Are You the Boss of Me?

The Supreme Court speaks out on supervisor liability.

Workplace discrimination and retaliation claims are on the rise. And verdicts are larger than ever as juries lose patience with companies unable to rein in managers engaging in questionable conduct. Legal costs are rising, and delays in the courts and administrative agencies are causing discrimination claims to linger unresolved. Against this backdrop, the United States Supreme Court has issued new decisions in the area of employment law, this time giving a victory of sorts to employers.

In the past several years, the Court has issued a number of decisions expanding the ways employers might get into legal trouble under anti-discrimination laws. 

These cases have primarily expanded the scope of who is protected by anti-retaliation provisions. The newly protected include third parties who have not alleged discrimination, but have cooperated in investigations; those who have a relationship with the person making the claim (such as a fiancé); and people who have informally complained without putting allegations in writing. Retaliation claims have been the most prevalent among the almost 100,000 discrimination charges filed annually with the Equal Employment Opportunity Commission (EEOC). 

In a decision issued in June in Vance v. Ball State University, the Court put the brakes on the recent expansion of employee workplace rights by narrowly defining who will be considered a supervisor under the Civil Rights Act. 

Many Ways to Get Sued

Under the Civil Rights Act, a company is strictly liable for the actions of a supervisor that result in a “tangible employment action.” Such actions include hiring, firing, failing to promote, discipline, demotion or effecting significant changes in working conditions or benefits.

Companies can also be held liable for harassment by a supervisor when a tangible employment action does not result if the supervisor has created a hostile work environment and the employer can't establish an affirmative defense.

An employer establishes such a defense by showing that it exercised reasonable care to prevent, and promptly correct, any harassing behavior, or that the plaintiff unreasonably failed to take advantage of preventative or corrective opportunities provided by the company.

Where the alleged harasser is simply a coworker, however, the employer is liable only if it was negligent in controlling the employee’s working conditions. If, for example, an employer failed to respond appropriately to a complaint of harassment by a co-worker, liability might result.

 Limiting Who’s a Manager

In the 5-4 Vance decision, authored by Justice Samuel Alito, the Court held that an employer is liable for an employee’s harassment “only when the employer has empowered that employee to take tangible employment actions against the victim.” In doing so, the Court rejected a broader definition of managers as promoted by the EEOC. 

Maetta Vance, an African-American employee of Ball State University, alleged she was the victim of discrimination by a fellow food service worker, Saundra Davis. The parties agreed that Davis did not have the power to hire, fire, demote, promote, transfer or discipline Vance, although they largely disagreed about the extent of power Davis otherwise had over her. Under the definition adopted by the Court, Davis was not a supervisor, and the university was not liable for her actions. 

The practical impact of this decision favors employers for two reasons. First, it adopts a more limited definition of supervisor, narrowing the scope of employees whose conduct a company might be liable for even if it is unaware of their specific actions. Second, it increases the opportunity for lawsuits to be decided early on by summary judgment (without a trial) since there is far less subjectivity in the determination.

 Protect Your Company

This decision demonstrates the importance of having strong policies in place and training supervisors and managers, and indeed all employees, in workplace laws and behavior. It is increasingly important to take proactive risk management measures that can shield a company from liability. 
These include:

• Have clear policies against discrimination and retaliation and regularly update and disseminate them to employees. Handing out the employee manual at the time of hire is not sufficient; employees need to be reminded of their rights and obligations.

• Provide regular anti-discrimination training for all employees including a live presentation and opportunity for questions and discussion. A training video on an employee’s first day of work or a web-based tutorial is not a substitute for comprehensive professional training.

•   Have a clear and effective process for reporting and investigating complaints.

• Evaluate supervisors’ management of and communication with their direct reports, and have accountability at all levels of management. 

Stevens is a shareholder in the Employment Law Practice Group at the McLane Law Firm, based in Manchester. She can be reached at charla.stevens@mclane.com or followed on Twitter at @charlastevens.