Legal View: Court limits employers' vicarious liability for harassment

Recently, the United States Supreme Court defined which “supervisors” can expose an employer to vicarious liability for a hostile work environment created by that supervisor.

In Vance v. Ball State University, 570 U.S. __, 2013 U.S. LEXIS 4703 (June 24, 2013), the court adopted a narrow definition of “supervisor,” thereby limiting which employees’ harassment can be imputed to the employer in Title VII hostile work environment cases.

The Vance decision sets against the backdrop of the Supreme Court’s prior decisions in Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Indus., Inc. v. Ellerth, 525 U.S. 742 (1998). While only a negligent employer may be held liable for unlawful harassment by a co-worker of the plaintiff, Faragher and Ellerth recognized that an employer may be vicariously liable for an actionable hostile work environment created by a supervisor, Faragher, 524 U.S. at 807-808; Ellerth, 525 U.S. at 765.

An employer will be strictly liable where the supervisor’s harassment “culminates in a tangible employment action, such as a discharge, demotion, or undesirable reassignment,” Id. However, where no tangible employment action was taken by the harassing supervisor, the employer may avoid vicarious liability by establishing an affirmative defense, now commonly known as the “Faragher/Ellerth defense,” Id.

The employer must show: (1) “that the employer exercised reasonable care to prevent and correct promptly” any harassing behavior; and (2) “that the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise,” Id.

Plainly said, Faragher and Ellerth made it very important for the parties to establish whether the harasser was a “supervisor” or a “co-worker.” Indeed, in cases where no tangible employment action resulted from the harassment, the status of the harasser is often a game-changer for the parties.

If a “co-worker” was the harasser, it is the plaintiff’s burden to prove that the employer was negligent in controlling the working conditions, and thus should bear responsibility for the plaintiff’s damages, Vance, 2013 U.S. LEXIS 4703, at *5, 11, 44. Conversely, where a “supervisor” creates the hostile work environment, the burden of proof falls on the defendant employer to prove the Faragher/Ellerth affirmative defense.

Faragher and Ellerth did not, however, define “supervisor” for purposes of Title VII vicarious liability. Vance answers that question.

Resolving a split amongst the Circuit Courts, Vance holds that “an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a ‘significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits,’” 2013 U.S. LEXIS 4703, at *17-18.

Significantly, the court rejected the “more open-ended” standard previously applied by the Second Circuit and the Fourth Circuit, “which ties supervisor status to the ability to exercise significant direction over another’s daily work,” Id. at *17. In other words, employer liability may not be imputed based solely upon the harassing conduct of a low-level supervisor who cannot take tangible employment actions against the employee.

Plaintiff Maetta Vance, an African-American woman, worked as a catering assistant for Ball State University’s dining services, Id. at *6. Vance alleged that her employer, the university, was liable for the racially hostile work environment created by her “supervisor,” Saundra Davis, Id. at *6-7, 51.

However, there was no dispute “that Davis did not have the power to hire, fire, demote, promote, transfer or discipline Vance,” Id. at *7. Applying its holding to these facts, the court affirmed the judgment of the Seventh Circuit and held that BSU could not be vicariously liable “[b]ecause there is no evidence that BSU empowered Davis to take any tangible employment actions against Vance,” Id. at *53.

The court explained that its adoption of the more limited standard, previously applied by the First, Seventh, and Eighth circuits, was an effort to devise an “easily workable” test that “can be applied without undue difficulty at both the summary judgment stage and at trial,” Id. at *19. The court rejected the EEOC’s definition of a “supervisor,” which had been adopted and relied upon by the Second and Fourth Circuits, as a “study in ambiguity,” Id. at *37.

The EEOC’s Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors states that an employee is a “supervisor” if: (1) “the individual has authority to undertake or recommend tangible employment decisions affecting the employee”; or (2) “the individual has authority to direct the employee’s daily work activities,” Mack v. Otis Elevator Co., 326 F.3d 116, 127 (2d Cir. 2003) (internal quotation marks omitted).

The court observed that adopting the EEOC’s definition of “supervisor” — specifically, the second prong of the EEOC’s test — would “present daunting problems for the lower federal courts and for juries,” who would be faced with determining the degree of “authority” wielded by a supervisor, Id. at *39-40. The determination of the degree of authority, the court noted, would be based on “ill-defined” factors, such as “the number (and perhaps importance) of the tasks in question,” Id. at *37-39.

The court’s definition of “supervisor,” on the other hand, makes it more likely that the question of supervisor status “can ... be resolved as a matter of law before trial,” Id. at *40.

While the “tangible employment action” standard adopted by the court is certainly more narrow than the test applied by the Second and Fourth circuits, the dicta of the court suggests the standard should be applied flexibly. For instance, the court recognized that its definition of “supervisor” could include an employee whose determinations on tangible employment actions are subject to approval by higher management, Id. at *28-29 n. 8.

Further, the court noted that an employee could be considered a “supervisor” under its test if the employee had the ability to reassign job duties, and that reassignment “had economic consequences” for the subordinate, “such as foreclosing ... eligibility for promotion,” Id. at *30 n. 9.

The joint dissent, authored by Justice Ginsburg, advocated adopting the EEOC’s Guidance, suggesting that “the authority to direct an employee’s daily activities establishes supervisory status under Title VII,” Id. at *54-55. Justice Ginsburg characterized the majority’s opinion as “blind to the realities of the workplace,” and opined that the court’s decision “relieves scores of employers of responsibility for the behavior of the supervisors they employ,” Id. at *74.

To illustrate its point, the dissent discussed the Second Circuit’s seminal case on this issue, Mack v. Otis Elevator Co., 326 F.3d 116 (2d Cir. 2003). In Mack, the plaintiff, an African-American woman, worked as an elevator mechanic’s helper, Mack, 326 F.3d at 120. The plaintiff filed suit claiming that her employer was vicariously liable for the hostile work environment created by James Connolly, who was the “mechanic in charge” at her worksite, Id.

Connolly had “the right to assign and schedule work, direct the work force, assure the quality and efficiency of the assignment, and to enforce the safety practices and procedures,” Id. The dissent in Vance noted that although Connolly had the ability to direct the day-to-day activities of his subordinates, he “lacked the authority to take tangible employment actions against mechanic’s helpers,” and thus, under the majority’s definition of “supervisor,” any claim for vicarious liability against Mack’s employer would have been precluded, Vance, 2013 U.S. LEXIS 4703, at *65-66.

While its application by the lower courts remains to be seen, the Vance decision is certainly a “win” for Second Circuit employers. However, as noted by the dissent, “Congress has, in the recent past, intervened to correct th[e] court’s wayward interpretations of Title VII,” Id. at *86. Whether Congress will act to address the employer-friendly standard pronounced in Vance also remains to be seen.

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Lea Nacca is an associate at The Wolford Law Firm LLP, where she practices in the area of commercial and employment litigation.