Do Your Discrimination Policies Go Far Enough?

The latest Court to look at the issue is the Third Circuit Court of Appeals. That Court held, in Suders v. Easton, 2003 U.S. App. LEXIS 7152 (3d Cir. 4/16/03), that constructive discharge is a tangible job action negating the ability to use the affirmative defense. Previously, only the Eighth Circuit had taken that position. As a result, employers in the Third and Eighth Circuits have a much more difficult time obtaining early dismissal of cases involving hostile environment claims. The reason is that it is virtually impossible for employers to use the Faragher/Ellerth affirmative defense if the employee alleges that he or she had no choice but to resign ' even if the employee had failed to report the conduct before resigning. The practical result is that employers in those two jurisdictions may ultimately win the case if they prove that resignation was not the employee's only alternative, but those employers who might otherwise have used the Farragher/Ellerth affirmative defense to prevail on a summary judgment motion earlier in the litigation, will be faced with the choice of either settling or incurring substantially higher legal fees in proceeding to trial.

Nor are employers in those jurisdictions the only ones who may face that problem, as only two other Circuits have addressed the issue. The Second Circuit has held that constructive discharge is not a tangible job action. The First Circuit has held that constructive discharge may constitute a tangible job action depending on the facts of the case.

In the other seven circuits, the law remains unsettled. District courts in South Carolina (Fourth Circuit), Ohio (Sixth circuit) and Kansas (Tenth Circuit) have all held that constructive discharge is not a tangible job action. Within the Ninth Circuit, a Nevada District Court held that constructive discharge is not a tangible job action, but an Oregon district court and an Arizona District Court held that it is. In the Eleventh Circuit, a Georgia District Court has held that it is, but the Alabama District Court followed the Second Circuit and held that constructive discharge is not a tangible job action.

Given the unsettled state of the law in most jurisdictions, and the way the law has been settled in the Third and Eighth Circuits, employers cannot assume that they will be permitted to use the affirmative defense to defend themselves in the event of a claim of hostile work environment discrimination. If an employee can quit without ever making an internal complaint, the only sensible course of action is for employers to do all they can to avoid problems from occurring, because the employer may never be given the chance to remedy the problem before being faced with a claim. The best way to do that is not only to have an up to date anti-harassment and discrimination policy ' but also to provide all employees with training that breathes life into the policy. The reason is that training makes it less likely that a supervisor will engage in inappropriate conduct in the first place, and it makes it much more difficult for an employee to claim that he or she felt there was no choice but to quit.

In addition to preventive training, employers would be wise to conduct exit interviews that are designed to elicit from a departing employee any problems they were having. The departing employees might then reveal that they are leaving because they believe they were being subjected to discrimination or harassment and the employer could then encourage the employee to remain employed, on paid leave, while an investigation proceeds. If the departing employee reports the problem but refuses to remain employed pending an investigation, it will be more difficult for the employee to successfully claim constructive discharge. If the employee fails to share the problem in the exit interview, the employer will have an easier time challenging the employee's credibility when he or she raises the issue later in litigation.

Employers should also train the personnel who will be conducting exit interviews because they need to know how to ask the questions that will enable the employer to demonstrate that the employee was not constructively discharged. In addition, interviewers must immediately prepare a memorandum for placement in the departing employee's personnel file setting forth the reasons the employee provided for the resignation.

In summary, all employers should take a number of basic precautionary measures to maximize their ability to avoid expensive litigation and costly awards:

• implement suitable anti-harassment policies and personnel handbooks tailored to your company's business needs, and obtain advice on the best means of issuing those policies;
• have those policies and handbooks periodically reviewed to ensure that they cover any recent changes in the law;
• provide training for all levels of employees (existing and new hires) that addresses any issues unique to the particular workplace, so as to prevent harassment in the first place and to ensure that employees report offensive conduct to those in your organization who can remedy the problems;
• provide training specially designed for supervisors to ensure they appropriately control the work environment to eliminate harassment when they see it;
• seek advice about when and how your company should reissue anti-harassment policies and how often you should train your employees; and
• establish an appropriate exit interview procedure with personnel who are trained to effectively conduct the exit interviews.

Margaret A. McCausland is a partner and Linda T. Jacobs is a senior associate in the Employment/ Benefits/Labor Practice Group of Blank Rome LLP in Philadelphia. Both Margaret and Linda concentrate their practice in representing management in all aspects of employment law, including litigation, advice and training. McCausland can be reached at [email protected] and Jacobs can be reached at
[email protected].

Since 1998, when the United States Supreme Court issued what have become known as the Farragher and Ellerth cases, employers have been able to assert an affirmative defense to harassment cases that allege the creation of a hostile work environment by supervisory employees as long as the harassment did not result in a tangible job action for the complaining employee. The Ellerth Court offered as examples of a tangible job action “hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” Ellerth, 524 U.S. at 761.

Prior to Farragher and Ellerth, employers were strictly liable (ie, the employer could not disclaim responsibility) in all cases of hostile environment harassment by a supervisor. In Farragher and Ellerth, however, the Supreme Court reasoned that employers should only be held strictly liable for the actions of a supervisory employee who was exercising his or her official authority; employers whose supervisory employee was acting without official authority should be permitted to raise an affirmative defense. In its simplest terms, that affirmative defense requires a showing that 1) the employee unreasonably failed to report the offensive conduct, despite an adequate reporting mechanism set forth in a well-publicized policy that clearly prohibited harassment; and, 2) the employer took prompt, remedial measures upon learning of the offensive conduct to ensure that it would not continue or be repeated.

In the years since Farragher and Ellerth, numerous courts have been asked to decide whether or not constructive discharge (ie, the employee felt forced to resign because conditions were unbearable) is a tangible job action negating the employer's ability to raise the affirmative defense. The decided cases have had differing outcomes.

The latest Court to look at the issue is the Third Circuit Court of Appeals. That Court held, in Suders v. Easton, 2003 U.S. App. LEXIS 7152 (3d Cir. 4/16/03), that constructive discharge is a tangible job action negating the ability to use the affirmative defense. Previously, only the Eighth Circuit had taken that position. As a result, employers in the Third and Eighth Circuits have a much more difficult time obtaining early dismissal of cases involving hostile environment claims. The reason is that it is virtually impossible for employers to use the Faragher/Ellerth affirmative defense if the employee alleges that he or she had no choice but to resign ' even if the employee had failed to report the conduct before resigning. The practical result is that employers in those two jurisdictions may ultimately win the case if they prove that resignation was not the employee's only alternative, but those employers who might otherwise have used the Farragher/Ellerth affirmative defense to prevail on a summary judgment motion earlier in the litigation, will be faced with the choice of either settling or incurring substantially higher legal fees in proceeding to trial.

Nor are employers in those jurisdictions the only ones who may face that problem, as only two other Circuits have addressed the issue. The Second Circuit has held that constructive discharge is not a tangible job action. The First Circuit has held that constructive discharge may constitute a tangible job action depending on the facts of the case.

In the other seven circuits, the law remains unsettled. District courts in South Carolina (Fourth Circuit), Ohio (Sixth circuit) and Kansas (Tenth Circuit) have all held that constructive discharge is not a tangible job action. Within the Ninth Circuit, a Nevada District Court held that constructive discharge is not a tangible job action, but an Oregon district court and an Arizona District Court held that it is. In the Eleventh Circuit, a Georgia District Court has held that it is, but the Alabama District Court followed the Second Circuit and held that constructive discharge is not a tangible job action.

Given the unsettled state of the law in most jurisdictions, and the way the law has been settled in the Third and Eighth Circuits, employers cannot assume that they will be permitted to use the affirmative defense to defend themselves in the event of a claim of hostile work environment discrimination. If an employee can quit without ever making an internal complaint, the only sensible course of action is for employers to do all they can to avoid problems from occurring, because the employer may never be given the chance to remedy the problem before being faced with a claim. The best way to do that is not only to have an up to date anti-harassment and discrimination policy ' but also to provide all employees with training that breathes life into the policy. The reason is that training makes it less likely that a supervisor will engage in inappropriate conduct in the first place, and it makes it much more difficult for an employee to claim that he or she felt there was no choice but to quit.

In addition to preventive training, employers would be wise to conduct exit interviews that are designed to elicit from a departing employee any problems they were having. The departing employees might then reveal that they are leaving because they believe they were being subjected to discrimination or harassment and the employer could then encourage the employee to remain employed, on paid leave, while an investigation proceeds. If the departing employee reports the problem but refuses to remain employed pending an investigation, it will be more difficult for the employee to successfully claim constructive discharge. If the employee fails to share the problem in the exit interview, the employer will have an easier time challenging the employee's credibility when he or she raises the issue later in litigation.

Employers should also train the personnel who will be conducting exit interviews because they need to know how to ask the questions that will enable the employer to demonstrate that the employee was not constructively discharged. In addition, interviewers must immediately prepare a memorandum for placement in the departing employee's personnel file setting forth the reasons the employee provided for the resignation.

In summary, all employers should take a number of basic precautionary measures to maximize their ability to avoid expensive litigation and costly awards:

• implement suitable anti-harassment policies and personnel handbooks tailored to your company's business needs, and obtain advice on the best means of issuing those policies;
• have those policies and handbooks periodically reviewed to ensure that they cover any recent changes in the law;
• provide training for all levels of employees (existing and new hires) that addresses any issues unique to the particular workplace, so as to prevent harassment in the first place and to ensure that employees report offensive conduct to those in your organization who can remedy the problems;
• provide training specially designed for supervisors to ensure they appropriately control the work environment to eliminate harassment when they see it;
• seek advice about when and how your company should reissue anti-harassment policies and how often you should train your employees; and
• establish an appropriate exit interview procedure with personnel who are trained to effectively conduct the exit interviews.

Margaret A. McCausland is a partner and Linda T. Jacobs is a senior associate in the Employment/ Benefits/Labor Practice Group of Blank Rome LLP in Philadelphia. Both Margaret and Linda concentrate their practice in representing management in all aspects of employment law, including litigation, advice and training. McCausland can be reached at [email protected] and Jacobs can be reached at
[email protected].