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HR Magazine: Fidicuiary Fitness - Additional Material

Jathan W. Janove  9/1/2003

HR Magazine, September 2003
Vol. 48, No. 9 

The Faragher/Ellerth Decision Tree

Lower courts put new growth on five-year-old branches.

While this year’s tenth anniversary of the Family and Medical Leave Act was greeted with quite a bit of fanfare, another employment law milestone slipped by during the summer without much notice. June 26 marked the fifth—or “wood”—anniversary of the Supreme Court’s decisions in the cases of Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth.

As HR professionals know, Faragher/Ellerth established a new legal standard for determining whether employers would be held liable for sexual harassment perpetrated by their supervisors. The Supreme Court set forth two separate branches of analysis depending on whether the supervisor’s conduct involved a “tangible” or “intangible” employment action.

If a supervisor committed a tangible employment action, the employer would be strictly liable and have no defense. The court did not define “tangible,” but gave examples of such actions including discharge, demotion, undesirable reassignment, failure to promote or a significant change in benefits.

For situations in which there was no tangible employment action but a supervisor created a sexually hostile work environment, the Supreme Court decreed that the employer would be liable unless it proved a two-part affirmative defense—the so-called “reasonable/unreasonable test.” According to that rubric, the employer must prove both that it took reasonable steps to prevent workplace harassment and correct problems and that the plaintiff unreasonably failed to use the employer’s preventative measures to allow the employer to correct the problem.

Since the high court’s 1998 ruling, lower federal courts have been busy defining and applying the elements of Faragher/Ellerth. Typically, they do not all see eye to eye. So, while not necessarily a cause for employer celebration, this wood anniversary seems like a good time to study the growth rings in the timber of the court’s rulings.

The following discussion focuses on various elements of the Faragher/ Ellerth tests, summarizes how lower federal courts have interpreted and applied the standards and offers responsive suggestions to help employers avoid liability for workplace harassment by their supervisors.

Who’s a Supervisor?

The first knot on the Faragher/Ellerth decision tree involves the question of who is a supervisor. In answering that question, some courts have focused on the individual’s formal authority: Does the person have the power to hire, fire, demote, promote, transfer or discipline?

Other courts have criticized this approach, arguing that it fails to take into account that persons who lack such formal power, nevertheless, can wield extraordinary influence over other employees.

A recent illustration of this debate can be found in Mack v. Otis Elevator Co., decided in April by the 2nd U.S. Circuit Court of Appeals. In that case, the court held that a lead mechanic with ability to make and oversee daily work assignments was a supervisor even though he lacked the power to hire, fire or change an employee’s job status. The court noted that the employees’ supervisor was seldom at the work site, leaving the lead worker as the only one with any authority. (For a more detailed discussion of this ruling, see the July 2003 Court Report column.)

Establish clear lines of authority. Effective oral and written communications spelling out who is in charge and to what degree can nip who’s-a-supervisor cases in the bud. Job descriptions, orientation and on-the-job training should define the limits of a lead worker’s authority and the scope of his or her role. If a lead person’s authority is limited to directing work assignments while another person performs traditional supervisory functions, that should be made clear. It will help prevent abuse of authority and reduce the risk of employer liability for the lead person’s actions.

However, even these steps are no guarantee that a lead or senior co-worker won’t be deemed a supervisor—especially when employees work at locations or hours different from the actual supervisor. Thus, in addition to management spelling out the lines of authority, supervisors need to supervise. They should visit work sites or areas regularly and inquire frequently regarding the status of their employees’ work as well as working conditions, issues and concerns.

What’s a ‘Tangible Employment Action?’

With respect to the question of what constitutes a tangible employment action, the current hot button issue is “constructive discharge.” The doctrine of constructive discharge applies to situations where harassment is so oppressive that remaining on the job while trying to correct the problem would be “intolerable” to the employee. In such cases, victimized employees can quit yet claim back pay as if they had been unlawfully fired.

Some courts have held that a constructive discharge is no different than a conven- tional one, making the employer strictly liable for the harassment. (A discussion of this issue can be found in the July 2003 Court Report column.) Other courts have held that the employer must actually make and execute the decision to discharge the employee for it to be held strictly liable.

Consider making an unconditional reinstatement offer. Making an unconditional offer of reinstatement to employees who quit and assert constructive discharge can be a useful tool in minimizing or even avoiding liability.

The Supreme Court recognized in Ford Motor Co. v. EEOC that offering discrimination plaintiffs their jobs back without asking them to waive their right to pursue claims could cut off back pay or front pay liability in Title VII cases if the individuals unreasonably refused the offer. In the Faragher/Ellerth context, an employer can use such an offer to counter or to minimize liability for a constructive discharge claim. If it comes to that, a reinstatement offer can help demonstrate the employer’s reasonable corrective efforts (especially when the employer did not know of the harassment) and show that the employee acted unreasonably in rejecting the offer.

Regardless of its potential impact on the legal question of employer liability, a reinstatement offer almost invariably lowers the temperature of the dispute and puts employer and employee on track to resolving the matter without major litigation.

Before making an unconditional offer of reinstatement, consider whether the employee claiming constructive discharge had serious performance, conduct or attendance problems at the time they quit. If so, this tool may not be appropriate or may need to be coupled with a message that the employee will need to correct any such problems after she returns to work.

Any such offer should be made in a letter informing employees that:

  • They can return to their former positions at the same level of compensation and with the same responsibilities as before.
  • They can still pursue their harassment or other claims against the employer.
  • The employer, without admitting harassment, will take measures to ensure a professional, respectful work environment.
  • The employer will neither engage in nor tolerate any retaliation.
  • The employer is willing to discuss any questions or concerns employees may have about returning to work under such circumstances.

Reasonable for Employer, Unreasonable for Employee?

Since Faragher/Ellerth, courts have been busy adjudicating the reasonable/unreasonable test. Although the case law does not line up uniformly, there appears to be a rough consensus regarding what constitutes reasonable preventative and corrective measures by employers and what constitutes an employee’s unreasonable failure to use them. As a result, several suggestions are in order.

Avoid conditional protection against retaliation. Some employers unwittingly have gotten into trouble by stating in their anti-harassment policies that they will not tolerate retaliation or adverse action against employees who bring internal harassment complaints in “good faith.”

The Equal Employment Opportunity Commission (EEOC) has taken the position that such provisions can amount to unlawful retaliation because they imply that disciplinary or other adverse action will be taken if the employer deems the complaint in “bad faith.” Also, plaintiffs might contend that such a provision “reasonably” deterred them from reporting harassment to the employer. Accordingly, an anti-retaliation provision should not contain any such limitations.

If an employee asserts an internal complaint that the employer can prove is false and in bad faith, any disciplinary action should be taken pursuant to other company policies such as those addressing honesty and integrity in the workplace.

Give employees lots of options. Courts have supported employer policies that provide alternative routes for reporting harassment problems and have rejected arguments that such policies are unclear because they give so many options.

In contrast, one court criticized an employer whose policy failed to include a reporting procedure for employees who worked shifts outside regular business hours, making it difficult for them to contact management or HR during their shifts.

Courts have approved of policy features such as allowing employees not only to bypass supervisors, but to avoid the chain of command entirely by going straight to HR. They also have looked favorably on policies that list names of contact persons as well as telephone or pager numbers, e-mail addresses, 800 numbers for multi-state employers, and other means for making reporting easy.

In Madray v. Publix Supermarkets, the 11th U.S. Circuit Court of Appeals noted that a provision in an open door policy helped an employer’s defense. The policy provided that if a problem was not resolved to an employee’s satisfaction, the employee should go to the next level of management. That plaintiffs did not do so reinforced a finding that they unreasonably failed to avail themselves of the employer’s preventive and corrective procedures.

Following these teachings, a good anti-harassment policy should give alternate routes for reporting problems and should make it as easy as possible for employees to contact someone in management or HR. Moreover, the policy should provide that if the employees are not satisfied with the initial response, they should report the problem to a designated person such as the vice president of HR, general counsel or president. Such a provision helps protect the employer against an initially mishandled complaint.

Don’t undertrain. Although there is no clear “safe harbor” for what constitutes adequate supervisor training, post-Faragher/Ellerth case law suggests a number of guidelines. Anyone who may be deemed a “supervisor” should have anti-harassment training within 90 days of hire or promotion and on an annual basis thereafter. One to two hours per year per supervisor is a good rule of thumb.

Make sure the trainer possesses proper qualifications. In Cadena v. Pacesetter Corp., the 10th U.S. Circuit Court of Appeals upheld a maximum award of punitive damages against the employer under Title VII. It cited as significant the answer given by the anti-harassment trainer to a deposition question asking whether it would be an act of sexual harassment if a male supervisor exposed his genitals to a subordinate female employee or grabbed her breasts. The trainer answered: “No, so long as he apologized.”

As this case illustrates, some people hold themselves out as qualified trainers, when they are not. Due diligence in investigating a trainer’s credentials and references is in order.

What sorts of training should be conducted for non-supervisory personnel? Regarding the “unreasonableness” prong of the Faragher/Ellerth defense, courts have repeatedly noted the employee’s knowledge of and familiarity with company policy in upholding employer defenses based on the employee’s unreasonable failure to follow it.

On the other hand, in Reed v. MBNA Marketing, the 1st U.S. Circuit Court of Appeals held that even though the company had reasonably promulgated anti-harassment policies and procedures, a trial had to be held on whether the employee unreasonably failed to avail herself of these measures.

The court noted that the plaintiff was 17 at the time and had been sexually harassed by a supervisor twice her age. The supervisor threatened her with discharge if she reported the act and claimed that his father was “really good friends” with the owner of the company. The court stated that the threat of retaliation coupled with the supervisor’s claim of family influence reasonably could have cowed her from reporting the problem.

Such case law suggests that, at a minimum, the employer explicitly should brief all non-supervisory employees on the company’s anti-harassment policy during orientation and require them to sign an acknowledgment.

In addition, offering annual training sessions to rank-and-file employees, while not required, is advisable. Besides covering unacceptable behavior, such training should emphasize that offensive sexual behavior should never be tolerated, that the employer will not tolerate retaliation and that employees should not fear reporting a problem and should never accept anyone’s counsel to remain silent.

Ditch EEOC guidelines. For the past umpteen years, employers have parroted in their policies the EEOC’s guidelines, which define sexual harassment as “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature … when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.”

However, post-Faragher/Ellerth case law and experience suggest a better approach—one that raises the bar higher than the legal standard and focuses instead on company values of respect and professionalism.

The question for employers should not be whether employees are “sexual harassers” but whether they have properly adhered to company policy regarding acceptable workplace behavior.

In a recent conversation, attorney Corbett Gordon of Fisher & Phillips in Portland, Ore., who has argued employment discrimination issues before the U.S. Supreme Court, and I agreed on the importance of a zero-tolerance standard for three reasons:

  • If you see a little improper behavior, there’s probably a lot.
  • You don’t want your supervisors sitting around musing, “Gee, it’s only one ‘Hey, baby.’ That’s not severe or pervasive, is it?”
  • If a company finds a violation of a policy that is calibrated to the same standard as the law, any documented violation of the policy is documentation of a legal violation. With a zero-tolerance policy, you don’t need to fire the offender at the first “Hey, baby,” but you can and should counsel the offender and drop a note in his or her file.

Deliver swift, effective remedial action. Faragher and Ellerth and their progeny teach employers not only to have good anti-harassment procedures in place and conduct training, they require swift and effective remedial action once the employer has knowledge of a problem. Based on cases where employers got into trouble, here are some lessons learned:

  • Don’t get caught up in forms. Employers have been deemed to have unreasonably delayed investigative and corrective actions where their policies called for filling out forms such as internal complaints or providing written statements and they waited for the documents even though they already had enough information to know a problem existed.
  • Thoroughness is important. When attempting to elicit the facts, particularly where the alleged harassment is disputed, go to great lengths to interview the complainant, the alleged harasser and anyone who may have knowledge of the situation. Review computer information such as e-mail messages and follow leads. In the courts’ view, thoroughness equates to reasonableness to a great extent.
  • Neither promise nor disclaim confidentiality. Employers have gotten into trouble when they made commitments to confidentiality that they could not maintain without compromising the investigation since some information had to be shared to determine the facts.

On the other hand, the employer should make clear in both the anti-harassment policy and during the investigative process that it understands the sensitivity of the information shared and will therefore maintain confidentiality to the extent it is practically able. Otherwise, the employer’s preventive/corrective measures may be deemed unreasonable or an employee’s failure to use them may be deemed reasonable due to a well-grounded fear of disclosure of sensitive information.

The Future of Faragher/Ellerth

What can we predict for Faragher and Ellerth’s 10th, or “tin,” anniversary?

First, the good news: There is no question that these decisions have increased employer understanding of the importance of preventive measures. They have contributed to the development of sound anti-harassment policies, procedures and training and to employers taking proactive steps to eliminate offensive workplace conduct.

Second, the bad news: While employers and courts have become less tolerant of sexual harassment, especially from supervisors, social conduct has become more blatantly sexual. The endless barrage of messages from television, movies, magazines and other media encouraging indulgence in sexual impulses means that “Sex in the City” will never be far from sex in the boardroom or sex in the break room.

Loosening social mores and tightening workplace liability act like tectonic plates and continue to cause upheaval as the plates collide. As a result, it’s a safe bet that Faragher and Ellerth won’t become dead letter law. Employers will need to continue to keep up-to-date on developments in the law of sexual harassment. As case law develops and society evolves, what constitutes the best preventive or corrective practices will no doubt change.

Benjamin Franklin’s ounce of prevention will need to be invested and reinvested. On the other hand, the payoff will continue to be avoidance of many pounds of cure.

This article is intended for general guidance only and not specific legal advice. For particular legal situations, employers should seek advice from qualified employment law counsel.

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