SEXUAL HARASSMENT IN THE WORKPLACE: EMPLOYER LIABILITY FOR THE SINS OF THE WICKED

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1 SEXUAL HARASSMENT IN THE WORKPLACE: EMPLOYER LIABILITY FOR THE SINS OF THE WICKED by Peter M. Panken, Esq. Lauri F. Rasnick, Esq. Parker Chapin Flattau & Klimpl, LLP New York, New York Johnna G. Torsone, Esq. and Christine L. Wilson, Esq. 1992, 1993, 1994, 1996, 1998 Peter M. Panken All Rights Reserved SEXUAL HARASSMENT IN THE WORKPLACE: EMPLOYER LIABILITY FOR THE SINS OF THE WICKED Recently, it seems that all we hear about is sexual harassment in the workplace. Even in the capital of this nation, charges are made concerning inappropriate behavior in the workplace. In

2 its last term, the Supreme Court opined in two much needed decisions that employers can protect themselves from sex harassment suits under certain circumstances. This article will review the regulations and case law concerning sexual harassment and suggest some steps each employer should take to avoid the liability and the cost of litigation, especially in light of the Supreme Court cases. I. THE EEOC GUIDELINES Title VII of the Civil Rights Act of 1964 prohibits employment discrimination because of sex. The law banning sexual harassment is based on a judicial and EEOC gloss on Title VII. A. What Is Prohibited Sexual Harassment? The EEOC defines illegal sexual harassment to include: (a) (b) (c) "unwelcome sexual advances," "requests for sexual favors," and "other verbal or physical conduct of a sexual nature." To violate Title VII, the activities must either be a quid pro quo for employment benefits or create an unreasonable hostile work environment in that: 1. "submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment" [quid pro quo]; 2. "submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual" [quid pro quo]; 3. "such conduct has the purpose or effect of unreasonably interfering with an individual's work performance" [hostile environment]; 4. such conduct has the purpose or effect of unreasonably "creating an intimidating, hostile, or offensive working environment" [hostile environment]. The EEOC guidelines recognize two separate kinds of "hostile environment" -- one having to do with conduct being "intimidating" or "offensive," and the other having to do with interference with work performance. 29 C.F.R (a)(3). But many courts have required that the offensive conduct be likely to interfere with an employee's work performance to sustain a

3 hostile environment finding. From an employer's standpoint, however, offensive sexual conduct in the workplace is unrelated to work, likely to inhibit productivity, and involves the risk of costly litigation. No employer should permit such offensive conduct. B. The Employer's Responsibility 1. Responsibility for the Acts of Agents and Supervisory Employees EEOC regulations state that employers (as well as employment agencies, joint apprenticeship committees and labor organizations) are responsible for the acts of their agents and supervisory employees with respect to sexual harassment regardless of whether the specific acts complained of were authorized. 29 C.F.R (c). The EEOC goes even further, saying that the employer may be responsible even if the acts complained of were forbidden by the employer and "regardless of whether the employer knew or should have known" of the occurrence of the acts. However, regulations also state that the EEOC "will examine the circumstances of the particular employment relationship and the job functions performed by the individual in determining whether an individual acts in either a supervisory or agency capacity." 29 C.F.R (c). As discussed below, there has been significant litigation over this issue. Generally, however, the existence of employer liability depends on the kind of harassment involved (quid pro quo or hostile environment); whether a tangible employment action is taken; and whether the harasser is a supervisor or co-worker. In particular, in the hostile environment case, the actions taken by management to prevent the harassment before and after the allegations have been made are often crucial in avoiding liability. C. The Employer's Obligations to Take Affirmative Action In its guidelines, the EEOC specifically calls for prevention and requests that all employers take the following steps to prevent sexual harassment from occurring by: 1. "Affirmatively raising the subject"; 2. "Expressing strong disapproval"; 3. "Developing appropriate sanctions"; 4. "Informing employees of their right to raise and how to raise the issue of harassment under Title VII"; and 5. "Developing methods to sensitize all concerned."

4 No employer should avoid these steps. They cost little or nothing and can avoid costly litigation. An employer never benefits from sexual harassment in the workplace. II. HOSTILE WORK ENVIRONMENT HARASSMENT: THE SUPREME COURT DEFINES HARASSMENT A. Meritor Sav. Bank, FSB v. Vinson Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57 (1986) was the first sexual harassment case to be heard by the Supreme Court. The Court found that a plaintiff may establish a Title VII violation by proving that sexual harassment created a hostile or abusive work environment. However, a sharply divided Supreme Court left unresolved the circumstances under which an employer will be held liable for sexual harassment by one of its supervisors. The Court agreed in dicta that in the quid pro quo case, an employer generally would be strictly liable for the supervisor's action, but in the hostile environment context, the Court was less than definitive, holding that the employer's liability must be based on common law principles of agency. 1. Background to the Decision a. The Sordid Allegations Michelle Vinson worked for Meritor Savings Bank for four years, during which time she was supervised by and often promoted by branch manager Sidney Taylor. In September 1978, Vinson notified Taylor that she was taking sick leave for an indefinite period and in November 1978, Taylor discharged Vinson for excessive use of that leave. Subsequently, Vinson brought an action against both Taylor and the bank claiming that during her four years of employment she had been subjected to sexual harassment by Taylor. Vinson testified at trial that, shortly after she was hired, Taylor made sexual advances, to which she eventually agreed because she feared losing her job. Vinson claimed that she had sexual intercourse with Taylor some 40 or 50 times at the bank during and after working hours and in several locations -- from a basement storage room to the bank vault. She also claimed that Taylor fondled her in front of other employees, followed her into the women's restroom when she went there alone, exposed himself to her, and even forcibly raped her on several occasions. Taylor and the bank denied Vinson's allegations and contended that Vinson had made her accusations in response to Taylor's business decision to terminate her. The bank also asserted that any sexual harassment by Taylor was unknown to the bank and that he engaged in such conduct without the bank's consent or approval. The bank asserted that it could not be held liable for Taylor's acts if Vinson did not alert them to the problem since Taylor's alleged acts were unauthorized and not part of his business duties, and Vinson had not used the grievance procedure to complain.

5 b. The District Court's Decision The District Court dismissed Vinson's claim on the grounds that any sexual relationship between Vinson and Taylor was voluntary and had nothing to do with her continued employment at the bank or her advancement or promotions. As to the bank's liability, the District Court noted that the bank had an express policy against discrimination and that neither Vinson nor any other employee had ever lodged a complaint about sexual harassment by Taylor. The District Court concluded that the bank was, therefore, without notice of the problem and could not be held liable for the alleged actions of Taylor. Vinson v. Taylor, 22 Empl. Prac. Dec. CCH 30,708 (D.D.C. 1980), reversed, 753 F.2d 141 (D.D.C.), cert. granted sub nom, PSFS Sav. Bank, FSB v. Vinson, 474 U.S. 815 (1985), aff'd sub nom, Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57 (1986). c. The Circuit Court's Decision The Court of Appeals for the District of Columbia Circuit reversed, reaffirming prior decisions which held that a violation of Title VII may be predicated on either of two types of sexual harassment: quid pro quo harassment that involves conditioning of tangible employment benefits on sexual favors, and "hostile environment" harassment that, while not affecting economic benefits, creates a hostile or offensive work environment. The Court of Appeals remanded to the District Court the question of whether Vinson had established that the sexual harassment by Taylor had created an offensive working environment, a question which the Court of Appeals believed the District Court had not answered despite its finding that Vinson had entered into any sexual relationship voluntarily. As to the bank's liability, the Court of Appeals held that an employer is absolutely liable for sexual harassment practiced by supervisory personnel, even if the employer did not know, or could not have known, about the misconduct. Vinson v. Taylor, 753 F.2d 141, 150 (D.C. Cir. 1985), aff'd sub nom, Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57 (1986). 2 The Supreme Court's Decision The Supreme Court unanimously affirmed the Court of Appeals' conclusion that a plaintiff may establish a Title VII violation by proving that sexual harassment created a hostile or abusive work environment. However, a sharply divided Supreme Court left unresolved the circumstances under which an employer will be held liable for sexual harassment by one of its supervisors. The Supreme Court followed the EEOC's guidelines in concluding that unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature could violate Title VII even if not directly linked to a grant or denial of a tangible job benefit. In reaching this decision, the Court relied on prior cases concerning workplace harassment based on race. It accepted the principle that

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