Employment Law 101: Employer Liability for Sexual Harassment

Employer liability for sexual harassment has been a controversial issue in the courts. The controversy was heightened by the 1991 amendment to Title VII, which added compensatory and punitive damages as available remedies in cases of intentional discrimination.

The U.S. Supreme Court has ruled that an employer is always liable for a hostile work environment created by a supervisor when the discrimination takes the form of a tangible employment action—defined as a significant change in employment status. Usually, but not always, a tangible employment action results in economic injury because it relates to matters such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a significant change in benefits. The theory is that when a supervisor takes a tangible employment action with respect to a subordinate, he or she is exercising authority delegated by the employer company, and the company is automatically responsible for how that authority is exercised.

· Part 1: Deductibility of Wages and Benefits
· Part 2: Employer Liability for Sexual Harassment
· Part 3: Tax-Exempt Status for Nonprofits

In a hostile environment case involving no tangible job action, the employer is only presumed liable for a supervisor's harassment. The employer may have an affirmative defense against such a claim, and avoid liability, if the employer can show that it had and enforced a policy against sexual harassment and that the complaining employee unreasonably failed to take advantage of preventive or corrective opportunities that the employer provided.

To evoke this affirmative defense, the employer must have and enforce a policy against sexual harassment. It is not enough to simply adopt a written policy. Many courts have recognized that employers must educate their workers about the policy, such as by conducting periodic training for managers and rank-and-file employees. And employers must promptly and objectively investigate complaints of harassment and take appropriate action if the complaint is found to be justified.

Nonsupervisor Conduct

Workplace sexual misconduct is not limited to a supervisor's mistreatment of subordinates. The employer can also be liable for tolerating a hostile work environment created by an employee's fellow colleagues and even non-employees, such as customers, if the employer knows (or should know) about the offensive work environment but failed to take appropriate remedial action. In effect, the law requires employers to make reasonable efforts to provide a working environment free from hostile or offensive harassment; the law does not necessarily care who does the harassing.

Protective Policies

Employers have tried different techniques to protect themselves from claims. Some employers require that employees who are involved in an office romance, particularly if the romance is between a higher-level supervisor and a lower-level employee, sign a love contract setting out the ground rules for the relationship. The contract might have the parties acknowledge, for example, that the relationship is consensual and that it can be terminated by either party at any time. Love contracts seem extreme, however, and may expose the employer to liability for invasion of privacy.

While no list of do's and don'ts can completely protect employers from sexual harassment claims, the following suggestions should go a long way toward protecting an employer from liability:

• Establish a written nondiscrimination policy, including a specific policy against sexual (and all other forms of) harassment. The policy should define sexual harassment. It should be published in the employee handbook and posted conspicuously at the workplace. In the absence of a written policy, an employer has no chance of defending against a claim of hostile-environment sexual harassment by a supervisor against a subordinate.
• Include in the policy various means by which an employee can complain about sexual harassment. The complaint route should not be limited to the employee's immediate supervisor, since he or she may be the harasser.
• Consider installing an anonymous hotline or an interactive website for employees to report harassment and other types of workplace problems.
• Conduct regular training seminars on sexual harassment and require mandatory attendance.
• Keep careful records of who attended each training session and what material was presented.
• Plan in advance who will be in charge of investigating complaints of sexual harassment and how the investigation will be conducted. (Making those determinations after a complaint is received could result in delays and in the harassment policy being ruled unreasonable or ineffective.)
• On receipt of a complaint of sexual harassment, review your employment practices liability insurance policy and notify your insurance carrier of the complaint.
• If the complaint involves sexual assaults or other criminal conduct, suggest that the complaining party make a police report.
• Investigate all complaints of sexual harassment promptly, thoroughly and objectively. Consider hiring experienced employment counsel to conduct the investigation, or a company that specializes in such investigations.
• Conduct an interview with the complaining party in the investigation. Gather as much detail from him or her as possible about what happened, when and where it happened, and who else saw or knows about the harassment. Also, ask the complainant how he or she would like the matter to be resolved (without making any promises about what action will be taken).
• Treat as confidential all information collected during the investigation. However, do not promise confidentiality, since complete confidentiality is probably impossible. Be careful about prohibiting your workers from discussing the matter, since that may constitute an unfair labor practice.
• Make a contemporaneous, detailed written record of the investigation.
• If the investigation shows that the complaint is justified, take immediate and appropriate corrective action against the harasser. Inform the complaining party about the action taken and ask whether there is anything further he or she wishes to bring to the employer's attention.
• For serious, ongoing incidents, consider temporarily reassigning the alleged harasser or complaining party, or placing one or both of them on temporary leave with pay, to prevent additional incidents pending your investigation. (This step involves some risk, since the reassignment or leave could be construed as retaliation against the complainant or defamation of the alleged harasser.)
• If the investigation shows the complaint to be unfounded, inform the complaining party and the accused harasser and close the investigation.
• Do not take disciplinary action against the complainant unless it is clear that he or she intentionally lied about the matter. (Retaliation against an employee for exercising rights protected by law, such as the right to complain about harassment, itself constitutes illegal discrimination).

Sometimes an employee may complain about harassment, but then ask managers not to take any action, perhaps out of fear that the workplace environment will be poisoned by an investigation. While it may be tempting to honor this no-action request, once managers are notified of harassment, they have no choice but to address it appropriately.

Charles H. Fleischer, Esq., is admitted to practice law in Maryland and the District of Columbia and to the Bar of the United States Supreme Court and is a member of the law firm Oppenheimer, Fleischer, and Quiggle, P.C., of Bethesda, Maryland. He is also a member of the Montgomery County and Maryland State Bar Associations, the Barristers (inactive), and the Montgomery County Inns of Court (emeritus).

Please visit the SHRMStore to order a copy of The SHRM Essential Guide to Employment Law: A Handbook for HR Professionals, Managers, Businesses, and Organizations by Charles H. Fleischer, Esq.