Employers In Sexual Harassment Arena: Beware

By Julie A Moore, Esquire
Reprinted with permission of the New Hampshire Business Review, Vol. 20, No. 16, July 17-30, 1998

The United States Supreme Court has dramatically changed the sexual harassment rules for employers.

Imagine this: you are the owner of a company, opening the morning mail, and you find out from the New Hampshire Commission for Human Rights that you are being sued for sexual harassment. The written notification says that one of your employees, "Bob," is bringing a sexual harassment charge against your company because he feels that he has been victimized by unwelcome propositions by his supervisor, "Sarah." You had no idea that this was happening and, in fact, you were horrified to learn that it may have taken place. Bob is a good and productive worker who just received a promotion. His supervisor actually raved about his work performance in his annual review last week. You panic, then call your lawyer. You learn that the law says that your company is automatically liable for a supervisor’s sexual harassment even if you did not know that it was occurring and even if the complaining employee’s job has not suffered at all as a result of the harassment.

Is there any recourse? The answer is yes.

On June 26, 1998, the United States Supreme Court sent a thundering message to all employers that they will be held legally responsible for the sexual harassment committed by their supervisors. The Court’s majority 7-2 decisions, which will soon be very familiar to all employers, are Ellerth v. Burlington Industries and Faragher v. City of Boca Raton. In the Burlington Industries case, the Court allowed a sales representative to sue her former employer over sexually explicit remarks and threats that a mid-level manager allegedly made if she would not give in to his sexual advances. The employee suffered no job detriment. In the City of Boca Raton, the Court upheld a former lifeguard’s verdict against the city for her supervisors’ repeated, vulgar behavior because the city failed to disseminate its sexual harassment policy to beach employees and made no attempt to kept track of the supervisors’ conduct. The city had no knowledge that the harassment had occurred.

The Court identified a set of rules under which cases of sexual harassment by supervisors are to proceed:

• Employers are responsible for their supervisors’ acts of sexual harassment.
  
• When the harassment results in "a tangible employment action, such as discharge, demotion or undesirable reassignment," the employer is automatically liable once the harassment and adverse action have occurred.
• When there is no tangible job action, an employer is still liable but it can offer the following two defenses that could relieve it of legal responsibility: (1) that it had taken "reasonable care to prevent and correct promptly any sexually harassing behavior," such as adopting a zero-tolerance sexual harassment policy, establishing a user-friendly complaint procedure, and implementing training programs; and (2) that the complaining employee "unreasonably failed to take advantage of any preventive or corrective opportunities" provided.

For employers, these decisions actually can be welcomed. The Court offered some definitive recourse for employers who are proactive in shielding their employees from sexual harassment. Where the complaining employee has not suffered any significant change in employment status, then the employer can avoid legal responsibility if it proves two things.

First, the employer must show that it exercised "reasonable care to prevent and correct promptly any sexually harassing behavior." The duty is twofold: to prevent and to remediate, if harassment occurs. That means that if, for example, the company had in place an anti-harassment policy and internal grievance procedure that was communicated to Bob and its other employees through sensitivity training and was prominently displayed in the company handbook and in posters in the lunchroom, then it may well have taken adequate steps to prevent unlawful harassment. Further, if it conducted an investigation immediately following its first notice of the claimed harassment, took steps to discipline Sarah who admitted to engaging in that misconduct, and the harassment stopped, then it acted promptly to correct the harassment. These are the first steps an employer must take in its defense. There’s more.

Second, the employer must demonstrate that the complaining employee "unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise." Here, let’s assume that the company had a proven, effective mechanism of reporting and resolving complaints of sexual harassment which was available to employees through the human resources department, without risk of retaliation or reprisal of any kind. The company, in that case, can show that Bob never reported the sexual harassment claim to anyone in the human resources department. In fact, the employer can show that Bob never put anyone in the company on notice as to how Sarah was treating him. Bob neglected to avoid or mitigate harm in this instance.

If the employer can prove both (1) that it did as much as it could to prevent sexual harassment from occurring and to stop it once it happened, and (2) that the employee complaining of the harassment failed to take steps to alert the employer as to what was happening and give it an opportunity to put an end to it, then it is not legally liable.

In its decisions, the Court rewrote sexual harassment law on a number of fronts. It said that employers could be sued over acts of harassment by supervisors that they did not know about. It gave employers an incentive to show the courts that they implemented tough anti-harassment safeguards that are reasonably calculated to stop sexual harassment. It essentially did away with the distinctions between "quid pro quo" sexual harassment (meaning that job advancements or detriments were predicated on sexual favors) and "hostile environment" sexual harassment (where the general ambience of a work setting is sexually abusive). Instead, the Court focused on whether the harassment involves a job consequence or not. The Court reaffirmed that an employer is automatically liable, regardless of its preventive program, for a supervisor’s harassment that results in "discharge, demotion, or undesirable reassignment."

Employers should heed the guidance offered by the Supreme Court by establishing the following measures:

• Developing a zero-tolerance sexual harassment policy
• Communicating that policy throughout the workforce
• Establishing an effective internal grievance mechanism for reporting and resolving sexual harassment complaints
• Carefully screening applicants hired for or promoted to supervisory positions
• Diligently monitoring the performance of supervisors
• Training, educating and sensitizing the entire workforce about sexual harassment and the legal boundaries of workplace behavior.

Other steps could be taken as well. Employers could establish 1-800 hotlines to allow for easy, 24-hour access for employees to lodge complaints. They could make group or committee employment decisions concerning job status changes, such as terminations and promotions, instead of relying on an individual supervisor’s recommendations.

Also, employers are wise to look into purchasing Employment Practices Liability Insurance (EPLI) to protect further their financial exposure if sued for sexual harassment. This was an obscure product only six years ago when it was first offered, but it is fast becoming an essential part of a company’s portfolio. EPLI covers sexual harassment and other employment-related lawsuits and, since premium costs are becoming affordable for most employers, it is often less expensive to buy EPLI than to handle sexual harassment claims or lawsuits themselves.

In light of the clarity and guidance offered by the Supreme Court, employers need to develop aggressive campaigns to prevent sexual harassment from occurring and to respond swiftly and effectively once it does. The law provides new avenues by which employers are absolved of liability committed by supervisors and, presumably, co-workers when no tangible job detriment results from the harassment. Employers must carefully select and train supervisors not to act in ways that would automatically bind them, such as firing a subordinate for not acquiescing to sexual demands.

The good news is that the Supreme Court’s recent pronouncements provide employers with a bright-line description of what they need to do, at a minimum, to avoid liability for sexual harassment claims. With the explosion of sexual harassment litigation over the past few years, the most commonly heard complaint from employers centered around the ambiguity and vagueness of exactly what should be done to effectively minimize the employer’s exposure for this ever-increasing liability. The Supreme Court has now provided a clear answer - - and it is training, publication of a detailed anti-sexual harassment policy, and the establishment of an effective and non-coercive complaint procedure. Armed with these new weapons, these Supreme Court cases promise to provide employers with effective tools to combat employer liability for harassment that takes place without the employer’s knowledge.

The goal should ultimately be a friendlier, less charged and more productive workplace. Employers can utilize trained and experienced professionals to provide them with the type of comprehensive and effective policies and educational programs required. In view of the extraordinary and unparalleled drain on corporate resources caused by sexual harassment complaints, this investment will prove, on the basis of these Supreme Court decisions, to be dollars well spent. The Supreme Court’s direct focus on these mechanisms provides employers with a genuine opportunity to control and manage liability in the workplace of the 90’s and beyond.

Synopsis of Sexual Harassment Law

Harassment by Co-Employees
A complaining employee must prove each of the following:

• Unwelcome sexual harassment, such as vulgar comments, lewd humor, uninvited touching;
• Based upon sex;
• That is severe or pervasive enough to alter the workplace conditions and to create an abusive work environment, considering the frequency of the alleged misconduct, its severity, whether it is of a physical or verbal nature, and how much it interferes with the work performance; and
• That the employer knew or should have known of the harassment and, nevertheless, failed to take appropriate steps to stop it.

Harassment by Supervisors Resulting in Job Consequences
An employer is automatically liable if a complaining employee can show:

• The creation of a hostile work environment based on sex, marked by severe or pervasive conduct;
• Made by a supervisor with immediate (or successively higher) authority over the employee; and
• Resulting in a tangible employment action by the supervisor, such as termination, demotion, failure to promote, undesirable reassignment, or a significant change in employee benefits.

Harassment by Supervisors Not Resulting in Job Consequences
To hold an employer liable, a complaining party must show:

• The creation of a hostile work environment based on sex, marked by severe or pervasive conduct; or threats of job detriment for rebuffed sexual advances; and
• Made by a supervisor with immediate (or successively higher) authority over the employee.

Then, an employer can offer the following in its defense to avoid a finding of automatic liability:

• That it used reasonable care to prevent and to correct promptly any sexually harassing behavior; and
• That the complaining employee unreasonably failed to take advantage of the employer’s preventive opportunities, such as following its internal grievance procedure, or otherwise failed to mitigate his or her harm.

Julie A. Moore, Esquire of Employment Practices Group in North Andover, Massachusetts, specializes in risk-management, workplace training and internal investigations on sexual harassment and other employment issues. She is admitted to practice law in Massachusetts and New Hampshire. She can be reached at jmoore@employmentpg.com or 978-975-0080.