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Few would differ with the proposition that training and monitoring employee conduct is essential in the modern American workplace. Under principles of common law, employers may be liable for the acts of their employees where the employees are acting within the scope of employment. Significant liability therefore can result from poorly trained or poorly monitored employees. Two U.S. Supreme Court decisions in 1998 dealing with sexual harassment under Title VII of the Civil Rights Act of 1964 underscored the importance of training and monitoring managerial employees. In the companion cases of Faragher v. City of Boca Raton and Burlington Industries Inc. v. Ellerth, the Supreme Court held that employers are strictly liable for the conduct of management employees whose harassment of a subordinate includes a “tangible employment action,” such as a termination or demotion. Where a management employee’s harassment does not involve a tangible employment action, the employer is liable, subject to a two-part affirmative defense. First, the employer must prove that it took steps to prevent and correct the harassment. Second, the employer must prove that the employee unreasonably failed to take advantage of these mechanisms or otherwise to avoid harm. The first part of this defense has garnered significant attention in recent years. Employers are devoting substantial resources to training all employees, not just managerial employees, on workplace harassment. Businesses have revisited and strengthened their policies prohibiting harassment and providing complaint mechanisms to investigate and redress possible illegal harassment. These anti-harassment policies apply not only to sexual harassment but also to unlawful harassment based on race, religion, national origin, disability and age. In addition to statutory harassment claims, aggrieved employees are increasingly bringing suit against employers for so-called negligent supervision. While the Texas Supreme Court has not officially recognized such a cause of action, some appellate courts in Texas have addressed such claims. Negligent supervision claims are based on the premise that an employer has a duty to train and monitor its employees. It is argued that the duty is breached by an employee’s acts of harassment, assault or other wrongdoing. Clearly, the best defense to a negligent supervision claim is to implement training and management policies and procedures, as well as to monitor activities in the workforce. In Mackey v. U.P. Enterprises Inc., Texas’ 12th Court of Appeals in Tyler in 1996 affirmed summary judgment dismissal of a plaintiff’s claim of negligent supervision due to the uncontroverted evidence that the employer trained and monitored its employees. A 2000 decision by the 7th U.S. Circuit Court of Appeals has national implications and further emphasizes the importance of training managers in the laws governing the workplace. In Mathis v. Phillips Chevrolet Inc., the court held that a company’s failure to train its managers on discrimination laws was an “extraordinary mistake” that warranted an award of $50,000 in liquidated (punitive) damages. In that case, Anthony Mathis, who is black and older than 40, applied for a sales job at Phillips. Mathis was not interviewed for the job and consequently sued Phillips, alleging age and race discrimination. According to the opinion, a jury found for Mathis on his age bias claim but refused to find that he was discriminated against on the basis of his race. The jury then awarded Mathis $50,000 in compensatory damages. Because the jury found that the dealership’s violation of the Age Discrimination in Employment Act was “willful,” the trial judge assessed an additional $50,000 in liquidated damages, the opinion noted. Phillips appealed this ruling. Under the ADEA, courts are required to assess liquidated damages equal to the compensatory damages if the employer’s violation of the statute was “willful.” A violation is considered willful if “the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA.” According to the opinion, Phillips argued that its conduct should not have been classified as willful. Specifically, the dealership contended that there was no direct evidence that anyone with hiring authority received a copy of his application. The court rejected this argument, finding, “[T]his went to the question of whether anyone at Phillips ever made a conscious decision not to interview Mathis because of [his] age; the jury necessarily decided that it did make such a decision when it found Phillips liable.” The court also noted that Jamie Pascarella, the general manager and the person with ultimate hiring authority at Phillips, often noted the ages of applicants by hand on their applications. In the opinion, the court noted Pascarella testified that he was not aware it was illegal to consider age in making hiring decisions. Another manager admitted that he looked for applicants who were “bright, young and aggressive,” the opinion noted. According to the court, “leaving managers with hiring authority in ignorance of the basic features of the discrimination laws is an ‘extraordinary mistake’ for a company to make, and a jury can find that such an extraordinary mistake amounts to reckless indifference.” The court also rejected Phillips’ argument that an equal employment opportunity statement on its application proves that it made a good-faith effort to comply with the statute. “[T]his evidence appears more harmful to Phillips than helpful,” the court held, “because the jury could easily have concluded that printing this statement on the application but then making no effort to train hiring managers about the ADEA shows that Phillips knew what the law required but was indifferent to whether its managers followed that law.” Based on this evidence, the court affirmed the trial judge’s award of liquidated damages. While it is too early to tell the range of impact of Mathis (the 7th Circuit has jurisdiction over Illinois, Indiana and Wisconsin), the case raises the stakes for employers. The 7th Circuit’s ruling essentially suggests that, in light of the universal knowledge that training is good, failure to train could be taken as a callous disregard for compliance with the law and a basis for awarding liquidated damages (in the ADEA context) or punitive damages (under Title VII or state laws). Any employer subject to the equal employment laws who fails to provide anti-discrimination training (not just anti-harassment training) to its employees could be asking for trouble. Ignorance of the law never has been a valid legal defense, and the Mathis court reaffirms this principle in the employment context. Jeffrey C. Londa’s practice at Ogletree, Deakins, Nash, Smoak & Stewart in Houston focuses on all aspects of labor and employment law, including litigation, client consultation, collective bargaining, arbitration, grievance consultation and proceedings before the NLRB, EEOC and U.S. Department of Labor.

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