Editors' Note: This article has been updated to reflect a correction. An earlier version included an incorrect photo of author Gary D. Friedman.

In a decision that will likely result in numerous workplace harassment cases being dismissed at the summary judgment stage and compel employers to more clearly delineate the job responsibilities of their employees to identify those who have "the authority to take tangible employment actions," the U.S. Supreme Court surgically narrowed the scope of who constitutes a "supervisor" under Title VII in its recent Vance v. Ball State Univ., No. 11-556, 2013 WL 3155228 (U.S. June 24, 2013) decision. In flatly rejecting the Equal Employment Opportunity Commission's definition of "supervisor" as "nebulous," "murky" and a "study in ambiguity," the court adopted a standard that neither of the parties on appeal had proposed but that could be "readily applied" by litigants, courts and juries, and was consistent with the court's attempt to balance the interests of employers and employees in its seminal decisions in Faragher v. Boca Raton, 524 U.S. 775 (1998) and Burlington Industries v. Ellerth, 524 U.S. 742 (1998). Now, only those who have the "authority to inflict direct economic injury" will be viewed as supervisors, which will sharply limit the number of instances in which employers can be held strictly liable for workplace harassment.

Case Background

Maetta Vance, an African-American employee in Ball State University's dining services department, filed EEOC charges against the university in December 2005 and August 2006, alleging, inter alia, that fellow employee Saundra Davis had used racial epithets and had made a threatening remark to Vance.1 Vance then filed suit in the Southern District of Indiana, bringing a Title VII hostile work environment claim against the university.2 On summary judgment, Ball State argued that it was not liable for Davis' alleged conduct because Davis was merely Vance's coworker, not her supervisor. This distinction is crucial because under the Faragher/Ellerth framework, employers are liable for a coworker's harassing or discriminatory conduct only if the employer was negligent in discovering or remedying the conduct, but are strictly liable for such conduct committed by a supervisor, unless the supervisor's conduct did not result in a tangible employment action and the employer establishes, as an affirmative defense, that it exercised reasonable care to prevent and correct the harassment and the plaintiff unreasonably failed to take advantage of these preventive or corrective opportunities. See Vance, 2013 WL 3155228, at *3.

The district court agreed with Ball State, citing the controlling Seventh Circuit standard that a "supervisor is someone with the power to directly affect the terms and conditions of the plaintiff's employment"—meaning, "the power to hire, fire, demote, promote, transfer, or discipline an employee"—powers that Davis did not have vis-à-vis Vance.3 Finding that the University was not negligent in discovering or remedying Davis' conduct, the district court granted summary judgment for Ball State. On appeal, the Seventh Circuit affirmed, noting the existence of a circuit split on the definition of "supervisor" in Title VII cases but reiterating that it "ha[d] not joined other circuits in holding that the authority to direct an employee's daily activities establishes supervisory status under Title VII."4

The Supreme Court granted Vance's petition for a writ of certiorari to decide the proper test for supervisory status under Title VII: the Seventh Circuit's more restrictive test, which had been adopted by the First, Third, Sixth, and Eighth circuits, or the more expansive test propounded by the EEOC and adopted in the Second, Fourth, Ninth, and Tenth circuits, which focuses on the authority to oversee an employee's daily work assignments.5

Surprisingly, in arguing its case before the Supreme Court, Ball State conceded that "the 'hire, fire, demote' test"—despite the backing of five circuits—"does not necessarily capture all employees who may qualify as supervisors[,]" but rather, "vicarious liability also may be triggered when the harassing employee has the authority to control the victim's daily work activities in a way that materially enables the harassment."6 In fact, at oral argument, Justice Antonin Scalia scolded the university for not defending the Seventh Circuit standard, remarking that "[w]e took [this case] principally to decide whether the Seventh Circuit rule…was right or not. And you don't even defend that. So there is nobody here defending the Seventh Circuit."7 However, Ball State simply contended that, on the record facts, Davis was not Vance's supervisor even under the more expansive test.

Supreme Court's Decision

Unmoved by Ball State's agreement with Vance that the Seventh Circuit test was overly restrictive, the Supreme Court adopted the Seventh Circuit test in a 5-4 decision written by Justice Samuel Alito and joined by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy and Clarence Thomas, holding 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.'"8

In Vance, the court's laser-like focus was on creating a standard that had clarity and would avoid a fact-intensive analysis in nearly every case. Specifically, the court derided the EEOC Enforcement Guidance as "a study in ambiguity" and remarkably "vague," as it relied on such "nebulous" concepts as "sufficient authority," authority to assign more than a "limited number of tasks" and authority that is exercised more than "occasionally." By contrast, the Seventh Circuit test "can be readily applied" and will often allow for supervisor status to be resolved at an early stage of litigation, thereby "simplif[ying]" matters for the jury. Under the EEOC's approach, the court explained, "the danger of jury confusion" would be "particularly high" because the jury would be "faced with instructions on alternative theories of liability under which different parties bear the burden of proof."

The court rejected Vance's reliance on definitions of "supervisor" in other contexts, finding that in colloquial uses the term "lacks a sufficiently specific meaning to be helpful for present purposes" and that the National Labor Relations Act's broad definition of "supervisor" "reflect[s] the NLRA's unique purpose, which is to preserve the balance of power between labor and management," and is therefore "inapposite in the context of Title VII, which focuses on eradicating discrimination." Rather, the court explained, because "supervisor" does not appear in Title VII but "was adopted by this Court in Ellerth and Faragher[,]" its meaning is best understood through "the highly structured framework that those cases adopted[,]" which "draws a sharp line between co-workers and supervisors"—i.e., those who have "'been empowered by the company as a distinct class of agent to make economic decisions affecting other employees under his or her control'" (emphasis in original).

Under the Ellerth/Faragher framework, the court determined, "the authority to take tangible employment actions is the defining characteristic of a supervisor"—which includes the "authority to inflict direct economic injury"—thereby making the Seventh Circuit test consistent with Supreme Court precedent.

Justice Ginsburg's Dissent

In a blistering dissent joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, Justice Ruth Bader Ginsburg took the court's majority to task for "ignor[ing] the conditions under which members of the work force labor, and disserv[ing] the objective of Title VII to prevent discrimination from infecting the Nation's workplaces." She explained that "[w]hat mattered" in Faragher and Ellerth was that the harassers "took advantage of the power vested in them as agents of [their employer] to facilitate their abuse[,]" and lamented that the majority "misses the forest for the trees" because "[a] supervisor with authority to control subordinates' daily work is no less aided in his harassment than is a supervisor with authority to fire, demote or transfer."

Fearing that the majority's "decidedly employer-friendly" decision "will leave many harassment victims without an effective remedy and undermine Title VII's capacity to prevent workplace harassment[,]" Ginsburg called on Congress to "correct this Court's wayward interpretation[] of Title VII" (as it did in passing the Lilly Ledbetter Fair Pay Act of 2009), stating, "The ball is once again in Congress' court to correct the error into which this Court has fallen, and to restore the robust protections against workplace harassment the Court weakens today."

Implications for Employers

Undoubtedly, Vance is a significant victory for employers, as it limits the circumstances in which companies will face strict liability under Title VII and, likely, the other federal anti-discrimination statutes, such as the Americans with Disabilities Act and the Age Discrimination in Employment Act, neither of which define the term "supervisor." Vance's definition of "supervisor" is unlikely to apply in the context of the NLRA, since Justice Alito specifically distinguished Title VII supervisory status from NLRA supervisory status, or to the Fair Labor Standards Act, as the regulation concerning the FLSA's "executive" exemption incorporates concepts similar to the EEOC Enforcement Guidance, such as directing the work of other employees, and having input into—but not ultimate authority regarding—hiring and firing decisions. See 29 C.F.R. §541.100(a)(3)-(4).

However, Vance is likely to have an impact on determining what constitutes an "adverse employment action" in the context of Title VII (and ADEA and ADA) retaliation claims. Under Burlington N. & Santa Fe Ry. v. White, 548 U.S. 53, 68 (2006), alleged retaliatory activity is actionable if it is "materially adverse," meaning that "it well might have 'dissuaded a reasonable worker from making or supporting a charge of discrimination.'" In determining what constitutes a materially adverse employment action, courts should view this question through the prism of Vance and its focus on activities that inflict "direct economic injury."

In the wake of Vance, employers should carefully review scope and chains of authority as reflected in job descriptions, employee handbooks, organizational charts and other pertinent company documents to determine their accuracy and whether they clearly delineate who does and does not have the authority to make decisions with respect to hiring, firing, demotions, reassignments, and other tangible employment actions. However, employers should be wary of the consequences of being overly restrictive in defining who has this authority, as doing so might, in addition to impairing business operations and company decision-making, adversely impact the employer's ability to assert the attorney-client privilege in certain situations (under the framework established by Upjohn Co. v. United States, 449 U.S. 383 (1981)), and might force that narrow band of top-level supervisors to delegate their authority to subordinates who have closer contact with the affected employee, which may qualify these lower-level employees as supervisors under Title VII.

It is also important for employers to recognize the limitations of Vance's reach. For starters, it remains to be seen just how restrictive courts will be, in practice, in defining what constitutes "economic consequences" for purposes of determining supervisory status. In addition, although many state and local laws follow Title VII jurisprudence on key principles such as "supervisory status," some jurisdictions expressly exceed the boundaries of Title VII and may not be inclined to follow Vance. For instance, California's Fair Employment and Housing Act provides a statutory definition of "supervisor" that incorporates the EEOC's Guidance definition of "the responsibility to direct" other employees (Cal. Gov. Code §12926(r)).

Similarly, New York City's Human Rights Law, though it does not define "supervisor," has been held to be "more compatible with" the "broader conception [of supervisor status] adopted by the Second Circuit[.]"9 Particularly given the statutory mandate that the NYCHRL be "construed liberally for the accomplishment of [its] uniquely broad and remedial purposes" regardless of whether federal or state anti-discrimination laws have been so construed (New York City, N.Y., Code §8-130), it remains to be seen whether courts interpreting the NYCHRL will apply Vance in harassment and discrimination cases.

Finally, it is essential for employers to remember that Vance does not altogether preclude liability for workplace harassment. Employers must remain vigilant in maintaining and enforcing robust anti-harassment policies, keeping a strong framework in place for reporting and investigating internal complaints about harassment, and providing regular anti-harassment trainings for their employees—particularly those with supervisory authority.

Litigants should keep an eye out for whether Congress might heed the dissent's plea for legislation overturning the Vance decision, as it did in enacting the Lilly Ledbetter Fair Pay Act of 2009, the first bill signed into law by President Barack Obama, whose administration has maintained a focus on gender equality in the workplace through the creation of the National Equal Pay Task Force. But barring any such legislative activity, Vance is the law of the land, and employers should review their policies and practices to ensure that they are in a position to benefit from the Supreme Court's decision.

Gary D. Friedman is a partner in the national employment litigation practice group of Weil, Gotshal & Manges. Ami G. Zweig is an associate in that group.

Endnotes:

1. Vance v. Ball State Univ., 646 F.3d 461, 465-67 (7th Cir. 2011).

2. Vance v. Ball State Univ., 2008 WL 4247836, at *11 (S.D. Ind. Sept. 10, 2008).

3. Vance, 2008 WL 4247836, at *12 (quotation marks and citations omitted) (emphasis in original).

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

5. See Petition for a Writ of Certiorari at 14-15, Vance v. Ball State Univ., No. 11-556 (U.S. Oct. 31, 2011), 2011 WL 5229301, at *13-16.

6. Brief for Respondent at 1-2, Vance v. Ball State Univ., No. 11-556 (U.S. Oct. 19, 2012), 2012 WL 5208645, at *1-2.

7. Transcript of Oral Argument at 35, Vance v. Ball State Univ., No. 11-556 (U.S. Nov. 26, 2012), 2012 WL 5903151.

8. Vance, 2013 WL 3155228, at *7.

9. O'Neil v. Roman Catholic Diocese of Brooklyn, 927 N.Y.S.2d 818 (Sup. Ct. 2011), aff'd, 949 N.Y.S.2d 447 (2012), leave to appeal denied, 20 N.Y.3d 860 (2013).