Recent Developments in Employer Liability for Sexual Harassment
In the December 1997 issue of The Florida Bar Journal, N. James Turner discussed employer liability for sexual harassment in an article, “The Perils of (Reporting and) Not Reporting Sexual Harassment.”1 In this short period of time, the doctrine of sexual harassment has further evolved, necessitating a further discussion of sexual harassment liability in the workplace. During its most recent term, the U.S. Supreme Court addressed and attempted to clarify employer liability for sexual harassment claims, specifically discussing harassment perpetrated by supervisory employees.2 On June 26, 1998, in the companion cases of Burlington Industries, Inc. v. Ellerth, 1998 U.S. LEXIS 4217 (June 26, 1998), and Faragher v. City of Boca Raton, 1998 LEXIS 4216 (June 26, 1998), the Court held that under Title VII of the Civil Rights Act of 1964, “[a]n employer is subject to liability for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee.”3
In an earlier decision, Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986), the Court first held that employers could be held liable for hostile environment harassment committed by supervisory employees. However, the Meritor Court did not articulate any definitive rules to guide lower courts in resolving this question of employer liability. Instead, the Court simply issued a cryptic directive to the lower courts—that lower courts should be guided in their determinations by the common law of agency as set forth in the Restatement of Agency.4 Consequently, in the wake of Meritor, the courts were left to create their own esoteric, and often differing, interpretations of how and when agency principles should be applied in hostile environment cases under Title VII. The predictable result was a patchwork of disparate approaches and conflicting decisions among the circuits. Accordingly, the Court granted certiorari in Ellerth and Faragher in order “to address the divergence” among the courts.5
Sexual Harassment Theories Under Title VII
Sexual harassment claims arising in the workplace have their genesis in Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§2000e et seq. Title VII provides, in part, “it shall be an unlawful employment practice for an employer. . . to fail or refuse to hire or to discharge any individual or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s race, color, religion, sex, or national origin.”6
Equal Employment Opportunity Commission (EEOC) Guidelines and judicial decisions interpreting Title VII have, in turn, recognized two distinct species of claims for sexual harassment. One species has been labeled as “quid pro quo” sexual harassment; the other, as “hostile environment” sexual harassment.7 These two terms—which do not appear in the statutory text of Title VII—first appeared in academic literature, were later noted by the Supreme Court in Meritor, and eventually found their way into decisions of the Courts of Appeals.8
Quid Pro Quo Sexual Harassment
Quid pro quo sexual harassment occurs when 1) an employee is subjected to unwelcome sexual harassment in the form of sexual advances or requests for sexual favors, and 2) submission to the unwelcome advances is an express or implied condition to receiving job benefits or of continued employment. However, in order to establish employer liability for quid pro quo sexual harassment, the employee must establish a third element: the employee’s refusal to submit to a supervisor’s sexual demands results in a tangible job detriment. Examples of “tangible job detriment” include a refusal to hire, dismissal, denial of a raise or promotion, demotion, withholding or withdrawal of benefits, docking of pay, and undesirable reassignment or transfer resulting in a significant change in an employee’s duties.9 Under the quid pro quo theory, an employer is held strictly liable “for the conduct of the supervisory employees having plenary authority over hiring, advancement, dismissal and discipline.. . . ”10
Hostile Work Environment Sexual Harassment
The other species of actionable harassment under Title VII—hostile environment harassment—is conceptually different from quid pro quo and is governed by different rules. The main distinguishing feature between the two kinds of sexual harassment is that under the hostile environment theory, the employee need not show a tangible job detriment in order to hold the employer liable under Title VII.
The substantive standards for hostile environment claims were set forth by the Court in Meritor and later reaffirmed in Harris v. Forklift Systems, Inc., 510 U.S. 17, 21 (1993). Under these decisions, sexual harassment is actionable if it is sufficiently “severe or pervasive” to alter the terms and conditions of the plaintiff’s employment. A hostile or abusive work environment is created when a reasonable person would find it hostile or abusive and the victim also subjectively perceives it as such. Unlike quid pro quo harassment, the discriminatory alteration in the terms and conditions of plaintiff’s employment is “constructive” as opposed to “explicit,” and the employee must prove the offending conduct was “severe or pervasive.”11 The sporadic use of abusive language, gender-related jokes, and occasional teasing are not deemed to be severe or pervasive, but rather “ordinary tribulations of the workplace.”12 Moreover, to be considered pervasive, incidents of environmental harassment must be more than episodic; rather, they must be sufficiently continuous and concentrated.13 Title VII does not prohibit genuine but innocuous differences in the ways men and women continually interact with members of the same or opposite sex, and simple teasing, off-hand comments and isolated incidents, unless extremely serious, will not amount to discriminatory changes in the terms and conditions of employment.14 Rather, the Court has made it abundantly clear that Title VII should not be made the functional equivalent of a “general civility code,” and conduct must be extreme before it will be deemed sufficiently severe as to give rise to an actionable hostile work environment claim.15
The Ellerth and Faragher Decisions
Both Ellerth and Faragher involved, in the Court’s view, hostile environment sexual harassment claims in which the alleged harassment was committed by a supervisory employee. However, in a broader sense, the Court used these decisions as vehicles to clarify virtually all the principles pertaining to employer liability in sexual harassment cases. This is evidenced by the substantial dicta concerning employer liability in quid pro quo and hostile environment claims for harassment perpetrated by either supervisory or lower level employees.
The Facts of Ellerth
Plaintiff, Kimberly Ellerth, a former salesperson, alleged that she was forced to resign because Ted Slowik, a vice president of sales and marketing in her division, continuously harassed her. Slowik served as vice president in one of Burlington’s eight divisions, and was considered a mid-level manager who was not responsible for decision- or policy-making. Slowik was not Ellerth’s immediate supervisor, as Ellerth answered to an individual in Chicago who, in turn, answered to Slowik in New York.
Throughout Ellerth’s tenure at Burlington, Slowik made sexual remarks and engaged in other sexual behavior toward Ellerth. In a promotion interview, Slowik expressed reservations about Ellerth’s promotion chances because she was not “loose” enough, and then reached over and rubbed her knee. When Ellerth received the promotion, Slowik said that the factory men would like “women with pretty butts and legs.” When Ellerth called Slowik for permission to insert a customer’s logo into a fabric sample, Slowik responded, “I don’t have time for that right now—unless you want to tell me what you are wearing.”
Ellerth resigned after a different supervisor cautioned her about the importance of promptly returning telephone calls to customers. Her initial letter of resignation did not refer to the alleged sexual harassment; however, three weeks later, Ellerth sent a letter explaining that she quit because of Slowik’s behavior. During her tenure at Burlington, Ellerth did not inform anyone in authority (including her immediate supervisor) about Slowik’s conduct, despite knowing Burlington had a policy against sexual harassment.
Ellerth filed suit, alleging discrimination in violation of Title VII and constructive discharge. The district court granted Burlington summary judgment, which the Seventh Circuit, en banc, reversed, in eight separate opinions with no controlling rationale.
The Supreme Court Decision in Ellerth
The Supreme Court reversed, holding that an employee who refused a supervisor’s sexual advances, yet suffered no tangible job detriment, may nevertheless recover against the employer without showing the employer is negligent or otherwise at fault, subject to an affirmative defense. The Supreme Court began by assuming with the “important proposition” that a trier of fact could find in Slowik’s remarks numerous threats to retaliate against Ellerth if she denied him sexual liberties. The Court then recognized the threats were not carried out or fulfilled. Because Ellerth’s claim involved only unfulfilled threats, the Court felt the claim was not one of quid pro quo harassment, but instead was a hostile work environment claim requiring a showing of severe or pervasive conduct.
The Court then turned to what it believed was the logical starting point for its inquiry—the Restatement (Second) of Agency. Section 219 (1) of the Restatement, the Court noted, “sets out a central principle of agency law: ‘[a] master is subject to liability for the torts of his servants committed while acting in the scope of their employment.’”16 The Court observed that the Restatement defines conduct, including an intentional tort, to be within the scope of employment when “actuated, at least in part, by a purpose to serve the [employer],” even if it is forbidden by the employer. However, a supervisor acting out of gender-based animus or a desire to fulfill sexual urges is not actuated, even in part, by a purpose to serve the employer. The harassing supervisor, (as was with the case with Slowik) often has personal motives which are unrelated, and even antithetical, to the objectives of the employer.17 Accordingly, the Court concluded that for Title VII purposes, “[t]he general rule is that sexual harassment by a supervisor is not conduct within the scope of employment.”18
Next, the Court turned to §219(2) of the Restatement, observing that the “scope of employment principle does not define the only basis for employer liability under agency principles,” and that agency principles may impose liability on employers when employees are aided by the existence of the agency relationship in committing tortious conduct.19 At first blush, one might believe this means that because an individual is an agent of the employer, proximity and regular contact with employees is facilitated, even inevitable, and that such contact and proximity may afford a captive pool of potential victims. However, the Court declined to adopt this interpretation because “[w]ere this to satisfy the aided in the agency relation standard, an employer would be subject to vicarious liability not only for all supervisor harassment, but also for co-worker harassment. . . . ”20 Subsequently, the Ellerth Court found that “[w]hatever the exact contours of the aided in the agency relation standard, its requirements will always be met when a supervisor takes a tangible employment action against a subordinate. ”21
Following this dicta, the Court focused on the issue of “[w]hether the agency relation aids in commission of supervisor harassment which does not culminate in a tangible employment action. . . . ”22 In Ellerth, Slowik’s conduct, which included making threats of tangible job detriment against Ellerth, was not of the kind which would be perpetrated by a nonsupervisory co-employee. According to the Court, when a supervisor claims he or she can make an employee’s job difficult, they are applying the very type of leverage and power which their position gives them vis-à-vis lower employees and clearly, such supervisors are aided in the commission of the harassment by virtue of the agency relationship with the employer who has invested the supervisor with such power. Hence, the Ellerth Court held, “[a]n 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 employees.”23
However, at the same time, the Court was mindful that Congress’ primary objective under Title VII was to prevent and deter discrimination in the workplace, and only secondarily to provide a remedy to aggrieved employees. In seeking to harmonize this primary goal with its conclusion that an employer can be subject to vicarious liability, the Court articulated an affirmative defense that employers may assert in hostile environment litigation:
When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages, subject to proof by a preponderance of the evidence. The defense 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.. . . No affirmative defense is available, however, when the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment.24
Therefore, the Court apparently struck a compromise, following Congress’ directive to determine employer liability under agency principles, and concurrently providing an affirmative defense for employers who take a decidedly pro-active approach to preventing harassment in the workplace.
The Facts of Faragher
Plaintiff, Beth Ann Faragher, a former lifeguard for the City at the Marine Safety Section of Boca Raton, sued the city and two lifeguard supervisors, Bill Terry and David Silverman, alleging she was forced to resign because the supervisors created a sexually hostile atmosphere at work. The supervisors repeatedly subjected plaintiff and other female lifeguards to “uninvited and offensive touching,” made lewd remarks, and spoke to women in offensive terms. For example, Terry allegedly told Faragher he would never promote a woman to the rank of lieutenant, and Silverman remarked, “Date me or clean the toilets for a year.” However, Faragher suffered no adverse, tangible employment action.
There was a clear chain of command at the Marine Safety Section—lifeguards reported to lieutenants and captains, and the lieutenants and captains reported to Terry, who possessed authority to supervise all aspects of the lifeguards’ work assignments, to engage in counseling, to deliver oral reprimands, and to make a record of any discipline. Silverman and another training captain, Robert Gordon, were responsible for making the lifeguards’ daily assignments, and for supervising their work and fitness training.
Faragher did not complain to higher management about Terry or Silverman. She did tell Gordon, her friend, of Terry and Silverman’s behavior, but she did not regard these informal discussions as a complaint to a supervisor. In 1986, the city announced an anti-harassment policy in a memorandum addressed to all employees. However, in May 1990, the city revised its anti-harassment policy and reissued a statement of the new policy. Although the city may have actually circulated memos and statements regarding the new policy to some employees, the city completely failed to disseminate and circulate its policy among the employees of the Marine Safety Section. Therefore, Terry, Silverman, Gordon, and many other lifeguards were unaware of the revised policy.
Two months before Faragher resigned, Nancy Ewanchew, a former lifeguard, wrote the city’s personnel director and complained that Terry and Silverman harassed her and the other female lifeguards. Following an investigation, the city determined Terry and Silverman had behaved improperly, and both received reprimands.
Faragher sued the city, Terry, and Silverman under Title VII. Following a bench trial, the district court concluded the supervisors’ conduct was sufficiently serious to alter the conditions of Faragher’s employment and to constitute an abusive work environment. The district court held the city liable for the harassment because the harassment was pervasive enough to support an inference of “knowledge or constructive knowledge” on the part of the city. However, the 11th Circuit, sitting en banc, reversed, holding that Terry and Silverman were not acting within the scope of their employment when they engaged in the harassing conduct, their agency relationship with the city did not facilitate the harassment, constructive knowledge of the harassment could not be imputed to the city, and the city could not be held liable for negligence in failing to prevent the harassment.
The Faragher Decision
The Supreme Court reversed, holding that, on the facts of Faragher, the failure of the city to disseminate the policy precluded the use of the affirmative defense. The Court determined the conduct of Terry and Silverman was severe and pervasive, and created a hostile work environment. As it did in Ellerth, the Court then embarked upon a comprehensive review of the various agency theories under which employers can be found vicariously liable for harassment committed by their supervisory personnel.
The Court first rejected the notion that Terry and Silverman were acting within the scope of their employment, pointing to ample authority in appellate court decisions that harassment by supervisors is conduct outside the scope of their employment. As in Ellerth, the Supreme Court’s holding that the city was liable was based upon §19(2)(d) of the Restatement (Second) of Agency, in that the supervisors’ conduct was facilitated by the existence of the agency relationship.
Finally, the Court recognized the tension between its holding in Meritor that an employer is not “automatically” liable for harassment by a supervisor who creates a hostile environment, and its current position that a supervisor’s misconduct aided by supervisory authority subjects the employer to vicarious liability. To ameliorate this tension, the Court reaffirmed the same two-prong affirmative defense previously described in Ellerth.25
Employer Liability After Ellerth and Faragher
In reading these two decisions, there is an overriding sense the Supreme Court wanted to set the record straight, regarding all pertinent theories of employer liability in Title VII sexual harassment cases. While the Court may have ultimately added more confusion than it eliminated to the concept of employer liability for sexual harassment, some general propositions can be gleaned from these two decisions.
First, it is clear that in quid pro quo harassment, the employer will be held strictly liable regardless of whether it knows or should know of the harassment. However, there must be a tangible job detriment or there is no liability for quid pro quo harassment. It is evident, following Ellerth, that unfulfilled threats of an adverse employment action will not be sufficient to establish liability for quid pro quo harassment. However, negligence on the part of the employer is not a prerequisite to liability and the affirmative defense is unavailable when an adverse employment action occurs.
Second, an employer will be vicariously liable when a legally sufficient hostile work environment claim has been established based upon supervisory conduct, irrespective of negligence, but will be allowed to assert the affirmative defense recognized in Ellerth and Faragher.
Third, with regard to hostile environment harassment perpetrated by co-employees who do not occupy a supervisory position, the employer will be liable only if it knew or should have known of the harassment and failed to take reasonably prompt and appropriate action to stop the harassment.
Fourth, in rare cases, the harassment may be motivated, at least in part, by a purpose to serve the employer, and thus the employee may be deemed to be acting within the scope of employment. For example, the employer may desire to have fewer female employees and an employee’s harassment against the female employees may assist in effectuating that goal, resulting in vicarious liability.
Conclusion and Recommendations
While Ellerth and Faragher may signify an expansion of employer liability in hostile environment cases, they also may have the corresponding effect of an overall diminution of hostile environment sexual harassment in the workplace. It is noteworthy, as well, that the affirmative defense fashioned by the Court in Ellerth and Faragher is aimed at having victims take some responsibility to help themselves, given that the Court has superimposed the classic doctrine of avoidable consequences into the arena of hostile work environment litigation. The employee must act with reasonable care to take advantage of the employer’s safeguards and “otherwise” prevent harm that could have been avoided. What the “otherwise” means is hard to pinpoint at this juncture, but, as case law evolves, it may mean that the victimized employee must take steps to limit exposure to the offending supervisor to the extent feasible—certainly during nonwork hours and outside the workplace.26
On the other hand, the affirmative defense recognized in Faragher and Ellerth will encourage employers to take prompt and reasonable steps to prevent and curb harassment and to provide effective grievance machinery for employees victimized by harassment. Therefore, Title VII’s primary objective of “prevention” will be served. The teachings of Ellerth and Faragher are that courts and juries will not look favorably upon employers who fail to take a decidedly pro-active approach against harassment in the workplace. As such, the following suggestions may help employers and their attorneys avoid liability for harassment:
• Develop a comprehensive anti-harassment policy which prohibits all forms of harassment, including same-sex harassment.
• Conspicuously disseminate and notify employees of the harassment policy in the form of letters, postings in the workplace, employee handbooks, training sessions, seminars, and meetings.
• Provide harassment training as part of new employee and new supervisor orientation.
• Provide harassment training specifically designed for supervisors, and offer the training at least on an annual basis.
• Develop a policy for reviewing supervisory actions which culminate in a tangible job detriment, and require that before any tangible adverse employment action is taken, it be presented to upper management for careful review.
• Conduct comprehensive background checks to avoid hiring (or promoting) supervisors who may commit harassment.27
• Employers should consider suspending employees pending discharge prior to taking a “tangible job detriment” in situations which may involve harassment, and paying the employee for the time off if not terminated.28
• Employers could seek indemnity or some other form of agreement from supervisors, outlining the supervisor’s promise not to commit harassment and protecting employers if the agreement is violated.29
1 See N. James Turner, The Perils of (Reporting and) Not Reporting Sexual Harassment, 71 Fla. B.J. 28
2 Since 1964, the U.S. Supreme Court has only issued two decisions addressing sexual harassment in the workplace. However, it is remarkable that during the 1997–98 term, the Court issued four decisions addressing the doctrine of sexual harassment.
3 Ellerth, 1998 U.S. LEXIS 4217 at *41; Faragher, 1998 U.S. LEXIS 4216 at *59.
4 Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 72 (1986).
5 Faragher, 1998 LEXIS 4216 at *22.
6 4 2 U.S.C. §2000e–2(a)(1) (1998) (emphasis added).
7 See Meritor, 477 U.S. at 65.
8 Ellerth, 1998 U.S. LEXIS 4217 at *20-21. It should be noted that while the Ellerth Court stated that the distinction between quid pro quo and hostile environment is not germane to the inquiry of employer liability, it may have created a misleading impression. The distinction, although largely one of semantics, will remain intact, perhaps even leading to greater confusion among courts and practitioners. The reason is that quid pro quo harassment, by definition, still culminates in a tangible job detriment, thereby subjecting the employer to strict liability. On the other hand, with hostile environment harassment, the employer is not strictly liable based on the availability of the affirmative defense outlined in Ellerth and Faragher and discussed infra.
9 See Ellerth, 1998 U.S. LEXIS 4217 at *35 . In Ellerth, the Court made it clear that the employee must actually suffer the tangible job detriment in order to have an actionable quid pro quo harassment claim; unfulfilled threats will not support the claim. If a claim involves only unfulfilled threats, as was the case in Ellerth, it should, the Court noted, be categorized as a hostile environment claim.
10 Highlander v. KFC Nat’l Management Co., 805 F.2d 644, 648 (6th Cir. 1998).
11 Harris, 510 U.S. at 21.
12 Faragher, 1998 LEXIS 4216 at *26 (internal citations omitted); see also Oncale v. Sundowner Offshore Services, Inc., 118 S. Ct. 998 (1998).
13 Faragher, 1998 LEXIS 4216 at *24.
14 Oncale, 118 S. Ct. at 998.
16 Ellerth, 1998 U.S. LEXIS 4217 at *26 (quoting Restatement (Second) of Agency §219(1)).
17 Ellerth, 1998 U.S. LEXIS 4217 at *29.
20 Ellerth, 1998 U.S. LEXIS 4217 at *33.
21 Ellerth, 1998 U.S. LEXIS 4217 at * 37–38.
22 Ellerth, 1998 U.S. LEXIS 4217 at *38.
23 Ellerth, 1998 U.S. LEXIS 4217 at *41.
24 Ellerth, 1998 U.S. LEXIS 4217 at *41–42; see also Faragher, 1998 U.S. LEXIS 4216 at *59–60.
25 Faragher, 1998 U.S. LEXIS 4216 at *59–60.
26 For example, in Ellerth, the victimized employee said she felt compelled to accept Slowik’s invitation to meet him in the hotel lounge. This may not, on remand, be found a “reasonable” attempt by Ellerth to “otherwise” prevent harm.
27 In doing so, employers should be careful to comply with the recent amendments to the Fair Credit Reporting Act.
28 As a caveat, for salaried employees under the Fair Labor Standards Act, disciplinary suspensions should be with pay or for an entire work week. Further, there is a respectable argument that suspension with pay nonetheless constitutes a tangible job detriment, based on an employee’s loss of dignity and status. See Faragher, 1998 U.S. 4216 at *22.
29 This option may not be viable for all employers in light of the current difficulty of retaining quality supervisors. Furthermore, while such an agreement may or may not be enforceable, it could provide relevant evidence of the employer’s “reasonableness” when establishing the affirmative defense outline in Ellerth and Faragher.
Jason L. Gunter is an associate in the Tampa office of Alley and Alley/Ford & Harrison LLP, specializing in labor and employment defense. He focuses his practice primarily on Title VII litigation, including defense of sexual harassment claims, as well as public sector employment issues. Mr. Gunter holds a B.P.S. in public administration from Barry University and J.D., magna cum laude, from Nova Southeastern University.
Tammie L. Rattray is an associate in the Tampa office of Alley and Alley/Ford & Harrison LLP, specializing in labor and employment defense. She holds a B.S. in business administration, with honors, and J.D., with honors, from the University of Florida. Ms. Rattray focuses her practice primarily on Title VII litigation, including the defense of sexual harassment claims.
This column is submitted on behalf of the Labor and Employment Law Section, Kevin Hyde, chair, and F. Damon Kitchen, editor.