Employers On Alert!

On June 14, 2004, the United States Supreme Court decided a sexual harassment case that has consequences for nearly every employer, regardless of industry.

Pennsylvania State Police v. Suders, 2004 U.S. LEXIS 4176 (2004), snuck through the appellate courts without attracting much attention because it appeared to present a limited technical question concerning the scope of an affirmative defense for supervisor conduct in hostile environment cases.

What the Supreme Court did in Suders, however, was to unequivocally establish that Title VII applies when employees are forced to quit for unlawful reasons (constructive discharges) and that the degree of a supervisor's involvement in a hostile environment may be all that stands between strict liability and a trial over whether the employer had effective policies and procedures to address harassment.

This article reviews the decision in Suders and guides employers on the practical implications of this decision with regard to the pre-emptive steps they must take to avoid liability.

Employers who assume that they will “never hear from the employee who quit” or who fail to promulgate and vigilantly enforce anti-harassment policies, effectively train supervisors, and ensure non-retaliation will surely face liability.

The Suders Decision

In Suders, the Supreme Court resolved a Circuit-split concerning whether a constructive discharge in response to supervisor harassment constitutes a “tangible employment action,” thereby making employers strictly for a supervisor's harassing conduct.

The Court held that employers may be strictly liable when a constructive discharge is precipitated by an “official company action,” such as a demotion, undesirable transfer, or other tangible negative employment action. When there is no official company action, but the supervisor nevertheless participates in the harassing conduct, the employer may still be liable, but it can assert an “affirmative defense.” That defense, however, is predicated on preexisting meaningful reporting, policies and training.

Shocking Allegations

As the case was on appeal from a Motion to Dismiss, the Supreme Court had to accept the Plaintiff's version of the facts as true.

Nancy Drew Suders, a police communications operator, alleged that during a 5-month period of employment, she was forced to endure a sexually hostile environment, which her supervisors orchestrated and fostered. According to the Complaint, Suders endured a continuous barrage of sexual harassment during her short tenure that included her supervisors making graphic and obscene gestures and comments. Suders also alleged that her supervisors falsely arrested her on trumped-up theft charges. The State Police denied all of the allegations.

Court Embraces Constructive Discharge Under Title VII

For those employers who labored under the false assumption that if an employee quits, a lawsuit cannot be sustained, the Court has soundly ended that myth.

Acknowledging that it had never addressed this issue directly under Title VII, the Court reviewed the National Labor Relations Act and the broad remedial purpose of Title VII and concluded that if an employer makes conditions so intolerable that the employee has to quit ' a constructive discharge ' that Title VII provides the former employee a remedy.

While many in the Human Resources area predicted such a result, the Court was divided on this point. Justice Thomas, and former Chair of the Equal Employment Opportunity Commission (EEOC), dissented, saying that there should be no constructive discharge theory under Title VII.

The Court did not apply Title VII to all resignations. Instead, it held that a constructive discharge arises when the abusive working environment becomes so intolerable that resignation is objectively a fitting response.

The Court found that, unlike an actual termination, which is always effected through an official act of the company, a constructive discharge need not be. A constructive discharge involves 1) an employee's decision to leave, which involves no official action, and 2) precipitating conduct, which may or may not involve official action. Whether or not an official action precipitates the constructive discharge will determine whether an employer can assert an affirmative defense.

Affirmative Defense

In a pair of 1998 Supreme Court decisions known as Faragher and Ellerth, the Court held that an employer is strictly liable for supervisor hostile work environment harassment that culminates in a tangible employment action, such as discharge, demotion, or undesirable transfer. Faragher v. Boca Raton, 524 U.S. 775 (1998); Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998). However, where no tangible employment action is taken, both decisions also held that an employer may raise an affirmative defense to liability (subject to proof by a preponderance of the evidence), which comprises two necessary elements:

• That the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and
• That the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

Official Acts of the Employer of Primary Concern to the Court

In 2003, the 3rd Circuit held that a constructive discharge in which a supervisor participated constituted a tangible employment action rendering an employer automatically liable for supervisor harassment. Such a finding precluded employers from asserting the affirmative defense in constructive discharge cases. The Supreme Court disagreed.

While the Supreme Court found that Title VII of the Civil Rights Act of 1964 encompasses employer liability for constructive discharge, it clarified that only where an employee's quitting rises to the level of a constructive discharge and is precipitated by an official company action will an employer be held strictly liable and stripped of its ability to assert the affirmative defense. If there was no official action, the affirmative defense remains. Therefore, the precise conduct of management is the determinative fact for assessing liability.

In furthering the principles set forth in Faragher and Ellerth, the Court reasoned that without an official act of the company as a “last straw,” the employer ordinarily would have no particular reason to suspect that an employee's resignation is not the typical kind occurring routinely in the work force. Absent such an official last act, such as a demotion or reduction in compensation, the extent to which a supervisor's misconduct has been aided by the agency relationship with his employer is less certain.

Therefore, the Court found that that uncertainty justifies affording the employer the chance to establish, through the affirmative defense, that it should not be held vicariously liable for its supervisor's acts.

The Court also found it critical that juries receive a comprehensible charge on how to apply the Faragher and Ellerth affirmative defense.

In short, a supervisor contributing to a hostile work environment spells trouble for any employer. If the supervisor goes beyond, and takes official action in furtherance of the harassment, the company will most certainly be strictly liable.

Suders' Practical Lessons for Employers

Following Suders, certain lessons ' many of which are not new ' now become essential for any employer who wishes to avoid liability.

Perhaps more so than in any other area of employment relations, Suders and its predecessors make clear that “an ounce of prevention is worth 1000 pounds of cure.”

Employers Must Have Policies

The extent of an employer's liability will depend upon its efforts to implement measures to prevent and address sexual harassment in the work place. As a threshold step, therefore, all employers should adopt and enforce a sexual harassment policy that provides examples of what constitutes sexually harassing conduct, notifies employees that such behavior will not be tolerated in the workplace and clearly establishes that employees who violate the policy will be severely disciplined.

Such policies should also provide several mechanisms for employees to report harassing conduct and clearly provide that no retaliatory action will be taken against any employees who report such conduct or participate in investigations.

No Complaint is 'Too Minor'

Additionally, the Suders decision reminds employers that all reported incidents of harassment, no matter how minor they may seem, should be promptly and thoroughly investigated. Unfortunately, although most employers have adopted anti-harassment policies, the reality is that some employers ignore the policies or “forget” about them when handing employee complaints. One of the easiest and quickest ways to defeat the affirmative defense is where the employer learns of an alleged harassment incident but fails to take it seriously and/or follow-up with prompt investigative measures and remedial action. Therefore, all persons who receive complaints of harassment must diligently react and ensure that a prompt investigation is undertaken.

Training, Training and More Training Against Harassment

Further, to ensure that anti-harassment policies are routinely followed and that employers will be able rely on the Faragher and Ellerth affirmative defense, it is essential that employers provide training to supervisors so that they know what behavior is prohibited by the policy, how to spot danger zones, what to do when the policy is violated, how to handle employee complaints, how to practice routine non-retaliation against employees who report or witness harassment, and the importance of implementing appropriate discipline in the event of a violation.

As the eyes and ears of many companies, supervisors need to know how to handle such situations and properly implement the company's policy. The Suders decision reaffirms employers' duty to carefully monitor supervisors' conduct.

Not Just an Issue for Management

When possible, it is also prudent to train non-supervisory employees about the types of activities the policy prohibits and how the policy is implemented.

Often when employees understand that their employer takes its policies seriously and that no retaliation will ensue for reporting conduct and participating in investigations, the policy will be more valuable for employees and employers alike.

Don't Retaliate

The lesson of non-retaliation cannot be stated enough. Particularly when an employee reports harassing conduct, it is imperative that neither the employee's supervisor(s) nor any other management personnel engage in any conduct against that employee that could be deemed retaliatory.

A precipitating demotion, pay cut, or undesirable transfer can constitute an “official company action” that would cause an employer to be strictly liable for an employee's constructive discharge. However, even such acts as giving an employee less work, less desirable assignments, or ignoring an employee might be deemed as official company acts that could drive an employee to claim constructive discharge. Supervisors and management must be sure to treat employees who report harassing conduct and those participating in investigations the same as before to avoid any suspicions of penalizing conduct.

Conclusion

By continuing to expand and define the law on hostile work environment sexual harassment, the Supreme Court's recent decision in Suders resolves an important split in the Circuits over whether a constructive discharge constitutes a tangible employment action for purposes of whether employers could still avail themselves of the Faragher/Ellerth affirmative defense in constructive discharge cases.

It is now clear that employers can still assert the affirmative defense unless an employee shows an official company action precipitated the constructive discharge. To ensure that employers can take advantage of the critical affirmative defense, it is now more important than ever important for employers to heed the various lessons that Suders reinforces. Effective policies, implementation, policing supervisor conduct and training are invaluable to handling employee complaints and defending against lawsuits.

On June 14, 2004, the United States Supreme Court decided a sexual harassment case that has consequences for nearly every employer, regardless of industry.

Pennsylvania State Police v. Suders, 2004 U.S. LEXIS 4176 (2004), snuck through the appellate courts without attracting much attention because it appeared to present a limited technical question concerning the scope of an affirmative defense for supervisor conduct in hostile environment cases.

What the Supreme Court did in Suders, however, was to unequivocally establish that Title VII applies when employees are forced to quit for unlawful reasons (constructive discharges) and that the degree of a supervisor's involvement in a hostile environment may be all that stands between strict liability and a trial over whether the employer had effective policies and procedures to address harassment.

This article reviews the decision in Suders and guides employers on the practical implications of this decision with regard to the pre-emptive steps they must take to avoid liability.

Employers who assume that they will “never hear from the employee who quit” or who fail to promulgate and vigilantly enforce anti-harassment policies, effectively train supervisors, and ensure non-retaliation will surely face liability.

The Suders Decision

In Suders, the Supreme Court resolved a Circuit-split concerning whether a constructive discharge in response to supervisor harassment constitutes a “tangible employment action,” thereby making employers strictly for a supervisor's harassing conduct.

The Court held that employers may be strictly liable when a constructive discharge is precipitated by an “official company action,” such as a demotion, undesirable transfer, or other tangible negative employment action. When there is no official company action, but the supervisor nevertheless participates in the harassing conduct, the employer may still be liable, but it can assert an “affirmative defense.” That defense, however, is predicated on preexisting meaningful reporting, policies and training.

Shocking Allegations

As the case was on appeal from a Motion to Dismiss, the Supreme Court had to accept the Plaintiff's version of the facts as true.

Nancy Drew Suders, a police communications operator, alleged that during a 5-month period of employment, she was forced to endure a sexually hostile environment, which her supervisors orchestrated and fostered. According to the Complaint, Suders endured a continuous barrage of sexual harassment during her short tenure that included her supervisors making graphic and obscene gestures and comments. Suders also alleged that her supervisors falsely arrested her on trumped-up theft charges. The State Police denied all of the allegations.

Court Embraces Constructive Discharge Under Title VII

For those employers who labored under the false assumption that if an employee quits, a lawsuit cannot be sustained, the Court has soundly ended that myth.

Acknowledging that it had never addressed this issue directly under Title VII, the Court reviewed the National Labor Relations Act and the broad remedial purpose of Title VII and concluded that if an employer makes conditions so intolerable that the employee has to quit ' a constructive discharge ' that Title VII provides the former employee a remedy.

While many in the Human Resources area predicted such a result, the Court was divided on this point. Justice Thomas, and former Chair of the Equal Employment Opportunity Commission (EEOC), dissented, saying that there should be no constructive discharge theory under Title VII.

The Court did not apply Title VII to all resignations. Instead, it held that a constructive discharge arises when the abusive working environment becomes so intolerable that resignation is objectively a fitting response.

The Court found that, unlike an actual termination, which is always effected through an official act of the company, a constructive discharge need not be. A constructive discharge involves 1) an employee's decision to leave, which involves no official action, and 2) precipitating conduct, which may or may not involve official action. Whether or not an official action precipitates the constructive discharge will determine whether an employer can assert an affirmative defense.

Affirmative Defense

In a pair of 1998 Supreme Court decisions known as Faragher and Ellerth, the Court held that an employer is strictly liable for supervisor hostile work environment harassment that culminates in a tangible employment action, such as discharge, demotion, or undesirable transfer. Faragher v. Boca Raton , 524 U.S. 775 (1998); Burlington Industries, Inc. v. Ellerth , 524 U.S. 742 (1998). However, where no tangible employment action is taken, both decisions also held that an employer may raise an affirmative defense to liability (subject to proof by a preponderance of the evidence), which comprises two necessary elements:

• That the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and
• That the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

Official Acts of the Employer of Primary Concern to the Court

In 2003, the 3rd Circuit held that a constructive discharge in which a supervisor participated constituted a tangible employment action rendering an employer automatically liable for supervisor harassment. Such a finding precluded employers from asserting the affirmative defense in constructive discharge cases. The Supreme Court disagreed.

While the Supreme Court found that Title VII of the Civil Rights Act of 1964 encompasses employer liability for constructive discharge, it clarified that only where an employee's quitting rises to the level of a constructive discharge and is precipitated by an official company action will an employer be held strictly liable and stripped of its ability to assert the affirmative defense. If there was no official action, the affirmative defense remains. Therefore, the precise conduct of management is the determinative fact for assessing liability.

In furthering the principles set forth in Faragher and Ellerth, the Court reasoned that without an official act of the company as a “last straw,” the employer ordinarily would have no particular reason to suspect that an employee's resignation is not the typical kind occurring routinely in the work force. Absent such an official last act, such as a demotion or reduction in compensation, the extent to which a supervisor's misconduct has been aided by the agency relationship with his employer is less certain.

Therefore, the Court found that that uncertainty justifies affording the employer the chance to establish, through the affirmative defense, that it should not be held vicariously liable for its supervisor's acts.

The Court also found it critical that juries receive a comprehensible charge on how to apply the Faragher and Ellerth affirmative defense.

In short, a supervisor contributing to a hostile work environment spells trouble for any employer. If the supervisor goes beyond, and takes official action in furtherance of the harassment, the company will most certainly be strictly liable.

Suders' Practical Lessons for Employers

Following Suders, certain lessons ' many of which are not new ' now become essential for any employer who wishes to avoid liability.

Perhaps more so than in any other area of employment relations, Suders and its predecessors make clear that “an ounce of prevention is worth 1000 pounds of cure.”

Employers Must Have Policies

The extent of an employer's liability will depend upon its efforts to implement measures to prevent and address sexual harassment in the work place. As a threshold step, therefore, all employers should adopt and enforce a sexual harassment policy that provides examples of what constitutes sexually harassing conduct, notifies employees that such behavior will not be tolerated in the workplace and clearly establishes that employees who violate the policy will be severely disciplined.

Such policies should also provide several mechanisms for employees to report harassing conduct and clearly provide that no retaliatory action will be taken against any employees who report such conduct or participate in investigations.

No Complaint is 'Too Minor'

Additionally, the Suders decision reminds employers that all reported incidents of harassment, no matter how minor they may seem, should be promptly and thoroughly investigated. Unfortunately, although most employers have adopted anti-harassment policies, the reality is that some employers ignore the policies or “forget” about them when handing employee complaints. One of the easiest and quickest ways to defeat the affirmative defense is where the employer learns of an alleged harassment incident but fails to take it seriously and/or follow-up with prompt investigative measures and remedial action. Therefore, all persons who receive complaints of harassment must diligently react and ensure that a prompt investigation is undertaken.

Training, Training and More Training Against Harassment

Further, to ensure that anti-harassment policies are routinely followed and that employers will be able rely on the Faragher and Ellerth affirmative defense, it is essential that employers provide training to supervisors so that they know what behavior is prohibited by the policy, how to spot danger zones, what to do when the policy is violated, how to handle employee complaints, how to practice routine non-retaliation against employees who report or witness harassment, and the importance of implementing appropriate discipline in the event of a violation.

As the eyes and ears of many companies, supervisors need to know how to handle such situations and properly implement the company's policy. The Suders decision reaffirms employers' duty to carefully monitor supervisors' conduct.

Not Just an Issue for Management

When possible, it is also prudent to train non-supervisory employees about the types of activities the policy prohibits and how the policy is implemented.

Often when employees understand that their employer takes its policies seriously and that no retaliation will ensue for reporting conduct and participating in investigations, the policy will be more valuable for employees and employers alike.

Don't Retaliate

The lesson of non-retaliation cannot be stated enough. Particularly when an employee reports harassing conduct, it is imperative that neither the employee's supervisor(s) nor any other management personnel engage in any conduct against that employee that could be deemed retaliatory.

A precipitating demotion, pay cut, or undesirable transfer can constitute an “official company action” that would cause an employer to be strictly liable for an employee's constructive discharge. However, even such acts as giving an employee less work, less desirable assignments, or ignoring an employee might be deemed as official company acts that could drive an employee to claim constructive discharge. Supervisors and management must be sure to treat employees who report harassing conduct and those participating in investigations the same as before to avoid any suspicions of penalizing conduct.

Conclusion

By continuing to expand and define the law on hostile work environment sexual harassment, the Supreme Court's recent decision in Suders resolves an important split in the Circuits over whether a constructive discharge constitutes a tangible employment action for purposes of whether employers could still avail themselves of the Faragher/Ellerth affirmative defense in constructive discharge cases.

It is now clear that employers can still assert the affirmative defense unless an employee shows an official company action precipitated the constructive discharge. To ensure that employers can take advantage of the critical affirmative defense, it is now more important than ever important for employers to heed the various lessons that Suders reinforces. Effective policies, implementation, policing supervisor conduct and training are invaluable to handling employee complaints and defending against lawsuits.