FEDERAL HIGHLIGHTS

Digest of EEO Law, Volume XI, No. 6

I

U.S. SUPREME COURT SETS OUT TITLE VII STANDARDS OF EMPLOYER LIABILITY FOR SUPERVISORS' CONDUCT IN SEXUAL HARASSMENT HOSTILE ENVIRONMENT CASES

The U.S. Supreme Court adopted the same holding in the following two companion cases, both of which involved allegations of sexual harassment by supervisors.

Faragher v. City of Boca Raton, 118 S.Ct. 2275 (June 26, 1998).

For five years, plaintiff worked for the city as a lifeguard. After she resigned, she brought an action asserting claims under, among other statutes, Title VII. She alleged that throughout her employment, two of her immediate supervisors created a sexually hostile environment for herself and other female lifeguards, repeatedly subjecting them to offensive touching and remarks. The lifeguards worked out of a beach office with the supervisors, and had no contact with more senior managers. The city had adopted a sexual harassment policy during plaintiff's employ, but it was never disseminated to the lifeguards or their immediate supervisors. In the five years she worked for the city, plaintiff did not report the supervisors' conduct to managers above the supervisors in the city government's chain of command.

Following a bench trial, the district court found that the supervisors' conduct created an abusive working environment, and further found the city liable for their conduct. When the case reached the 11th Circuit Court of Appeals, the court agreed with the finding of an abusive work environment. However, the court overturned the district court's conclusion that the city was liable for the harassment.

The U.S. Supreme Court granted certiorari of this case to address the divergence among Courts of Appeals on the standards to be used to govern employer liability for hostile environment harassment that is perpetrated by supervisory employees. The Supreme Court observed that courts have consistently held employers liable for harassment by supervisors when the harassment culminates in a tangible employment action, like hiring, firing, promotion, or compensation. Where the harassment does not result in a tangible employment action, stated the Court, the traditional principles of the law of agency were relevant in assigning employer liability. The Court in discussing the use of agency law was referring to its guidance in Meritor Savings Bank, FSB v. Vinson, 106 S.Ct. 2399 (1986), and stated that Meritor's statement applying agency principles "is the foundation on which we build today." The Court stated in sum that there are good reasons for imposing liability on employers for misuse of supervisory authority, but expressed the necessity to square that rationale with Meritor's holding that an employer is not "automatically" liable.

To counter the risk of automatic liability under these standards, the Court set forth two alternatives for an employee alleging supervisory liability. The first is to require proof that a harassing supervisor affirmatively or actively invoked the employer's authority. However, the Court noted the difficulty in identifying such affirmative uses of power, observing that supervisors do not make speeches threatening sanctions when they are making legitimate exercises of managerial authority, yet every subordinate knows the sanctions exist. After discussing the difficulty in drawing a line between affirmative and explicit uses of power, the Court stated that the parties would be poorly served by this "active-use rule." The Court instead recognized an affirmative defense to liability, even where a supervisor did create the actionable environment. The affirmative defense requires a showing 1) that the employer exercised reasonable care to avoid harassment and to eliminate it when it might occur, and 2) that the complaining employee failed to act with "reasonable care" to take advantage of the employer's safeguards and otherwise to prevent harm that could have been avoided.

In this case, the Court decided that any avenue to such a defense by the city was closed, noting the city's failure to disseminate its policy against sexual harassment, the city's failure to keep track of supervisors' conduct, and the fact that the city's policy did not include any assurance that a harassing supervisor could be bypassed in registering complaints. The Supreme Court reversed the judgment of the circuit court, and reinstated the judgment of discrimination found by the district court.

II

Burlington Industries, Inc. v. Ellerth, 118 S.Ct. 2257 (June 26, 1998).

The plaintiff's second-level supervisor allegedly made repeated boorish and offensive remarks to her during the approximately 14 months she worked for the employer. He also allegedly threatened to deny her tangible job benefits, once stating, after plaintiff gave no encouragement to his sexual remarks, that he could make her life "very hard or very easy." However, the supervisor did not carry out any threats against plaintiff, and indeed she received a promotion while working there. Plaintiff did not inform upper management of the supervisor's conduct during her employ, but did do so in explaining the reason for her resignation. She brought an action alleging sexual harassment. Her case reached the U.S. Supreme Court after summary judgment had been granted for the employer, so the Court was required to assume for the purposes of its opinion that all of plaintiff's allegations were true.

Because the claim involved only unfulfilled threats, stated the Court, it should be categorized as a hostile work environment claim, which requires a showing of severe or pervasive conduct. The Court stated that the question before it was whether an employer has vicarious liability in such a case. The Court stated that Congress gave an explicit instruction to the courts to interpret Title VII based on agency principles, by defining the term "employer" in Title VII to include "agents." The Court concluded that in applying agency principles, a "uniform and predictable standard must be established as a matter of federal law." The Court then discussed principles of agency law as applied in the context of employment. The Court stated that it is bound by the holding in Meritor, cited above, that agency principles place some limits on the concept of holding employers liable for the acts of employees. Considerations other than agency principles also might be relevant in placing such limits, stated the Court. The Court set out the example of Title VII's design, which encourages the creation of antiharassment policies and effective grievance mechanisms. In order to accommodate these considerations, the Court adopted the following holding both in this case and in the Faragher opinion highlighted above:

An employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee. When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages. . . . The defense necessarily comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

118 S.Ct. at 2270. The Court noted that proof of an antiharassment policy with a complaint procedure is not always required to show the first of the elements, although the need for a stated policy suitable to the employment circumstances may be addressed. The Court also stated that while an employee's failure to use an employer's complaint procedure is not the only proof appropriate to show the employee's failure to avoid harm, the employee's failure to use the procedure will normally be enough proof to satisfy the employer's burden under the second element. The Court emphasized, however, that no affirmative defense is available when a supervisor's harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment. The Court reversed the grant of summary judgment, and remanded the case to the district court for trial.