Employers in Delaware, Pennsylvania, New Jersey, and Virgin Islands, who are within the jurisdiction of the Third Circuit Court of Appeals, have the benefit of a new decision from that court providing guidance on a key issue in harassment law. The case, Huston v. Procter & Gamble Paper Products Corp., issued on June 8, is good news for employers and offers important precedent in a critical area of employment law.
Some context . . .
When an employee files a sexual or other harassment claim involving allegations of harassment by a co-worker, the employer often invokes what is known as the Ellerth-Faragher defense. To utilize this defense, the employer must show that it took reasonable steps to prevent harassment in the first place. This is normally accomplished by showing that the organization had an anti-harassment policy, which was communicated to the employees. (See my previous post for more information on what exactly constitutes an effective anti-harassment policy).
If the employer can meet this burden, then the employer must demonstrate that it took reasonable steps to correct and mitigate the harassment. Usually this means that the employee followed the steps outlined in the organization's anti-harassment by reporting the offensive conduct. Next, it's up to the employer to act on the information that the employee has provided. This requires the employer to follow the steps enumerated in its policy and to do so quickly. At the end of the day, the employer must investigate the claim and take whatever steps necessary to cure any ongoing harassment. And the employee must cooperate in the investigation and, within reason, accept whatever remedy the employer implements.
If the employer fails to promptly investigate or otherwise act once it knows or "has reason to know" of the allegations of harassment, the defense is not available. The case often becomes one of "he-said, she-said" evidence and the employer will likely find it quite difficult to present an effective defense.
Therefore, one of the most critical points is when the employee first makes its report. If the employee tells only a friend, family member, or coworker, the employer is not deemed to have knowledge of the allegations and is not required to take any action. If, however, the employer makes a complaint of harassment, formal or informal, to a member of management, including HR, the company is deemed to have knowledge of the allegations and its duty to act is triggered.
In Huston, the 3d Circuit addressed the question of just who qualifies as a managerial employee sufficient for the purposes of imputing knowledge to the employer. The employee-plaintiff, Huston, worked on a team of employees who operated large paper machines and claimed that the machine supervisors knew of the harassment but failed to take action in accordance with P&G's policy. She argued that, because "supervisors" had knowledge of the conduct, the organization also was imputed to have knowledge, triggering its duty to act.
The Third Circuit disagreed. The court found that the machine supervisors did have some, limited supervisory functions but those functions were limited to supervising work on the machines, which was insufficient to trigger liability for the employer. Only two types of employees will be sufficient to impute knowledge of co-worker sexual harassment. First, where the employee is "sufficiently senior" to the complainant or otherwise "in a position of administrative responsibility over employees under him, so that such knowledge is important to his general managerial duties. Department or plant managers are examples of this first type of employee.
Second, where the employee "is specifically employed to deal with sexual harassment" will be imputed to the company. "Typically such an employee will be part of the employer's human resources, personnel, or employee relations group or department." The court explained that just because an employee has "supervisory authority over the performance of work assignments by other co-workers is not, by itself, sufficient to qualify an employee for management level status [in this context].” Instead, the court explained, “to the extent that such a supervisor does not have a mandate generally to regulate the workplace environment, that supervisor does not qualify as management level.”