Employment law frequently makes distinctions between “supervisors” and non-supervisors. In the context of sexual harassment, the U.S. Supreme Court has developed markedly different standards for imputing liability to the employer depending on whether the offender is a supervisor or a coworker. Under federal law, when the alleged harasser is a coworker, the employer will be vicariously liable only if the employee proves negligence.

However, when a supervisor creates a hostile work environment, the employer in most cases will be vicariously liable unless it can satisfy the burden of proving an affirmative defense—that it had an effective anti-harassment policy in place and that the employee unreasonably failed to take advantage of such policy.

This term, in Vance v. Ball State,1 the Supreme Court is expected to provide long-awaited guidance on the scope of supervisor liability and resolve a circuit split on the question of who qualifies as a supervisor. Three courts of appeals—for the First, Seventh and Eighth circuits—have narrowly defined supervisor as an individual vested with the authority to carry out a tangible employment action against the alleged victim, such as hiring, firing, promoting, demoting, transferring or disciplining. At least two courts of appeals—for the Second and Fourth circuits—as well as the Equal Employment Opportunity Commission (EEOC), have more broadly defined supervisor to include individuals with the power to direct and oversee the work of the alleged victim.2 Employers and practitioners alike eagerly anticipate where the Supreme Court will draw the line in Vance on the level of supervisory activity needed to cause employers to be held vicariously liable under federal law for harassment.

Hypothetical Finance Firm

Determining who should qualify as a supervisor for purposes of sexual (or other unlawful) harassment is not an easy task. Take, for example, a large financial services firm. Assume that a first-year associate assigns work to his/her secretary and one or more junior analysts, and is asked by the firm to give periodic performance appraisals and feedback with respect to such persons. Assume further that this first-year associate has no power to hire, fire, promote, demote, transfer or discipline any employees at the firm—let alone set (or influence) any such individuals’ salary, compensation or bonus levels—all of which authority resides with the managing directors/partners and/or hiring and compensation committees of the firm.

To complete the hypothetical, assume that the firm has robust anti-harassment policies and procedures, with employee training designed to prevent and deter inappropriate conduct from occurring in the workplace, and an enforcement mechanism in place to investigate allegations of misconduct, and take prompt corrective and remedial action to the extent appropriate following any such investigation. In this firm, someone found to have engaged in harassment is likely to be terminated when such misconduct is reported and the allegations substantiated. Should the first-year associate be deemed a supervisor for purposes of federal harassment law, and the firm held vicariously liable for his/her actions?

Supervisory Liability

Nearly 15 years ago, in two companion cases—Faragher v. City of Boca Raton3 and Burlington Industries v. Ellerth4—the Supreme Court ruled that an employer may be subject to vicarious liability for actionable hostile work environment sexual harassment committed by a “supervisor with immediate (or successively higher) authority” under Title VII of the Civil Rights Act of 1964, as amended (Title VII).5 Drawing on, among other things, common law agency principles and Title VII’s “basic policies of encouraging forethought by employers and saving action by objecting employees,”6 the Supreme Court held that an employer will be vicariously liable for a hostile work environment created by a supervisor, if the actionable harassment resulted in a tangible employment action. Where no tangible employment action has been taken, the employer may raise an affirmative defense to vicarious liability, if it can show that: (1) the employer exercised reasonable care to prevent, and took prompt remedial action to correct, the alleged harassing behavior; and (2) the employee/victim unreasonably failed to take advantage of any preventive or corrective measures provided by the employer or otherwise avoid or limit the harm.7

In contrast, employers will not be held vicariously liable for a hostile work environment created by the alleged victim’s coworker (or a third party) absent proof of negligence. In other words, a plaintiff must prove that the employer knew or should have known of the harassment and failed to take reasonable measures to stop it. When the harasser is a coworker, not a supervisor, of the victim, employer liability turns on its “combined knowledge [of the behavior] and inaction” in response.8

Split in the Circuits

When the Supreme Court developed a new standard for supervisor liability for harassment, it left the lower courts to define the contours of this standard. Shortly after Faragher and Ellerth were decided, the Seventh Circuit held that “the essence of supervisory status is the authority to affect the terms and conditions of the victim’s employment.”9 The First and Eighth circuits have since adopted the Seventh Circuit’s definition, as have the Third and Sixth circuits in unpublished opinions.10 These courts essentially have required that an individual be delegated the power to carry out a tangible employment action against the alleged victim, such as authority to hire, fire, promote, demote, transfer or discipline other employees.

The EEOC promulgated enforcement guidelines that included an even broader definition of supervisor, namely if “the individual has authority to undertake or recommend tangible employment decisions affecting the employee; or the individual has authority to direct the employee’s daily work activities.”11 The Second Circuit, relying in part on the EEOC’s guidance, adopted this broader standard, concluding that an alleged harasser is a supervisor for the purposes of supervisory liability if he/she possesses “authority to direct the employee’s daily work activities,” even if he/she lacks the authority to take tangible employment actions against the victim.12 The court reasoned:

The question in such cases is not whether the employer gave the employee the authority to make economic decisions concerning his or her subordinates. It is, instead, whether the authority given by the employer to the employee enabled or materially augmented the ability of the latter to create a hostile work environment for his or her subordinates.13

The Fourth Circuit has adopted a similar position, as has the Tenth Circuit in an unpublished decision.14 While the Ninth Circuit has not taken as concrete a position, it has embraced the broader definition.15

Facts of ‘Vance’

Vance involves a dining services employee (Vance) allegedly subjected to a hostile work environment because of her race, including a pattern of threatening and intimidating conduct. Vance’s alleged harasser (Davis) had enumerated responsibilities/duties that included supervision of “Kitchen Assistants and Substitutes,” and leading, directing and overseeing the work of “part-time, substitute and student employees” such as Vance. Defendant/respondent Ball State investigated Vance’s internal complaints, and took disciplinary action when it deemed appropriate.

Vance filed suit in 2006. The U.S. District Court in the Southern District of Indiana granted summary judgment in favor of Ball State, concluding, in relevant part, that Davis lacked the sine qua non of supervisor status—the ability to take tangible employment actions against Vance. The district court held that even assuming “Davis periodically had authority to direct the work of other employees, such power would still not be sufficient to establish a supervisory relationship for purposes of Title VII….”16 The district court also ruled that as a matter of law, Vance could not succeed on her claims against Davis under the negligence standard applicable to coworkers because, even assuming that the allegations rose to the level of actionable harassment, Ball State investigated and addressed Vance’s complaints in a way “reasonably calculated to foreclose subsequent harassment.”17

Vance appealed the district court’s ruling to the Court of Appeals for the Seventh Circuit, which affirmed. In relevant part, the court held that Davis could not qualify as a supervisor because she did not have the power to hire, fire, demote or discipline Vance. The court also rejected the assertion that whether Davis “had the authority to tell her what to do” raised a triable issue as to supervisory status for purposes of vicarious liability.18

Anticipated Arguments

Counsel for the petitioner in Vance has argued that the Supreme Court should reject the narrower standard established in the Seventh Circuit, in part because it is inconsistent with the decisions in Faragher and Ellerth and the agency principles relied upon in those decisions. For example, the Supreme Court recognized that one of the alleged harassers in Faragher had apparently lacked the authority to take tangible employment actions but nevertheless was considered a supervisor because he was “granted virtually unchecked authority” over the plaintiff and other female employees such that it would be difficult for these victims to “walk away or tell the offender where to go.”19 Accordingly, limiting the definition of supervisor to only those with the power to take tangible employment actions arguably would have changed the outcome of Faragher itself. In addition, petitioner’s counsel claims that

[u]nlike co-employees, those who oversee and direct [others in the workplace] can punish those who resist, more effectively enlist others to their ends, and more directly set the tone and values of an organization.20

To the contrary, counsel for the respondent may argue,21 among other things, that a narrower definition of supervisor is both consistent with the Supreme Court’s past precedent and rationale for imposing supervisory liability. In Ellerth, the Supreme Court reasoned that

when a supervisor makes a tangible employment decision, there is assurance the injury could not have been inflicted absent the agency relation…. Tangible employment actions fall within the special province of the supervisor.22

Without such “assurance” or “special province,” the agency relationship relied upon by the Supreme Court in the first instance to impute liability to the employer may not exist. Further, an important justification for recognizing supervisory liability—the “greater opportunity to guard against misconduct by supervisors than by common workers”23 through training and monitoring—would be diminished if the pool of supervisors were to increase exponentially beyond those delegated the authority to hire, fire, promote, demote, transfer or discipline. Lastly, imposing vicarious liability on employers arguably should be limited to situations in which the conduct at issue plainly has the imprimatur of corporate approval. When the hypothetical financial services firm allocates responsibility to a first-year associate to assign work to others and conduct performance appraisals, is it fair to presume that the firm is “enabl[ing]” or “ materially augment[ing] the ability” of the associate to create a hostile work environment?

Practitioner Tips

Pending the Supreme Court’s decision in Vance, employers in the Second Circuit should be mindful that under the current law, vicarious liability may be imputed for the activities of those responsible for directing and supervising work, not just those authorized to make tangible employment decisions. Regardless of whether or not the Supreme Court adopts a broad or narrow reading of supervisory liability, employers would be prudent to review their existing EEO policies and procedures for reporting and investigating complaints of discrimination to comport with best practices.

Moreover, employers should periodically review employee job descriptions, duties and responsibilities and consider whether to expand the group of individuals who receive anti-harassment training—in particular, to ensure that anyone who can potentially bind the employer as a supervisor under federal law understands clearly the employer’s anti-harassment policies and modifies his/her behavior accordingly.

Brian S. Kaplan is a partner, and Elisheva M. Hirshman is an associate in Kasowitz Benson Torres & Friedman’s employment practices and litigation group.

Endnotes:

1. No. 1:06-cv-1452, 2008 U.S. Dist. LEXIS 69288 (S.D. Ind. Sept. 10, 2008), aff’d, 646 F.3d 461 (7th Cir. 2011), cert. granted, No. 11-556, 2012 U.S. LEXIS 4685 (June 25, 2012).

2. Panels in the Third, Sixth and Tenth circuits have also addressed the issue in unreported decisions, referenced infra.

3. 524 U.S. 775, 807 (1998).

4. 524 U.S. 742, 765 (1998).

5. 42 U.S.C. §§2000e, et seq.

6. Ellerth, 524 U.S. at 764; Faragher, 524 U.S. at 807.

7. Notably, the Faragher-Ellerth affirmative defense is not available for hostile work environment claims brought pursuant to the New York City Human Rights Law, N.Y.C. Admin. Code §8-107 (NYCHRL). See Zakrzewska v. New School, 14 N.Y.3d 469, 479 (N.Y. 2010) (finding that the NYCHRL imposes strict liability on the employer if “the offending employee ‘exercised managerial or supervisory responsibility’”) (internal citation omitted). The Second Circuit also recently joined a number of circuits in ruling that the Faragher-Ellerth affirmative defense is not available when the supervisor committing the alleged harassment is of such seniority so as to be a mere proxy or alter ego of the employer itself. See Townsend v. Benjamin Enters., 679 F.3d 41, 52-53 (2d Cir. 2012).

8. Faragher, 524 U.S. at 789. An employer may also be held vicariously liable for the actions of a harassing employee under the “apparent authority” rule even if the employee does not have supervisory authority, so long as the alleged victim has a “false impression that the actor was a supervisor,” and the “mistaken conclusion [is] a reasonable one.” Ellerth, 524 U.S. at 759.

9. Parkins v. Civil Constructors of Illinois, 163 F.3d 1027, 1034 (7th Cir. 1998).

10. See Noviello v. City of Boston, 398 F.3d 76, 96-97 (1st Cir. 2005); Weyers v. Lear Operations, 359 F.3d 1049, 1056-57 (8th Cir. 2004); Griffin v. Harrisburg Prop. Servs., 421 Fed. Appx. 204, 209 (3d Cir. April 4, 2011); Stevens v. United States Postal Serv., 21 Fed. Appx. 261, 263-64 (6th Cir. Aug. 7, 2001).

11. EEOC Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors (1999). The EEOC clarified that while an individual with temporary authority to direct another employee’s daily work activity will qualify as a supervisor for supervisory liability purposes during such period, “someone who merely relays other officials’ instructions regarding work assignments and reports back to those officials” or only directs a limited number of tasks or assignments will not. Id. “For example, an individual whose delegated authority is confined to coordinating a work project of limited scope is not a ‘supervisor.’” Id.

12. Mack v. Otis Elevator, 326 F.3d 116, 127 (2d Cir. 2003).

13. Id. at 126.

14. See, e.g., Whitten v. Fred’s, 601 F.3d 231, 244-47 (4th Cir. 2010); Smith v. City of Oklahoma City, 64 Fed. Appx. 122, 127 (10th Cir. April 14, 2003).

15. See, e.g., McGinest v. GTE Serv., 360 F.3d 1103, 1119 n.13 (9th Cir. 2004) (vicarious liability depends “upon whether a supervisor has the authority to demand obedience”).

16. Vance, 2008 U.S. Dist. LEXIS 69288, at *38.

17. Id. at *47. The district court also rejected Vance’s claims against other employees and her claim for retaliation.

18. Vance, 646 F.3d at 470.

19. 524 U.S. at 803 (internal quotation and citation omitted).

20. Brief for Petitioner at 34, Vance v. Ball State, No. 11-556 (2012).

21. Respondent’s merits brief was not filed at the time that this article was submitted for publication.

22. 524 U.S. at 761-62.

23. Faragher, 524 U.S. at 803.