November 7, 2011

Responsibility of employers in cases of sexual harassment

Ellerth v Burlington Ind., CA7, 102 F.3d 848 

The law places a heavy burden of responsibility on employers in cases of sexual harassment. Even if the employer was unaware of the harassment and the harasser was breaking company rules in his or her behavior, the employer may still be judged liable.

The pertinent law can be confusing and is not well understood by many personnel directors and union leaders, even those with experience handling sexual harassment cases. However, courts consider the standard that they apply to be uncontroversial. Circuit Judge Diane Wood explained the law in her decision in the Ellerth case.

The Ellerth case concerned a male vice president of marketing who had a habit of staring conspicuously at a female employee's breasts and legs and made numerous sexual comments, including during her initial job interview. (He inquired whether she and her husband were planning to have a family -- an illegal question, to be sure -- and whether they were "practicing" at it.) In a hotel lounge during a business trip, he told her that she should "loosen up" and that "I could make your job very hard or very easy at Burlington."

Although such behavior continued for more than a year, the employee never complained to her direct supervisor or the human resources department as called for in the company's policy against sexual harassment. The question the court focused on was whether an employer is held liable for a supervisor's conduct.

The answer is sometimes.

The U.S. Supreme Court addressed the issue in its landmark 1986 decision in Meritor Savings Bank v Vinson, 477 U.S. 57, in which the justices declared that sexual harassment is a form of sex discrimination prohibited by Title VII. In that decision, the Supreme Court rejected the view that employers are "automatically" or "absolutely" liable for the actions of supervisory personnel. At the same time, the Court rejected the notion that a company that has a policy against harassment and a grievance procedure is necessarily insulated from liability, even if the employee fails to file a grievance.

Instead, the justices stated that courts should determine employers' liability by relying on the old legal concept of agency, which holds that a master is responsible for the actions of a servant if the servant was aided in the action by the existence of an "agency relation" to the master.
For instance, suppose there is evidence that a rental agent named Hurdelbrink discriminated when showing apartments to prospective tenants. The owner of the building, Balistrieri, argues that there is nothing to link the discriminatory acts to him. Is the owner still liable for Fair Housing Act violations? Yes, the Seventh Circuit ruled in U.S. v Balistrieri, CA7, 981 F2nd 916 (1992):

In any event, Hurdelbrink was acting as Balistrieri's agent. Her duties as agent were to show apartments and to do the other things--such as quoting rents and stating rental conditions--that go along with that job. Hurdelbrink was acting within the scope of her authority--either actual or apparent--when she committed her discriminatory acts. As we have previously held ... "a principal is liable for the wrongful acts of its agent."

In a nutshell, liability depends on whether a supervisor was "acting in the scope of (his or her) employment" in committing the acts of harassment.

If the employee was breaking a company rule in the behavior, that means they were not acting in the scope of their employment, right? Wrong. If the employee broke a rule -- or even committed a crime -- this does not shield the employer from liability. In a case involving a hotel vice president who actually raped and sodomized an employee during working hours, the Fourth Circuit found the corporate employer to be liable for the sexual harassment. The test, the court held, "is not whether the ... act itself is a transaction within the ordinary course of the business of the [employer], or within the scope of the [employee's] authority, but whether the service itself in which the ... act was done was within the ordinary course of such business or within the scope of such authority." Martin v Cavalier Hotel Corp., CA4, 48 F3rd 343 (1995), at 1351.

In the specific case of Ellerth and Burlington Industries, Judge Wood, a Clinton appointee, ruled that it is possible that the company is liable and that a jury trial should be permitted. Wood and other circuit judges overturned a summary judgment by a U.S. District Court dismissing the lawsuit.

"The district court erred in believing that the relevant conduct was the harassment itself and that the harassment somehow needed to serve the employer's purpose before "scope of employment" liability could result," Wood wrote.

The mere fact that the offenses occurred during working hours and in the context of a working relationship that benefited the employer is sufficient to establish the harasser was acting in the scope of his employment, Wood wrote. "(M)ost of his actions took place in the workplace, during working hours, and they were directed toward an employee over whom he had substantial authority. In some cases they occurred off-premises, but only in the context of business luncheons or work-related travel ... Nothing ever happened on entirely personal time or circumstances."

Indeed, the supervisor's innuendoes that there would be a quid pro quo for sexual favors were "directly related to his corporate position," Wood wrote.

Under agency law, Burlington's liability for the actions of its supervisor taken within the actual or apparent scope of his employment does not depend on whether someone else at the company knew or should have known that the supervisor was abusing the authority he had been given, Wood wrote. "The common law of agency places the responsibility on the employer to monitor the supervisory employees to whom it has entrusted special powers, to ensure that those powers are not misused."


Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
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