New EEOC Policy Guidance Examines Vicarious Employer Liability for Workplace Harassment and Much More

On June 18, 1999, the Equal Employment Opportunity Commission issued yet another enforcement guidance addressing vicarious employment liability for unlawful harassment by supervisors. While this guidance does discuss various issues raised by the Supreme Court’s year-earlier decisions in Ellerth and Faragher, it covers far more than that. For example, it offers advice to employers on what to include in their anti-harassment policies, how to conduct a proper harassment investigation, what questions to ask, and so forth. Since EEOC policy guidances do not have the force of law, the Commission is again seeking to influence decision-makers, whether within a corporation’s human resources office or serving as federal or state judges deciding harassment cases. This is the law as the EEOC would like it to be, not as it is or, even, as it should be.

Supervisory Status. The first issue addressed is who qualifies as a supervisor under Title VII. This is truly critical because, according to the Supreme Court in Ellerth, vicarious employer liability attaches only if the harassment is carried out by “a supervisor with immediate (or successively higher) authority over the employee.” This issue is wide open because, unlike other federal labor statutes such as the National Labor Relations Act, Title VII never defines “supervisor.” Moreover, although supervisors are usually deemed to be the employer’s “agents,” in Faragher the Court cautioned against the “mechanical application” of traditional agency principles.

Despite these cautionary instructions, the EEOC’s policy guidance forges ahead and offers its own definition of a Title VII “supervisor.” The EEOC’s special definition has three parts. First, someone is a supervisor if he/she has authority to undertake tangible employment decisions affecting the employee. While no one can quarrel with that, the Commission quickly adds two additional supervisory definitions that are unprecedented and controversial.

The second prong of the EEOC’s home-grown supervisory definition covers individuals who have the authority to recommend tangible employment decisions affecting the employee even where the individual making that recommendation “does not have the final say.” The EEOC would declare someone a Title VII supervisor whenever that person’s recommendation “is given substantial weight” by the final decision-maker. The obvious intent is to incorporate the specific NLRA alternative requirement that someone who can effectively recommend an action is a supervisor under Section 2(11) of that Act. Earlier, the Commission told us (fn. 16) the express supervisory definition added by Congress to the NLRA “does not control” under Title VII. Yet, the authority to make effective recommendations is put forward by the Commission as an independent ground of supervisory status. At other times, the Commission’s guidance suggests the mere recommendation of a tangible job action by a supervisor based on an employee’s response to unwelcome sexual demands by that supervisor makes the employer automatically liable for that supervisor’s conduct, presumably even where that recommendation is rejected by higher-ups and never carried out.

The third prong of the EEOC’s specialized supervisory definition covers individuals who have authority to direct the employee’s daily work activities. While the Commission recognizes that someone who “merely relays” another’s work assignment instructions is not a supervisor, this third prong would bring low-level supervisors under Title VII and expand vicarious employee liability accordingly. The cases reject this expansion of employer liability under Title VII, holding, for example, that knowledge obtained by low-level supervisors is not imputed to the employer under Title VII. DeOcampo v. Information Builders, Inc., 1998 U. S. Dist. LEXIS 20190 (S.D.N.Y. 1998) (Cote, J.) Straw bosses, crew chiefs and working foremen may be NLRA supervisors but they are not Title VII supervisors. See Parkins v. Civil Constructors of Illinois, 163 F.3d 1027 (7th Cir. 1998), discussed in “Properly Classifying Your Supervisors for the Purpose of Workplace Harassment Complaints,” May 1999 Employment Law Alert.. The low-level “foremen” in Parkins were found not to be Title VII supervisors even though they could recommend discharges, thereby rejecting the Commission’s second prong as well.

Pushing forward, the Commission tells us someone outside the supervisory chain of command who does not have actual authority can still be a Title VII supervisor if the employee “reasonably believed” that the alleged harasser had such power. There is a serious question whether the doctrine of apparent authority can properly be used in a Title VII context as the basis for vicarious employer liability. This is not authority delegated by the employer that aids the supervisor in carrying out the harassment. The cases to date are divided on this point. Compare Llampallas v. Mini-Circuit Lab Inc., 163 F.3d 1236 (11th Cir. 1998) (“apparent authority serves just as well to impute liability to the employer”) with Parkins, cited above (boast that foreman had the ability to have employees fired, even if accurate, did not elevate him to supervisory status). In Parkins, the Seventh Circuit held that knowledge of an earlier harassment complaint to someone the complaining employee believed had supervisory authority but who was not a supervisor could not be imputed to the company.

An additional problem with the Commission’s endorsement of apparent authority is its suggestion that it can equally apply to someone who is outside the supervisory chain of command. In other words, if the employee reasonably believes the individual is a supervisor, the company is automatically responsible for that supervisor’s actions even if that purported supervisor had no supervisory authority over that employee. This unwarranted extension of Title VII directly conflicts with the Supreme Court’s careful phrasing in Ellerth that an employer is vicariously liable for supervisory harassment only if the harassment was committed by “a supervisor with immediate (or successively higher) authority over the employee” (emphasis added). Several courts have correctly held that employers cannot be held liable even where the alleged harasser is a supervisor or a successively higher supervisor if that supervisor is outside the employee’s chain of command. The Commission acknowledges these cases later in its policy guidance when it recommends employers designate someone “outside an employee’s chain of command” as one of the management representatives who can receive harassment complaints as this provides “additional assurance,” according to the Commission, that the employee’s complaint “will be handled in an impartial manner.”

Tangible Employment Actions. Identifying a tangible employment action is critical. An employer is automatically liable whenever supervisory harassment culminates in a tangible employment action. The new affirmative defense is not available in such cases. The EEOC’s expansive view of this important term tracks the decided cases when it declares that a significant change in job duties qualifies as a tangible employment action even if the employee’s salary and benefits remain the same if that change blocks future opportunities for promotions or salary increases. Durham Life Insurance v. Evans, 166 F.3d 139 (3d Cir. 1999). However, the Commission’s additional conclusion that giving an employee a “less prestigious” job title whereby the employee’s “status” may be lowered in others’ eyes can somehow result in a tangible employment action is off the mark. This rank speculation conflicts even with the Commission’s immediately preceding observation, citing from the Seventh Circuit’s decision in Flaherty v. Gas Research Institute, 31 F.3d 451 (1994), that an employee’s “bruised ego” is not enough for a tangible employment action.

Kolstad. This EEOC policy guidance issued four days before the Supreme Court’s June 22, 1999 decision in Kolstad v. American Dental Assn., 1999 U. S. Sup. Ct. LEXIS 4372. In Kolstad, the Court held an employer was not vicariously liable for punitive damages under Title VII if the supervisor’s harassment was contrary to employer anti-harassment policies. This surprise decision (that issue had not been argued below) certainly places into question several sections of the EEOC’s policy guidance. The Commission’s view of what anti-harassment law should be, as expressed in this policy guidance, was clearly influenced by its view that the Court in Faragher and Ellerth set forth a “more stringent standard” of vicarious employer liability that “must be construed narrowly.” Kolstad retreats from those extreme views by its holding that employers who make good faith efforts to comply will not be held liable for punitive damages for contrary supervisory conduct. The Commission’s policy guidance does not properly reflect that important change in the Court’s approach to workplace harassment.

Anti-Harassment Policy and Complaint Procedure. The title of this EEOC policy guidance hides the fact that it contains useful information for employers both on the content of their workplace policies against harassment and the proper processing of harassment complaints. There are even helpful lists of questions to ask the complainant, the alleged harasser and third parties. At certain points, however, the Commission’s prosecutorial zeal takes over. We will note those unhelpful hints for our readers.

The Commission tells employers it is “important” for their anti-harassment policies to contain information about the time frames for filing charges of unlawful harassment with the EEOC or state fair employment practices agencies and to explain that the deadline runs from the last date of unlawful harassment, not from the date that the complaint to the employer is resolved.

We do not recommend this language unless your company is so civic-minded that it actually enjoys defending against increased numbers of workplace harassment complaints filed with federal, state or local agencies. Why would an employer remind an employee that the statute of limitations for filing charges is running while it is investigating that employee’s complaint? The Commission may pass on this “advice” to its own employees, but that is because the federal agency complaint filing period (45 days) is quite short. Federal and state private sector filing periods are usually 300 days or one year. And why stop here? Why not tell employees about the court filing requirements after they receive right-to-sue notices from the Commission?

Another unhelpful suggestion is that employers establish informational telephone lines that employees can use “to discuss questions or concerns about harassment on an anonymous basis.” Employers have an obligation to investigate all harassment complaints. This phone line raises major issues. It is no answer to say, as the Commission does, that the employer representative answering “should make it clear that [he/she] is not a management official and can only answer questions and provide information.” The employee will consider that process to be a complaint process no matter what the person answering the phone says. Indeed, later in the policy guidance, the Commission emphasizes that employers must investigate harassment complaints even if the employee does not complain to management using its designated complaint procedure. Employers are generally obligated to investigate complaints whenever the caller provides enough detailed information to begin an investigation. The Commission later suggests employers should record all employee complaints of harassment to uncover “a pattern of harassment by the same individual.” We recommend against the establishment of unofficial non-management telephone lines.

The Commission also recommends that employers “should inform both parties” about the specific disciplinary measures taken against a harasser where they find harassment did occur. Possible defamation claims by the harasser make this a terrible idea. It is true, as the Commission notes (fn. 69), that employers have a qualified privilege defense in such cases but avoiding litigation entirely is preferable to winning in litigation. Later on, the Commission suggests employers should “release general information to employees about corrective and disciplinary measures undertaken to stop harassment.” Broadcasting remedial steps to the entire workforce may possibly “increase employees’ confidence in the efficacy of the [employer’s] complaint process” but there must be other ways that don’t infuriate managers and delight attorneys already suing your company for harassment.

Employee Complaints. The Supreme Court’s affirmative defense in hostile work environment harassment cases requires proof by the employer that the employee unreasonably failed to use the available complaint procedure or to avoid harm. The Commission’s policy guidance seeks to ensure that few employers will ever be able to assert that defense successfully. The Commission even offers attorneys for employees who are drafting harassment complaints the following “reasonable explanations” for an employee’s delay in complaining or complete failure to utilize the employer’s complaint procedure:

(1) Using that procedure entailed a risk of retaliation;
(2) There were obstacles to my complaints;
(3) The complaint mechanism was not effective.

An employee’s fear of retaliation is not a reasonable explanation for not using the employer’s complaint pro-cedure. Montero v. AGCO Corp., 1998 U.S. Dist. LEXIS 13956 (E.D. Calif., 1998), aff’d, 1999 U.S. App. LEXIS 23502 (9th Cir., September 28, 1999); Fierro v. Saks Fifth Avenue, 13 F. Supp. 2d 481 (S.D.N.Y. 1998). While the Commission cites surveys (but no cases) showing employees do not complain because they fear retaliation, that exact argument was made by Beth Faragher’s attorney before the Supreme Court as a reason for the Court not to require employee complaints. The Court rejected that argument and required an employee to complain in hostile work environment cases. Now, even after properly instructing employers to add express no retaliation assurances to their anti-harassment policies, the Commission would still allow employees who still fear retaliation to go directly to court without ever complaining to their employer.

The Court also said that these employee harassment complaints must use the employer’s complaint process (“preventative or corrective opportunities provided by the employer,” emphasis added). The Commission acknowledges this when it concedes that EEOC complaints, union grievances and internal ADR complaints do not qualify as employer-provided anti-harassment procedures. Nevertheless, the Commission suggests that employees who, either by mistake or on purpose, use those other procedures for their harassment complaints are in fact making other efforts to avoid harm as the Supreme Court intended. This cannot be what the Court meant. Using other complaint procedures, such as union grievance channels, does not necessarily provide the employer with sufficient information to recognize or to redress the employee’s harassment complaint. The employer typically acquires no notice about the alleged harassment in that case and that employee has already disregarded the several complaint-takers named in the employer’s anti-harassment policy. See Maddin v. GTE of Florida Inc., 33 F. Supp. 2d 1027 (M.D. Fla. 1999). To say, as the Commission does, that a complaint to the union does not qualify as the use of an employer-provided procedure but does qualify as an effort to avoid harm and thereby takes away the employer’s affirmative defense elevates form over substance. Trees falling in the forest with no one around to hear make no noise. Employers cannot act on harassment complaints they never get.

The Commission does tell employers how long a “prompt” harassment investigation should take. First, it must be launched “immediately” after receiving the complaint. The Commission cites two cases, one in which the investigation began the same day the complaint was filed and one in which it began the following day. It also cites cases where employers were found to have promptly finished their harassment investigations within 4 days, 7 days, 10 days and 14 days. Start as early as you can, and be certain you finish in two weeks.

The Commission’s policy guidance has an interesting section describing the temporary measures employers should take once an harassment complaint has been filed. They mention obvious steps such as making scheduling changes so the contending parties will have as little contact as possible, or transferring either the complainant (if she requests it) or the alleged harasser to another department or shift. The Commission also suggests employers should place the harasser on non-disciplinary leave with pay pending the conclusion of the investigation. One wonders whether the complainant might also prefer staying home with pay but the Commission mentions only the alleged harasser in this context.

The Commission’s policy guidances are always interesting and thought-provoking. Despite the Com-mission’s efforts, its policy guidances are routinely ignored by the courts. Unlike regulations they do not have the force of law. They are the same as a friend-of-the-court brief setting forth the Commission’s official position. Employers have the right to disagree with the Commission’s position and reject its “guidance,” particularly when it is not supported by precedent. We again remind employers that the controlling law is determined not by Commission wish lists but by our courts.