The Supreme Court On Sexual Harrassment

The Supreme Court’s message: Put your pokey in writing, communicate it to every employee, and follow up on complaints.

The Supreme Court issued two sexual-harassment rulings last summer that should both worry and hearten employers.

On the downside, the court ruled that under Title VII of the Civil Rights Act of 1964, companies can be held liable for the illegal harassing behavior of supervisors even when top managers had no idea that it was going on and were not negligent in any way. This was the strongest statement yet of employers’ liability for supervisors’ actions.

“It resolves all doubt about supervisors being liable for sexual harassment, whether the company knows about it or not,” says Ernest Rossiello, a Chicago attorney who represented one victorious plaintiff, Kimberly Ellerth. “The Supreme Court has made it clear that companies will virtually automatically be liable.”

On the upside, the court clearly explained for the first time how employers can insulate themselves from many if not all harassment suits.

The court’s rulings in the two cases thus gave both sides something to celebrate.

The plaintiffs’ supporters hailed what they called victories for harassed employees. “The court’s decisions will literally benefit millions of Americans,” said Steven R. Shapiro, national legal director of the American Civil Liberties Union, which had filed a brief in support of the plaintiff’s position in one of the cases.

Attorneys on the business side said, though, that the new rules are tougher than before but are much easier to follow.

Under the two court decisions, “both the employer and the employee have clear responsibilities,” says Stephen A. Bokat, executive vice president of the National Chamber Litigation Center, an affiliate of the U.S. Chamber of Commerce. “The employer is responsible for setting guidelines, and the employee is responsible for following them.”

Both cases–Faragher vs. City of Boca Raton and Burlington Industries vs. Ellerth–involved sexual harassment by supervisors rather than co-workers. (For a summary of the two cases, see “The Cases Behind The Rules,” Page 17.) In combination, the two cases–both won by the plaintiffs–reached these conclusions:

* If a supervisor takes a “tangible employment action” against a sexually harassed employee–if, say, a male manager fires or demotes a female subordinate because she rebuffed his advances–the employer is always liable for damages. It doesn’t matter if the owners or top managers of the company had no knowledge of the supervisor’s actions. Neither does it matter if they tried to prevent such harassment.

“There is no escape,” says David A. Copus, an attorney who specializes in employment law in the Washington, D.C., office of Jones, Day, Reavis & Pogue. “The employer is dead meat.”

* If a supervisor’s harassment of an employee is “severe or pervasive” to the point that it creates a “hostile work environment,” the company can be liable for damages even when the supervisor didn’t take any “tangible employment action.” But the court instructed employers on how to avoid liability in hostile-work-environment cases.

A company can defend itself successfully if it can prove that it had an effective policy against harassment and that the employee alleging harrasment failed to take advantage of it. That’s called an “affirmative defense,” as opposed to a defense based on the plaintiff’s failing to prove his or her case. (For what’s involved in setting up a successful anti-harassment program, see “Protecting Employees–And Your Business,” Page 18.)

An affirmative defense requires companies not only to have a policy against sexual harassment but also to put it in writing, disseminate it, and enforce it. The court’s decisions “create powerful new incentives for employers to formalize programs” that in the past were often informal, says Ronald W. Taylor, an employment lawyer with the Baltimore office of Venable, Baftjer and Howard, LLP.

The Key Words

The harried small employer, with many other responsibilities, might be tempted to ask why it is so important to draw up a written policy on harassment rather than come down hard on such behavior if it shows up. In the case of the affirmative defense, the answer lies in these key words: “reasonable” and “unreasonable.”

The employer must have made reasonable efforts to prevent and correct harassment; the employee must have unreasonably failed to take advantage of opportunities to prevent or correct the harassment.

“If the employer merely has an informal [harassment] policy, he’s going to have to go through trial” to establish whether the company’s efforts were reasonable, warns William J. Kilberg, a labor attorney with the Washington office of Gibson, Dunn & Crutcher, LLP Conversely, a formal, written policy whose effectiveness can be demonstrated through affidavits can result in outright dismissal of a case.

The affirmative defense is “the one bone that the employer community received” from the Supreme Court’s rulings, says Harry A. Rissetto, an attorney with the Washington office of Morgan, Lewis & Bockius, LLP. Rissetto represented the city of Boca Raton, Fla., in its case.

Perhaps more importantly, the Supreme Court, by laying out the elements of an affirmative defense, has told employers how to prevent a “hostile work environment” from ever arising, says Rissetto. “That’s a lot better than having an affirmative defense,” he adds, “because if there’s no hostile environment, there’s no liability”

In other words, if you prepare really well for an affirmative defense, you may never have to mount one. “Companies with effective anti-harassment policies do not end up in court,” says Chicago attorney Rossiello.

Even when a strong anti-harassment policy can’t protect an employer from liability-for instance, when a supervisor takes a “tangible employment action” against a harassed employee-it may provide a shield against ruinous awards of punitive damages. If an employer has an effective system and the employee didn’t use it, that could help reduce the damages even when the employer is unquestionably liable.

The Need For Communication

The court’s rulings point clearly to communication between the company and its employees as key to creating a strong and effective sexual-harassment policy It’s up to the company to articulate a clear standard of conduct in the workplace, says Rissetto. The company can communicate its standard through orientation for new employees, for example, or through an employee handbook.

But communication cannot be a one-way street. The company must “create an environment where it is likely that an employee will complain to someone, as soon as possible, when inappropriate conduct occurs, says Rissetto. Because “in most situations hostile environments tend to accrete” through a succession of inappropriate acts, he says, employers need to encourage harassed employees to complain early

Likewise, an employee who is the target of harassment now has less incentive to keep quiet until the harassment gets bad enough to reach the hostile-environment level-that is, bad enough to justify a lawsuit. Says employment-law attorney Taylor: “Employees have an affirmative obligation to come forward and complain to minimize their own damages.”

Says Rissetto, “I think the court believes that if the employer does it right, the employee will have the courage to complain.”

A Question Of Reasonableness

Reasonableness-the legal concept at the heart of the affirmative defense-also comes into play when evaluating the validity of employee harassment complaints. The courts have held that an alleged harassment has to be offensive not just in the eyes of the person who claims to have been offended but also in the eyes of a hypothetical reasonable person.

The problem is, “we don’t know what the [reasonableness] standard is,” says labor lawyer Kilberg. “We know that it is a ‘reasonable’ person’s standard, but we don’t know if that person is a reasonable woman or a reasonable woman in a particular industry.”

You won’t be safe just because coarse language and sexual horseplay have always been common in your workplace. One problem, Kilberg says, is that relying on such a company culture “doesn’t deal with the employee who starts work tomorrow.”

Beyond that, says Andrea S. Christensen, an attorney with Kaye, Scholer, Fierman, Hays & Handler, LLP, in New York City, “it’s very risky to assume that everybody in the workplace shares in the same sense of humor. A lot of times, these environments that have a lot of sexual horseplay are environments that have had single-sex employees in the past, both male and female. There’s a lot more freedom to engage in this kind of horseplay under those circumstances.”

Now, though, she says, “it’s not too difficult to pass over the line between social by-play and what becomes offensive, illegal conduct.”

(That can happen even when everyone in a workplace is of the same gender. The Supreme Court held unanimously in another case, earlier in 1998, that same-gender sexual harassment is also barred by Title VII. What matters is whether the conduct at issue is both sexual in nature and unwelcome.)

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