The April 1, 1998 ruling granting President Clinton's motion for summary judgment in the Paula Jones sexual harassment lawsuit has attracted more media coverage than any other employment law decision of this year. AlthoughtheJones v. Clinton ruling was favorable for employers, the case was somewhat unique and atypical of normal sexual harassment lawsuits because of the meager evidence Jones offered in support of her claims, and of course, because she was suing the President of the United States. Thus, while it makes for interesting headlines, the ruling will be of limited practical significance to employers in the Carolinas.
In contrast, Harris v. L&L Wings (December 24, 1997), a decision of the U.S. Court of Appeals for the Fourth Circuit, should have a much greater impact on employers' attitudes toward sexual harassment claims and the way that they investigate and evaluate such claims. In Harris, the Fourth Circuit upheld an award of compensatory damages, attorney's fees, and $300,000 in punitive damages to two former employees of L& L Wings, a beachwear chain based in Myrtle Beach. The evidence at trial showed that the two female warehouse employees endured unwelcome touching, crude sexual comments, and propositions for sex from both their supervisors and co-workers for two years. The unwelcome advances and offensive behavior occurred against a backdrop of walls covered with posters of scantily clad women, obscene drawings of sexual organs, and vulgar graffiti. When the two employees complained to the warehouse manager and other officials about this treatment, the harassment intensified and continued until the two female employees were eventually fired.
L&L Wings first argued that it could not be held liable for sexual harassment because the president of the company had never received any reports of sexual harassment, and thus, the company was unaware of the employees' complaints. The Fourth Circuit disagreed, and noted that while the employees had not complained directly to the president, they had complained to the warehouse manager and several other managers on numerous occasions. The court also pointed out that the company had not adopted a sexual harassment policy or any other grievance procedure, and it was reasonable for the employees to assume that their complaints to management would reach the company president. Also, because the president had visited the warehouse on many occasions, he certainly could not deny knowledge of the offensive graffiti and pornography that decorated the walls.
After its first argument failed, L&L Wings attempted to cut its losses and persuade the court that the punitive damages awards were improper and excessive. To recover punitive damages from an employer in a sexual harassment case, an employee must show that the employer (and not just the harassers) acted with malice or reckless indifference to his or her rights. In upholding the punitive damages awards in their entirety, the court focused on the beachwear retailer's failure to respond to the employees' numerous complaints, as well as its failure to adopt a sexual harassment policy. Although the absence of a sexual harassment policy itself is not enough to establish liability, the court advised that, "the institution of a written sexual harassment policy goes a long way towards dispelling any claim about the employer's 'reckless' or 'malicious' state of mind." The Harris case should serve as a "wake up call" for employers who have yet to adopt a policy prohibiting workplace harassment and outlining a procedure for reporting and investigating harassment claims. Further, an inadequate policy will also limit an employer's ability to argue that it did not receive proper notice of alleged harassment, that it takes claims of sexual harassment seriously, and that it did not engage in reckless conduct worthy of an award of punitive damages. Of course, even air-tight policies are of no use if they are not sufficiently publicized to the workforce, or if the employer fails to take prompt investigative action when a complaint arises.