Greenberg Traurig Alert

Sexual Harassment Liability: New Rules Affect Employers

July 1998
By Ronald M. Rosengarten and Jennifer Demberg, Greenberg Traurig, Miami Office

  View or download the PDF version of this Alert here.

On June 26, 1998, the United States Supreme Court issued two important decisions in the area of sexual harassment, Burlington Industries v. Ellerth and Faragher v. City of Boca Raton. These cases make it important for all employers to understand the new rules under which they will be deemed liable for the actions of a supervisor accused of sexual harassment, and how they can take preventative measures to avoid liability.

In Burlington Industries v. Ellerth, Kimberly Ellerth, a salesperson, claimed she was subjected to constant sexual harassment by a mid-level manager who made offensive remarks and gestures, as well as comments that could be construed as threats to retaliate against her if she denied some sexual liberties. Ellerth did not complain about the manager’s conduct to anyone in authority, even though she knew that the Company did have a policy against sexual harassment. She quit after her immediate supervisor cautioned her about her job performance. Three weeks later, she sent a letter explaining that she quit because of the manager’s behavior.

In Faragher v. City of Boca Raton, Beth Ann Faragher, a lifeguard, claimed that her supervisor created a sexually hostile atmosphere, which included uninvited and offensive touching, lewd remarks, and speaking of women in offensive terms. Faragher complained to another supervisor about this conduct, but that information was not passed on to the City. Although the City had a policy against sexual harassment, it was not distributed to beach employees.

Through these two cases, the Court established the following principles:

(1) If both of the following conditions exist, an employer will be subject to "vicarious" liability (that is, indirect liability) for the actions of a supervisor: (i) the supervisor has created a hostile environment for an employee (that is, sexual harassment that is sufficiently severe and/or pervasive), and (ii) the supervisor has taken some tangible employment action against the employee. Tangible actions include hiring, firing, failure to promote, reassignment with significantly different responsibilities, or a decision causing significant change in benefits.

(2) If a supervisor has created a legally hostile environment, but has not taken a tangible employment action against an employee, then the employer has the chance to avoid liability if the employer shows that it meets both of the following tests: (i) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and (ii) the employee unreasonably failed to take advantage of procedures or corrective opportunities provided by the employer or to avoid harm otherwise.

In effect, these Supreme Court cases have created a greater risk of employer liability once a supervisor has caused a hostile work environment. It does not matter whether the employer "knew or should have known" what the supervisor was doing; the Supreme Court essentially has imposed liability on the employer in cases where some tangible employment action was taken by the supervisor. Even where no tangible action was taken, an employer still will bear the burden of proving its defenses in order to escape liability once the hostile work environment has been established.

The new Supreme Court rulings reinforce that the best way for employers to avoid liability for a hostile work environment is to make sure well in advance that a sexual harassment policy is in place, that it is communicated effectively to all employees, and that there is an accessible and workable procedure for employees to register complaints. Furthermore, as soon as employees complain of misconduct, employers must take quick steps to investigate and stop any misconduct. Employees trained as to their rights with respect to sexual harassment are more likely to register a complaint before any adverse employment action is taken. Greenberg Traurig will continue to help its clients develop sound policies against sexual harassment and procedures to deal with complaints, and we remain ready to advise employers on how to respond to specific complaints of sexual harassment once they are received.