The Pricelessness of Prevention

An employee who had never before complained about harassment quits and then files a sexual harassment constructive discharge claim with the EEOC. Can the employer prevail on the ground that the employee failed to take advantage of the employer's internal complaint procedure?

What the Courts Say

On June 14, 2004, in Pennsylvania State Police v. Suders, the Supreme Court answered, “it depends” on what precipitated the employee's quitting. Before discussing the specifics of the Suders decision, some legal background is necessary.

In 1998, in Faragher v. City of Boca Raton, 118 S.Ct. 2257 (1998) and Burlington Industries, Inc. v. Ellerth, 118 S.Ct. 2275 (1998), the Supreme Court held that an employer is strictly liable for sexual harassment engaged in by a supervisor which involves a tangible employment action (for example, discharge, demotion or denial of promotion.) However, in the absence of a tangible employment action, an employer can defend by proving that:

• the employer exercised reasonable care to prevent and correct promptly any sexual harassment; and
• the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

This affirmative defense, often referred to as the “Ellerth/Farragher affirmative defense,” has been applied by the EEOC and the lower courts to harassment on account of other protected groups, for example, racial, ethnic and religious harassment.

While the lower courts have agreed that the affirmative defense applies to harassment other than sex, they were less than consistent in their conclusion as to whether constructive discharge constitutes a tangible employment action. For example, the Second Circuit held that constructive discharge does not constitute a tangible employment action, so that the affirmative defense may apply. Caridad v. Metro-North Commuter R.R. 191 F.3d 283 (2d Cir. 1999). The Third Circuit disagreed, holding that constructive discharge does constitute a tangible employment action, so that the affirmative defense does not apply. Suders v. Easton, 325 F.3d 432 (3d Cir. 2003)

The First Circuit rejected both absolute approaches, instead holding that the affirmative defense would apply, unless the basis for the constructive discharge claim was “an official supervisory act,” in which case the affirmative defense would not apply. Reed v. MBNA Marketing Systems, Inc., 333 F.3d 27 (1st Cir. 2003)

The Supreme Court Ruling

In order to resolve the split among the circuits, the United States Supreme Court heard the employer's appeal of the Third Circuit's decision. The Court rejected the analysis of the Third Circuit and endorsed generally the analysis of the First Circuit.

As in Faragher and Ellerth, the Supreme Court focused in Suders on whether there is a tangible employment action. Specifically, the Supreme Court held that absent a tangible employment action, the Ellerth/Faragher affirmative defense is available in a constructive discharge claim to an employer whose supervisors are charged with harassment. However, if a supervisor's “official act” is what “precipitates” the constructive discharge, then the affirmative defense does not apply.

In determining the availability of the affirmative defense, the Supreme Court has commanded lower courts to determine whether the “last straw” was an “official act of the enterprise.” If the employee's resignation was not prompted by his or her demotion, denial of a promotion, reassignment with significantly different responsibilities, a significant reduction in benefits or other significant change in employment status, the employer can defend on the ground that the employee did not give it the opportunity to solve the problem before the employee quit.

Five Recommendations

The Suders decision increases the value to employers of prevention and correction (and conversely raises the stakes for their absence). Here are five recommendations to increase the likelihood that the defense will be available to you as an employer in harassment claims in general and in constructive discharge claims in particular (where the damages may be greater).

1. Policy. Develop and distribute to all employees a policy that prohibits unlawful harassment. The policy should cover not only sexual, but also racial, ethnic and all other forms of unlawful harassment (based on any protected status). The policy should provide practical examples as opposed to legal definitions and speak in terms of appropriateness as opposed to illegality. It also should be clear that it covers not only written and oral but also electronic and internet communications. The policy should be clear that it covers not only conduct in the workplace but also conduct outside of but ancillary to work (for example, business trips).

2. Complaint Procedure. There should be a complaint procedure by which employees can bring their concerns to management. Like the policy, the complaint procedure should not be limited to sexual but also should cover all kinds of unlawful harassment. It should be clear it covers conduct engaged in not only by employees but also by non-employees with whom employees interact. Employees should be given multiple options in terms of to whom to report their complaints. It is recommended that there be operational, geographic and EEO diversity in the points of access.

3. Supervisory Training. Supervisors should receive training on their obligations to help ensure a workplace free from harassment. This training must do more than tell them what they should not do. It should also focus on their affirmative responsibilities. Theses responsibilities include: reporting all complaints of harassment to a designated function or officer; responding proactively to inappropriate behavior, even in the absence of a complaint; remedying inappropriate behavior through discipline, up to and including discharge; and refraining from retaliation if an employee makes a complaint or serves as a witness.

4. Employee Education. Employees should receive education as to their rights and responsibilities. They have the right to a workplace free of objectionable conduct, communications etc. They also have the responsibility to speak up if they are uncomfortable. The education should discuss inappropriate behaviors to be avoided. The education also should discuss alternative forms of dispute resolution: direct confrontation as well as use of the complaint procedure. While employees can be encouraged to let someone know if they are making them uncomfortable, it needs to be made clear to them that this is not a requirement and that they can always use the complaint procedure instead.

5. Investigatory Guidelines. If a complaint is filed, an employer almost always will have to investigate. If the employer waits until the first complaint is filed to develop guidelines, it is not likely that the investigation will be prompt and /or complete. Employers need to develop guidelines proactively that address, among other issues: who will investigate; standard interview questions; who will resolve complaints; how will the data be documented and preserved; corrective action; and how will the employer ensure non-retaliation (regardless of whether the complaint has merit.)

An employee who had never before complained about harassment quits and then files a sexual harassment constructive discharge claim with the EEOC. Can the employer prevail on the ground that the employee failed to take advantage of the employer's internal complaint procedure?

What the Courts Say

On June 14, 2004, in Pennsylvania State Police v. Suders, the Supreme Court answered, “it depends” on what precipitated the employee's quitting. Before discussing the specifics of the Suders decision, some legal background is necessary.

In 1998, in Faragher v. City of Boca Raton , 118 S.Ct. 2257 (1998) and Burlington Industries, Inc. v. Ellerth, 118 S.Ct. 2275 (1998), the Supreme Court held that an employer is strictly liable for sexual harassment engaged in by a supervisor which involves a tangible employment action (for example, discharge, demotion or denial of promotion.) However, in the absence of a tangible employment action, an employer can defend by proving that:

• the employer exercised reasonable care to prevent and correct promptly any sexual harassment; and
• the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

This affirmative defense, often referred to as the “Ellerth/Farragher affirmative defense,” has been applied by the EEOC and the lower courts to harassment on account of other protected groups, for example, racial, ethnic and religious harassment.

While the lower courts have agreed that the affirmative defense applies to harassment other than sex, they were less than consistent in their conclusion as to whether constructive discharge constitutes a tangible employment action. For example, the Second Circuit held that constructive discharge does not constitute a tangible employment action, so that the affirmative defense may apply. Caridad v. Metro-North Commuter R.R. 191 F.3d 283 (2d Cir. 1999). The Third Circuit disagreed, holding that constructive discharge does constitute a tangible employment action, so that the affirmative defense does not apply. Suders v. Easton , 325 F.3d 432 (3d Cir. 2003)

The First Circuit rejected both absolute approaches, instead holding that the affirmative defense would apply, unless the basis for the constructive discharge claim was “an official supervisory act,” in which case the affirmative defense would not apply. Reed v. MBNA Marketing Systems, Inc. , 333 F.3d 27 (1st Cir. 2003)

The Supreme Court Ruling

In order to resolve the split among the circuits, the United States Supreme Court heard the employer's appeal of the Third Circuit's decision. The Court rejected the analysis of the Third Circuit and endorsed generally the analysis of the First Circuit.

As in Faragher and Ellerth, the Supreme Court focused in Suders on whether there is a tangible employment action. Specifically, the Supreme Court held that absent a tangible employment action, the Ellerth/Faragher affirmative defense is available in a constructive discharge claim to an employer whose supervisors are charged with harassment. However, if a supervisor's “official act” is what “precipitates” the constructive discharge, then the affirmative defense does not apply.

In determining the availability of the affirmative defense, the Supreme Court has commanded lower courts to determine whether the “last straw” was an “official act of the enterprise.” If the employee's resignation was not prompted by his or her demotion, denial of a promotion, reassignment with significantly different responsibilities, a significant reduction in benefits or other significant change in employment status, the employer can defend on the ground that the employee did not give it the opportunity to solve the problem before the employee quit.

Five Recommendations

The Suders decision increases the value to employers of prevention and correction (and conversely raises the stakes for their absence). Here are five recommendations to increase the likelihood that the defense will be available to you as an employer in harassment claims in general and in constructive discharge claims in particular (where the damages may be greater).

1. Policy. Develop and distribute to all employees a policy that prohibits unlawful harassment. The policy should cover not only sexual, but also racial, ethnic and all other forms of unlawful harassment (based on any protected status). The policy should provide practical examples as opposed to legal definitions and speak in terms of appropriateness as opposed to illegality. It also should be clear that it covers not only written and oral but also electronic and internet communications. The policy should be clear that it covers not only conduct in the workplace but also conduct outside of but ancillary to work (for example, business trips).

2. Complaint Procedure. There should be a complaint procedure by which employees can bring their concerns to management. Like the policy, the complaint procedure should not be limited to sexual but also should cover all kinds of unlawful harassment. It should be clear it covers conduct engaged in not only by employees but also by non-employees with whom employees interact. Employees should be given multiple options in terms of to whom to report their complaints. It is recommended that there be operational, geographic and EEO diversity in the points of access.

3. Supervisory Training. Supervisors should receive training on their obligations to help ensure a workplace free from harassment. This training must do more than tell them what they should not do. It should also focus on their affirmative responsibilities. Theses responsibilities include: reporting all complaints of harassment to a designated function or officer; responding proactively to inappropriate behavior, even in the absence of a complaint; remedying inappropriate behavior through discipline, up to and including discharge; and refraining from retaliation if an employee makes a complaint or serves as a witness.

4. Employee Education. Employees should receive education as to their rights and responsibilities. They have the right to a workplace free of objectionable conduct, communications etc. They also have the responsibility to speak up if they are uncomfortable. The education should discuss inappropriate behaviors to be avoided. The education also should discuss alternative forms of dispute resolution: direct confrontation as well as use of the complaint procedure. While employees can be encouraged to let someone know if they are making them uncomfortable, it needs to be made clear to them that this is not a requirement and that they can always use the complaint procedure instead.

5. Investigatory Guidelines. If a complaint is filed, an employer almost always will have to investigate. If the employer waits until the first complaint is filed to develop guidelines, it is not likely that the investigation will be prompt and /or complete. Employers need to develop guidelines proactively that address, among other issues: who will investigate; standard interview questions; who will resolve complaints; how will the data be documented and preserved; corrective action; and how will the employer ensure non-retaliation (regardless of whether the complaint has merit.)