Make it clear that the policy applies to harassment by vendors, clients and regular visitors;
d) Encourage employees to utilize the policy;
e) Provide more than one avenue to bring concerns to the company's attention, such as through a direct supervisor, an indirect supervisor or personnel manager;
f) Assure employees that any reported matter will, when possible, be dealt with confidentially on a "need to know" basis;
g) Assure that the matter will be dealt with promptly;
h) Promise and provide complainants and witnesses protection from retaliation; and
i) Provide for immediate disciplinary action, including possible termination for the offender.

3. Make sure to disseminate the policy widely.
a) Make it part of the introductory package for new employees.
b) Include it in employee handbooks.
c) Distribute it at all training sessions.
d) Use informal publications (like the Company intranet) to reinforce the policy.

4. Train supervisors and employees.
a) Consider making supervisor training mandatory and give it the highest priority.
b) Be sure to document any training an employee receives.

5. Carefully select and monitor supervisory personnel.
a) Be careful not to hire, promote or otherwise advance known "problems." Insofar as possible, perform due diligence.
b) Take steps to ensure that adherence to the company's sexual harassment policy is reflected in the company's performance and evaluation practices.

6. Keep an "ear to the ground" and your "eyes wide open" concerning problems of harassment in the workplace.
a) Supervisors need to keep watch over what is occurring in the workplace.
b) If a supervisor observes inappropriate/questionable behavior, he/she should caution the employee involved against engaging in the behavior so as to avoid complaints in the first place.
c) Look for potential sources of harassment like e-mail messages, photographs, calendars, suggestive objects, etc.

7. Investigate matters promptly, thoroughly and carefully. Where appropriate and/or necessary, seek the advice of counsel.

8. Respond quickly to complaints and take effective disciplinary action against the individual who has violated company policy.