Constructive Discharges Resulting from Sexual Harassment

In one of its most important employment decisions on the subject of sexual harassment since its landmark decisions in Burlington Industries, Inc. v. Ellerth (524 U.S. 742, 141 L. Ed. 2d 633, 118 S. Ct. 2257 (1998)) and Faragher v. Boca Raton (524 U.S. 775, 808, 141 L. Ed. 2d 662, 118 S. Ct. 2275 (1998)), the Supreme Court, in Pennsylvania State Police vs. Suders (124 S. Ct. 2342, 159 L. Ed. 2d 204, 2004 U.S. LEXIS 4176 (2004)), addressed the issue of a constructive discharge resulting from sexual harassment.

Nearly 6 years ago, in Ellerth and Faragher, the Supreme Court made it clear that the responsibility to eliminate sexual harassment in the workplace resides with employers and that sexual harassment training is an important component in preventing sexual harassment claims. In these decisions, the Supreme Court held that an employer can be held liable even though it is not negligent or otherwise at fault, for a hostile work environment created by a supervisor.

These cases held that an employer may defend such a lawsuit, provided that there has been no tangible adverse employment action taken against the employee, by establishing 1) that it exercised reasonable care to prevent and promptly correct any harassment; and 2) that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to otherwise avoid harm.

In Suders, the Supreme Court addressed an issue that has confused not only employers but practitioners and judges alike: namely, how, if at all, the framework of Ellerth and Faragher would apply in the case of a constructive termination.

In addressing this issue, the Supreme Court concluded that it needed to resolve two subsidiary issues: 1) what actually constitutes a constructive termination; and 2) whether a constructive termination claim exists under Title VII. As to the first subsidiary issue, the Supreme Court clarified that a constructive termination occurs where working conditions become so intolerable that a reasonable person in the employee's position would have felt compelled to resign. As to the latter issue, the Supreme Court held that Title VII does encompass explicit or constructive alterations in the terms or conditions of employment, and as such, includes employer liability for constructive discharge claims.

The Central Issue

After resolving these subsidiary issues, the Supreme Court considered the central issue posed by the appeal — namely, where an employee resigned in response to a hostile work environment created by a supervisor, could an employer proceed to defend such a claim, and if so, how? The Court prefaced its ruling by reasoning that sexual harassment that becomes so intolerable as to cause a resignation may result from co-worker conduct, unofficial supervisory conduct, or official company actions. The Court then distinguished between official acts of the employer — such as a termination, an unfavorable or even dangerous reassignment, or a substantial decrease in pay — on the one hand, and situations where official acts do not underlie the constructive discharge and, as a result, the employer ordinarily would have no particular reason to suspect that a resignation is not the kind that routinely occurs in the workforce.

The Court held in Suders that so long as an official action does not underlie the constructive discharge, then employers will be able to advance the defenses authorized by Ellerth and Faragher; namely: 1) that the employer had installed a readily accessible and effective policy for reporting and resolving complaints of sexual harassment; and 2) that the employee unreasonably failed to utilize the employer-provided preventive or remedial procedures. Where, on the other hand, official action — that is to say, one in which the employer is deemed to have had control (such as a termination, unfavorable reassignment, or substantial decrease in pay) has occurred – then the Ellerth and Faragher defenses will not be available to employers in terminations based upon supervisor harassment.

Lessons to Learn

Like a good stew, the decision appears to have aspects that employees and employers will regard favorably. Employees will no doubt be comforted by that portion of the Court's ruling that a constructive discharge falls within Title VII. Employers, on the other hand, will be relieved that their ability to defend sexual harassment claims arising from a constructive termination has largely been preserved. That said, the Supreme Court's decision in Suders nevertheless provides another important reminder to employers that they may be held vicariously liable for sexual harassment in the workplace if they fail to take appropriate and effective actions to prevent harassment in the first instance. The lessons of Suders and the earlier Supreme Court decisions for employers include the following:

• They should carefully evaluate all appropriate facts and circumstances before taking an adverse employment action against an employee;
• They should carefully consider which managers and supervisors will have authority to recommend adverse employment decisions and establish a procedure by which such recommendations are vetted by the Human Resource Department and senior management;
• They should establish an effective and practical anti-harassment policy, which should prohibit sexual harassment, as well as harassment based upon race, disability, religion or any other protected category;
• The policy should have the following features: 1) it should have multiple points of contact; ie, an employee should be able to complain to his/her immediate supervisor, the director of Human Resources, and the president of the company; 2) the policy should communicate the company's zero tolerance toward harassment of any kind and describe what may constitute the different types of prohibited harassment; and 3) the policy should state that all complaints will be investigated thoroughly and that there will be no retaliation against those who make complaints;
• The anti-harassment policy should be regularly published;
• They should conduct harassment training on a regular basis for all employees, supervisors and managers;
• All claims of harassment and retaliation should be acted upon promptly and thoroughly investigated; and
• Supervisors and managers should be evaluated in terms of how they are managing their staff and whether they are effectively monitoring, applying and enforcing the policy.

Conclusion

In many respects, the Supreme Court's decision in Suders, particularly when viewed in the context of increasing jury awards, means that the stakes have never been higher for employers when it comes to harassment claims. Employers who take appropriate proactive measures, including those set forth above, can achieve benefits that translate far beyond the bottom line. Those who fail to do so proceed at their peril.

In one of its most important employment decisions on the subject of sexual harassment since its landmark decisions in Burlington Industries, Inc. v. Ellerth (524 U.S. 742, 141 L. Ed. 2d 633, 118 S. Ct. 2257 (1998)) and Faragher v. Boca Raton (524 U.S. 775, 808, 141 L. Ed. 2d 662, 118 S. Ct. 2275 (1998)), the Supreme Court, in Pennsylvania State Police vs. Suders (124 S. Ct. 2342, 159 L. Ed. 2d 204, 2004 U.S. LEXIS 4176 (2004)), addressed the issue of a constructive discharge resulting from sexual harassment.

Nearly 6 years ago, in Ellerth and Faragher, the Supreme Court made it clear that the responsibility to eliminate sexual harassment in the workplace resides with employers and that sexual harassment training is an important component in preventing sexual harassment claims. In these decisions, the Supreme Court held that an employer can be held liable even though it is not negligent or otherwise at fault, for a hostile work environment created by a supervisor.

These cases held that an employer may defend such a lawsuit, provided that there has been no tangible adverse employment action taken against the employee, by establishing 1) that it exercised reasonable care to prevent and promptly correct any harassment; and 2) that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to otherwise avoid harm.

In Suders, the Supreme Court addressed an issue that has confused not only employers but practitioners and judges alike: namely, how, if at all, the framework of Ellerth and Faragher would apply in the case of a constructive termination.

In addressing this issue, the Supreme Court concluded that it needed to resolve two subsidiary issues: 1) what actually constitutes a constructive termination; and 2) whether a constructive termination claim exists under Title VII. As to the first subsidiary issue, the Supreme Court clarified that a constructive termination occurs where working conditions become so intolerable that a reasonable person in the employee's position would have felt compelled to resign. As to the latter issue, the Supreme Court held that Title VII does encompass explicit or constructive alterations in the terms or conditions of employment, and as such, includes employer liability for constructive discharge claims.

The Central Issue

After resolving these subsidiary issues, the Supreme Court considered the central issue posed by the appeal — namely, where an employee resigned in response to a hostile work environment created by a supervisor, could an employer proceed to defend such a claim, and if so, how? The Court prefaced its ruling by reasoning that sexual harassment that becomes so intolerable as to cause a resignation may result from co-worker conduct, unofficial supervisory conduct, or official company actions. The Court then distinguished between official acts of the employer — such as a termination, an unfavorable or even dangerous reassignment, or a substantial decrease in pay — on the one hand, and situations where official acts do not underlie the constructive discharge and, as a result, the employer ordinarily would have no particular reason to suspect that a resignation is not the kind that routinely occurs in the workforce.

The Court held in Suders that so long as an official action does not underlie the constructive discharge, then employers will be able to advance the defenses authorized by Ellerth and Faragher; namely: 1) that the employer had installed a readily accessible and effective policy for reporting and resolving complaints of sexual harassment; and 2) that the employee unreasonably failed to utilize the employer-provided preventive or remedial procedures. Where, on the other hand, official action — that is to say, one in which the employer is deemed to have had control (such as a termination, unfavorable reassignment, or substantial decrease in pay) has occurred – then the Ellerth and Faragher defenses will not be available to employers in terminations based upon supervisor harassment.

Lessons to Learn

Like a good stew, the decision appears to have aspects that employees and employers will regard favorably. Employees will no doubt be comforted by that portion of the Court's ruling that a constructive discharge falls within Title VII. Employers, on the other hand, will be relieved that their ability to defend sexual harassment claims arising from a constructive termination has largely been preserved. That said, the Supreme Court's decision in Suders nevertheless provides another important reminder to employers that they may be held vicariously liable for sexual harassment in the workplace if they fail to take appropriate and effective actions to prevent harassment in the first instance. The lessons of Suders and the earlier Supreme Court decisions for employers include the following:

• They should carefully evaluate all appropriate facts and circumstances before taking an adverse employment action against an employee;
• They should carefully consider which managers and supervisors will have authority to recommend adverse employment decisions and establish a procedure by which such recommendations are vetted by the Human Resource Department and senior management;
• They should establish an effective and practical anti-harassment policy, which should prohibit sexual harassment, as well as harassment based upon race, disability, religion or any other protected category;
• The policy should have the following features: 1) it should have multiple points of contact; ie, an employee should be able to complain to his/her immediate supervisor, the director of Human Resources, and the president of the company; 2) the policy should communicate the company's zero tolerance toward harassment of any kind and describe what may constitute the different types of prohibited harassment; and 3) the policy should state that all complaints will be investigated thoroughly and that there will be no retaliation against those who make complaints;
• The anti-harassment policy should be regularly published;
• They should conduct harassment training on a regular basis for all employees, supervisors and managers;
• All claims of harassment and retaliation should be acted upon promptly and thoroughly investigated; and
• Supervisors and managers should be evaluated in terms of how they are managing their staff and whether they are effectively monitoring, applying and enforcing the policy.

Conclusion

In many respects, the Supreme Court's decision in Suders, particularly when viewed in the context of increasing jury awards, means that the stakes have never been higher for employers when it comes to harassment claims. Employers who take appropriate proactive measures, including those set forth above, can achieve benefits that translate far beyond the bottom line. Those who fail to do so proceed at their peril.