United States: Are You The Boss Of Me? The Supreme Court Speaks Out On Supervisor Liability

Published in Business NH Magazine

Statistics and anecdotal information continue to show that workplace discrimination and retaliation claims are on the rise. Verdicts are larger than ever as juries lose patience for companies unable to reign in management employees who engage in questionable conduct. Legal costs rise, and delays in the courts and administrative agencies cause discrimination claims to linger unresolved. Against this backdrop, the United States Supreme Court has issued new decisions in the area of employment law, this time giving a victory of sorts to employers.

In the case of Vance v. Ball State University issued on June 24, 2013 the Court put the brakes on the recent expansion of employee workplace rights by narrowly defining who will be a considered a "supervisor"  under the Civil Rights Act. The Court in the past several years has issued a number of cases expanding the ways in which employers might find themselves in legal trouble under anti-discrimination laws. These cases have primarily expanded the scope of persons protected by anti-retaliation provisions. The newly protected include third parties who have not alleged discrimination but have cooperated in investigations, individuals with whom the claiming party has a relationship such as a fiancé and people who have "informally" complained without putting allegations in writing. For the past several years retaliation claims have been the most prevalent among the almost 100,000 discrimination charges filed annually with the Equal Employment Opportunity Commission ("EEOC").

The Vance decision impacts the standard by which an employer's liability for the behavior of its employees will be measured. Under the Civil Rights Act, a company is strictly liable for the actions of a supervisor which result in a "tangible employment action." Such actions include hiring, firing, failing to promote, discipline, demotion or effecting significant changes in working conditions or benefits. Companies can also be held liable for harassment by a supervisor when a tangible employment action does not result if the supervisor has created a hostile work environment and the employer is unable to establish an affirmative defense. An employer establishes such a defense by showing 1) that it exercised reasonable care to prevent and promptly correct any harassing behavior or 2) that the plaintiff unreasonably failed to take advantage of any preventative or corrective opportunities provided by the company.

Where the alleged harasser is simply a coworker, however, the employer is liable only if it was negligent in controlling the employee's working conditions. If, for example, an employer failed to respond appropriately to a complaint of harassment by a co-worker, liability might result.

In a 5-4 decision authored by Justice Alito, the Court adopted a fairly conservative approach and held that an employer is liable for an employee's harassment "only when the employer has empowered that employee to take tangible employment actions against the victim." In doing so, the court rejected a broader definition of manager  promoted by the EEOC.

The matter originated with the claim by Maetta Vance, an African-American employee of Ball State University, alleging that she was the victim of discrimination by a fellow food service worker, Saundra Davis. The parties agreed that Davis did not have the power to hire, fire, demote, promote, transfer or discipline Vance although they largely disagreed about the extent of power Davis otherwise had over Vance. Under the definition adopted by the Court, Davis was not a supervisor, and the university was not liable for her actions.

The practical impact of this decision is favorable to employers for two reasons. First, it adopts a more limited definition of supervisor narrowing the scope of employees for whose conduct a company might be liable even if it is unaware of their specific actions. Second, it increases the opportunity for lawsuits to be decided early on by summary judgment (without a trial) since there is far less subjectivity in the determination.

This decision provides yet another opportunity for employers to receive the message about the importance of having strong policies in place and training supervisors and managers, and indeed all employees, in workplace laws and behavior. Employment attorneys regularly warn about the risks created by front line managers and supervisors who interact most regularly with non-management employees. Because of this decision and the fact that many cases will be measured by the negligence standard, however, it is also increasingly important to take the proactive risk management measures which can shield a company from liability. These include:

  • Clear policies against discrimination and retaliation regularly updated and disseminated to employees; handing out the employee manual at the time of hire is not sufficient; employees need to be reminded of their rights and obligations.
  • Regular anti-discrimination training for all employees including a live presentation and opportunity for questions and discussion; a training video on an employee's first day of work or a web-based tutorial is not a substitute for comprehensive professional training.
  • A clear and effective process for reporting and investigating complaints.
  • Evaluation of supervisors' management of and communication with  their direct reports; accountability at all levels of management.

A review of Court cases and EEOC activity over the past several years provides a useful reminder that the legal landscape continues to change. Companies will need to continue to work hard to meet the challenge of managing legal risk while continuing to run profitable businesses.

Charla Bizios Stevens is a shareholder atMcLane, Graf, Raulerson & Middleton, where she is a member of the Employment Law Practice Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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