Mayer Brown - Labor and Employment Newsletter, Special Bulletin: Supreme Court on Sexual Harassment: An Analysis

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Labor and Employment Newsletter, Special Bulletin: Supreme Court on Sexual Harassment: An Analysis
Labor and Employment Newsletter

Newsletter - Employment & Benefits, Americas

2 July 1998

Contents: 1) Implications for Employers 2) The Holding 3) The Cases 4) Questions for the Future In a pair of decisions issued June 26, 1998, the United States Supreme Court laid out new rules with respect to an employer's liability for the sexually harassing conduct of its supervisory employees. The Court held that employers are subject to vicarious liability for sexual harassment by supervisors and managers. In hostile environment cases, the employer may raise an affirmative defense based on its exercise of reasonable care to prevent sexually harassing behavior. The employer will have the burden of showing that it exercised reasonable care to prevent and promptly correct any sexually harassing behavior and that the employee unreasonably failed to take steps to avoid harm. In light of these decisions, employers need to review carefully their internal policies on sexual harassment and particularly the mechanisms for employees to file complaints of sexual harassment. IMPLICATIONS FOR EMPLOYERS: The recent Supreme Court cases, Burlington Industries, Inc. v. Ellerth and Faragher v. Boca Raton, make it imperative for employers to make sure they have effective sexual harassment policies in place. Such policies offer employers the best chance to avoid liability for the sexually harassing behavior of their supervisory employees. Employers need to evaluate and revise their procedures for addressing sexual harassment issues in light of the following questions: Does the employer have a written policy on sexual harassment? Does the policy adequately identify the prohibited conduct? Is the policy frequently disseminated among supervisors and employees? Are employees and supervisors adequately educated about the policy? Do supervisors and employees sign acknowledgments that they have received the policy and are aware of the reporting procedures? Does the reporting mechanism in place allow the victimized employee to bypass the harassing supervisor? Are supervisors adequately educated as to appropriate follow-up if allegations of sexual harassment are reported to them? Does the employer have adequate procedures in place to investigate and take appropriate action regarding allegations of sexual harassment? Are employees who report sexual harassment by their supervisors protected from retaliation by those supervisors? Employers should also consider the implications of these cases for other types of harassment. It is likely that the standards regarding sexual harassment articulated in the recent Supreme Court cases will in the future be applied to other types of employment discrimination. Therefore, these cases provide a good opportunity to review policies regarding other areas of employment discrimination. THE HOLDING: The Supreme Court adopted the same holding in both Ellerth and Faragher. The Court articulated the concept of a "tangible employment action," which is distinct from a hostile environment. A tangible employment action is an action which "constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits." If a tangible employment action is taken because a supervisor's sexual advance is refused, the employer is liable and no defenses are available. In contrast, where no tangible employment action is taken, but the supervisor's conduct creates a sexually hostile work environment, an affirmative defense (discussed in more detail below) is available to the employer. The concepts of hostile environment and quid pro quo sexual harassment are still relevant for determining the threshold issue of whether a plaintiff can prove discrimination in violation of Title VII. However, with regard to the subsequent issue of vicarious liability of the employer for discriminatory acts of a supervisory employee, the concept of tangible employment action replaces the concept of "quid pro quo" and results in strict liability for the employer. The affirmative defense to liability or damages for hostile environment has two necessary elements: (a) whether the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) whether the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise. In evaluating the first element of the affirmative defense, the Court has indicated that "proof that an employer had promulgated an anti-harassment policy with complaint procedure" should be considered. Furthermore, evidence that an employee failed to utilize the employer's complaint procedure will generally satisfy the employer's burden under the second element of the defense. This affirmative defense is not available to employers when the supervisor's harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment. THE CASES: In Burlington Industries, Inc. v. Ellerth, the employee, Kimberly Ellerth, worked as a salesperson. She claimed that one of the supervisors to whom she reported, Ted Slowik, subjected her to repeated boorish and offensive remarks and gestures. Ellerth pointed in particular to three incidents where Slowik's alleged comments could be construed as threats to deny her tangible job benefits. These incidents included one situation in which Slowik made comments about Ellerth's breasts, suggested that she "loosen up," and told her that he could make her "life very hard or very easy at Burlington." There was another situation in which, during a promotion interview, Slowik told Ellerth that she was not "loose" enough and rubbed her knee. Ellerth did receive the promotion. In the third situation, Slowik suggested that Ellerth wear shorter skirts "because it would make your job a whole heck of a lot easier." At the end of 15 months of employment, Ellerth quit her job. During the period of Ellerth's employment with Burlington, the company had a policy against sexual harassment. Ellerth was aware of this policy. Nonetheless, she did not inform anyone in authority about Slowik's conduct until three weeks after she quit. At that time, she sent the company a letter explaining that she had quit because of Slowik's behavior. A few months after she quit, Ellerth brought suit against Burlington in the Federal District Court in the Northern District of Illinois. The District Court granted Burlington's motion for summary judgment, finding that, although Slowik's conduct was severe and pervasive enough to create a hostile work environment, Burlington neither knew nor should have known of the conduct. On appeal, the Seventh Circuit sitting en banc reversed, issuing eight separate opinions and no consensus for a controlling rationale. The Supreme Court affirmed the Seventh Circuit's reversal of summary judgment against Ellerth, and remanded the case to the District Court to allow Burlington to assert and prove the affirmative defense to liability. In Faragher v. Boca Raton, the employee, Beth Ann Faragher, worked part time and summers from 1985 to 1990 as an ocean life guard for the city of Boca Raton, Florida. She alleged that two of her supervisors, Bill Terry and David Silverman, created a sexually hostile environment at the beach by making lewd remarks, by engaging in unwelcome sexual touching and gestures, and by speaking of women in offensive terms. Among Faragher's specific allegations were the claims that Terry said that he would never promote a woman to the rank of lieutenant, and that Silverman once said to her, "Date me or clean the toilets for a year." Faragher did speak of these events to a third supervisor, Robert Gordon. She regarded these discussions not as formal complaints, but as informal conversations. Gordon did not report these complaints to Terry (who was his supervisor) or to any other city official. Although the city of Boca Raton adopted a sexual harassment policy in 1986, this policy was not disseminated to the Marine Safety Section of the city, and therefore Faragher's supervisors were unaware of it. In 1992, Faragher filed her Title VII suit. The District Court held that Terry's and Silverman's actions constituted harassment, and that Boca Raton was liable for the harassing behavior of its employees on three theories: the harassment was pervasive enough to support an inference that the City had knowledge or constructive knowledge of it; Terry and Silverman were acting as agents of the City; and Gordon's knowledge plus inaction created liability on the part of the City. A panel of the Court of Appeals reversed, finding that although the conduct constituted harassment, the City was not liable because Terry and Silverman were not acting within the scope of their employment, were not aided in their actions by the agency relationship, and the City did not have constructive knowledge of their actions. The Eleventh Circuit sitting en banc adopted the panel's conclusion. The Supreme Court reversed the judgment of the Eleventh Circuit, and remanded the case for reinstatement of the District Court's judgment finding that Boca Raton was liable for the actions of Terry and Silverman. QUESTIONS FOR THE FUTURE: The Ellerth and Faragher cases raise several ambiguities to which employers must be sensitive. For example, the Court has articulated the notion of a "tangible employment action" which, if present, makes the affirmative defense unavailable. The Court gave examples of tangible employment actions, including a "reassignment with significantly different responsibilities" and a "significant change in benefits." However, lower courts may end up interpreting this term even more expansively. Because the unavailability of the affirmative defense would seriously impede an employer's ability to defend against liability for a supervisor's sexually harassing behavior, employers need to be careful in making changes to an employee's status, particularly where there is a pending harassment complaint or any potential evidence of sexual harassment. Another question for the future is the way in which the two elements of the affirmative defense will work together. The Court's language indicates that the two elements are both necessary; in other words, both prongs must be met for the employer to be protected. This raises two issues. First, the opinion is silent as to the employer's liability when an employee does utilize an effective policy, but we must assume that an employer is still required to take prompt and effective remedial action. In addition, the second element of the defense -- whether the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise -- is vague. It is certain that courts, in the coming years, will refine this test and provide a better understanding of what constitutes unreasonable failure by employees to avoid harm. In the meantime, since an employee who failed to complain will undoubtedly have excuses for not doing so, it may be difficult to avoid trial since the reasonableness of the employee's failure to complain may give rise to a fact question to be decided by the jury. Employers should strive to minimize liability by educating all supervisors to take immediate and effective action if harassment is reported to them and making sure that there is an open and effective system for making, investigating, and resolving complaints. Copyright 1998 Mayer, Brown & Platt. This Mayer, Brown & Platt publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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