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Delivering on Diversity's Promise

​LAST YEAR, the owner of an Alabama fast food franchise paid out more than $1 million to 19 female employees to settle claims that the company created a hostile work environment by allowing sexual harassment to go unchecked. In the case, the plaintiffs claimed that male employees made sexual remarks and groped female workers for years. In 2007, another company paid African-American workers almost $400,000 to settle a hostile work environment case in which white employees scrawled offensive graffiti and displayed nooses, swastikas, and KKK symbols in work areas. These are just two examples of what it can cost a company that allows a hostile workplace environment to persist.

Under federal law, employees are protected from harassment based on race, sex, religion, or national origin. They are also protected from retaliation taken by employers after a harassment claim is filed. If the workplace harassment is so pervasive and egregious that it alters the conditions of employment and affects an employee’s well-being, the employer could be liable for creating a hostile work environment. However, by establishing a comprehensive program to recognize, prevent, and address any workplace harassment, companies can reduce the threat of litigation.

The key to avoiding liability due to harassment or a hostile work environment is in the U.S. Supreme Court’s two 1998 landmark decisions in Faragher v. Boca Raton and Burlington Industries, Inc., v. Ellerth. These cases establish a uniform standard for employer liability for sexual harassment committed by supervisory personnel and set out ways that companies can defend themselves if faced with a harassment lawsuit. The decisions address sexual harassment, a common basis for a hostile work environment claim, but employers can also apply the concepts set out in the cases to other types of workplace harassment.

The Rulings
In Faragher and Ellerth, the Court ruled that employers may be held liable for the acts of supervisors that constitute sexual harassment, irrespective of the employer’s policies and practices and even if the  employer lacks actual notice of the supervisor’s conduct. When the supervisor’s sexual harassment results in an adverse tangible employment action against the victimized employee—a termination, denial of a raise or promotion, or an undesirable reassignment—the company’s liability is absolute.

When the supervisor’s sexual harassment does not result in an adverse employment action, such as when a supervisor makes an unwelcome sexual advance or threatens to deny job benefits unless the employee agrees to sexual favors, the company may still be liable but the claim is subject to an affirmative defense.

An affirmative defense has two components: The employer must prove that it exercised reasonable care to prevent and promptly correct any sexual harassment, and the employer must also prove that the plaintiff unreasonably failed to take advantage of the company’s personnel procedures to report harassment and give the company a chance to prevent or correct it.

An employer has the ultimate burden of proof to show sufficient facts to invoke the affirmative defense recognized in Faragher and Ellerth.

The key to a successful affirmative defense is a comprehensive harassment prevention and response policy modeled on the U.S. Equal Employment Opportunity Commission’s Guidelines on Employer Liability for Sexual Harassment. The guidelines specify that the personnel policy should define what constitutes harassment, and it should prohibit harassment as a matter of company policy.

The policy should make clear that the company has a zero-tolerance policy for any type of harassment and that support for this stance comes directly from senior management. Moreover, the policy must explicitly prohibit any retaliation against the person filing the complaint.

The policy and procedures must address complaint reporting, investigations, remediation, and employee education.

Reporting. The policy must identify how complaints can be filed. It is in the company’s interest to have multiple internal corporate mechanisms for the reporting of complaints. The reporting procedures should make clear that employees can submit complaints to someone other than their immediate supervisor.

Ideally, the company will implement an open-door reporting policy whereby it is acceptable to report a harassment complaint to any corporate supervisor, manager, or designated human resource representative. This is critical in cases where an employee’s direct supervisor is the harasser. In such cases, the company must make sure that the employee cannot make a convincing case that he or she could not report the harassment and, thus, could not take advantage of the company’s complaint procedures.

The internal complaint procedure should include a requirement that an employee provide a written complaint to start the process. This written complaint will aid with the investigation because it locks employees into a factual scenario that cannot be changed at a later date. It also establishes clear evidence of the complaint should litigation occur farther down the road.

Investigations. To comply with the standard set forth in the Faragher and Ellerth rulings, the policy should provide that the company will promptly respond to a harassment complaint in an appropriate fashion. That means having and enforcing good protocols for thoroughly investigating all claims of harassment in a timely fashion.

Remedial measures. After an investigation in which the complaint is substantiated, an employer must be ready to institute prompt remedial measures to prevent recurrence of the harassment. It is also important that the remedial measures be well documented.

Employee Education
An affirmative defense recognized by the Supreme Court is further solidified by proof of dissemination of personnel policies to the work force. An employer must be able to show that there is no question among employees as to their rights and responsibilities under the policies and no confusion about what to do when a harassment problem arises.

The first opportunity to ensure that employees know about and understand the policy is immediately after hiring. Thus, the company’s harassment policies should be thoroughly addressed during employee new-hire orientation.

Given that the affirmative defense is dependent upon the work force’s awareness of personnel policies, proof of dissemination is also critical.

This proof could be established either electronically, with a digital signature through an Intranet system, or by written documentation, with an acknowledgement form for all new employees to fill out when hired or for existing staff to sign after dissemination of any personnel policy or amendments.

Specifically with regard to orientation, the manager who provides the training should be required to complete a checklist to show what information was covered and to include documentation signed by each new hire acknowledging that the policy was promulgated and explained.

Ongoing communication. Just addressing the harassment policy at orientation is not sufficient. The company must reiterate its zero-tolerance policy, its management support, and its reporting and response procedures by various means throughout the year.

As a part of this process, corporate management should communicate the zero-tolerance policy to all employees on an annual basis. Doing so demonstrates the commitment and accountability of management to the priorities of equal employment opportunity and diversity. The policy statement should be signed by the CEO or the president.

A similar notice should be posted on a bulletin board in each facility of the company. The same information should be conveyed through newsletters or a corporate Intranet. The information disseminated should remind employees of the complaint procedures and of their responsibility for contacting the company with a complaint.

Management. Managers need to be given special training so that they understand their role in helping to ensure that harassment is not tolerated. If it does occur, managers have a role to play in ensuring that it is reported and investigated. Management needs to understand that it has a responsibility to act immediately and affirmatively to combat the problem.

Managers also must be trained to detect early signs of behavioral problems and respond to harassment if they observe it or hear any indications that it is occurring or has occurred.

And, of course, managers must understand that the policy applies to them as well and that any infractions are cause for dismissal. Employers are absolutely liable for quid pro quo sexual harassment committed by supervisors. Thus, preventive training, including discussion of what is or is not appropriate workplace behavior, is critical.

As with front-line employees, supervisory and management training must be well documented. Documentation of the training should be signed by each supervisor and placed in his or her personnel file.

Managers’ performance appraisals should include a line item about their work in enforcing and abiding by the company’s harassment policy. This should factor into their overall performance rating.

Plaintiffs’ attorneys will attack an employer by contending that their clients failed to reasonably pursue a complaint of sexual harassment because of a fear of reprisal. As a result, employers should consider setting up an anonymous hotline for employees to report harassment. (After receiving a tip, the company should investigate the complaint and obtain statements from employees.)

When coupled with a strong protocol for investigating complaints and a zero tolerance program, this anonymous reporting option will give a company a solid basis for combating the fear-of-reprisal legal argument.

Exit Interviews
The affirmative defense also has implications for an employee who resigns or is terminated, because often a disgruntled former employee asserts a bogus charge of discrimination or harassment months after his or her departure in hopes of extorting a quick settlement. To avoid that or to help prepare a defense against that eventuality, companies should always conduct employee exit interviews.

The exit interview process provides an employer a final opportunity to flush out a complaint of sexual harassment from the employee who resigns or is terminated. If a charge is pending or the company anticipates a lawsuit, the interview allows an employer to assemble the facts necessary to prove the affirmative defense.

During the exit interview, a company has the opportunity to lock the departing employee into any factual complaint regarding his or her treatment on the job. If the documented exit interview shows the absence of a complaint, that will be a considerable aid in defending against any subsequent charges that may be levied by the former employee. If adverse information surfaces during the exit interview, the company can immediately investigate the problem and try to resolve it before litigation ensues.

The implementation of a comprehensive harassment policy will ideally enable an employer to identify and resolve problem situations and resolve them before employees feel the need to visit an attorney. Where an employee does initiate litigation, policies and procedures form a factual basis for the affirmative defense recognized in Faragher and Ellerth and improve the odds that the company will be successful in defending itself against any charges.

Gerald L. Maatman, Jr., is a partner at Seyfarth Shaw LLP in its Chicago and New York City offices