Three years ago, the United States Supreme Court changed the face of employment law forever. In deciding Burlington Industries, Inc. v. Ellerth, 118 S.Ct. 2257 (1998) and Faragher v. City of Boca Raton, 118 S.Ct. 2275 (1998), the Court took on the question of when an employer is liable for sexually-harassing conduct of its supervisory employees. The Court concluded that an employer will be strictly liable for such conduct where the supervisor's harassment results in the employee suffering a "tangible employment action." This analysis applies irrespective of the employer's lack of knowledge of the alleged harassment or any steps taken to remedy the situation once discovered.

The Court also recognized a limited affirmative defense available where the supervisor's harassment does not result in a tangible employment action. This defense, known commonly as "the employer's affirmative defense," allows an employer to completely avoid liability if it can show:

(1) that it exercised reasonable care to prevent and correct promptly any harassing behavior; and

(2) the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise.

Since the Ellerth and Faragher decisions, courts, companies, and their counsel have struggled to understand and apply these new principles, particularly in the areas which were unaddressed by the Court's opinion. Examples of such areas include: (1) defining the parameters of a tangible employment action; (2) identifying whether the harasser is a "supervisor" for purposes of deciding which type of analysis to apply, e.g., supervisor or co-worker harassment; (3) evaluating whether the employer did enough to show "reasonable care" in trying to prevent and correct harassment; and (4) deciding whether there are appropriate exceptions to the employee's duty to notify the employer of harassment under the "failure to avail" prong of the affirmative defense. Clearly, the first two issues define the type of analysis to apply, while the second two relate specifically to the employer's ability to avoid liability and invoke the affirmative defense. The purpose of this paper is to provide an overview of how the courts and the Equal Employment Opportunity Commission ("EEOC") are evaluating these difficult issues. The importance of understanding the various cases cannot be understated, particularly given the ever-increasing number of sexual harassment cases filed with the EEOC B a record high of 15,836 such cases were filed in fiscal year 2000 alone.

In Faragher, the Court noted that a tangible employment action may include any significant change in employment status, such as hiring, firing, failing to promote, reinstatement with significantly different responsibilities, or a decision causing a significant change in benefits. The Court clarified that allegations about such trivial things as a "bruised ego" or "reassignment to a less convenient job, or demotion without change in pay, duties, benefits, or prestige" will not be enough to establish a tangible job detriment.

Having defined the two ends of the spectrum, it initially appeared that the Court's tangible employment action standard was similar, if not identical, to the "adverse employment action" requirement that is part of both traditional disparate treatment discrimination and retaliation claims. Thus, it seemed obvious that cases where an employee was discharged after objecting to harassing conduct by a supervisor would result in strict liability for the employer. What has been less clear, however, is the outcome of situations in which the employment action is something short of termination, including instances where the employee chose to end the employment relationship, i.e., "constructive discharge." Understandably, cases that have arisen after Faragher illustrate the very real struggle of the lower courts as they try to apply the tangible employment action standard and define its outer parameters. The overview of recent cases contained below demonstrates this struggle and the inconsistency of the results to date.

1. Illustrative Cases Where No Tangible Employment Action Was Found

   No tangible employment action was found where an employee alleged that, after rejecting the sexual advances of a supervisor, she was given increased work assignments and denied at least one significant (unspecified) job benefit. The Fourth Circuit concluded that the employee's allegations, even if believed by a jury, do not show that she experienced a change in her employment akin to a demotion or a reassignment entailing significantly different job responsibilities, as is required by the standard set forth in Faragher.

   In another case, the court concluded, as a matter of law, that no tangible employment action occurred where the supervisor, after being rebuffed by the employee, gave her a "very good" rather than "excellent," rating on her performance evaluation. The court had difficulty accepting the plaintiff's argument that the evaluation constituted significant action and pointed out that she was not realistically in danger of being fired, demoted, or transferred because her supervisor felt she was a "very good secretary." In addition, the court found no evidence that the employer had begun "papering" her file with negative evaluations as a precursor to eventual discharge.

   Other scenarios that have resulted in a finding of no tangible employment action include:

• alleged change in work hours and expansion of job duties;

• alleged criticism and insults directed toward the plaintiff, coupled with assignment to menial job duties, and questioning about requests to take vacation or sick leave;

• transfer of plaintiff from one job site to another;

• failure to grant plaintiff's request for transfer to another city;

• alleged change in attitude of supervisor, even when coupled with change in duties and responsibilities of plaintiff;

• plaintiff's voluntary transfer to a lower paying position due to "anxiety" about the resolution of the alleged harassment following her complaint;

• actions taken by board member, including failure to interview plaintiff for job opening, taking away her cell phone, reassigning her company car, and requesting that she review her telephone bills, where there was also no evidence that actions were caused by alleged harasser;

• negative evaluations of plaintiff's job performance; and

• constructive discharge.

2. Illustrative Cases Where Tangible Employment Action Was Found
   
   There are some surprising outcomes when lower courts try to evaluate alleged employment actions short of discharge and decide if they constitute tangible employment action, as is illustrated by the holdings of these cases:

• the employer's confiscation of a teacher's art supplies (which may have been necessary for the performance of her job) and a negative performance evaluation (which was reversed six months later) was deemed sufficient employment action to invoke strict liability;

• where the employer's provision of a secretary and private office were specifically negotiated terms of the employment relationship, and the withholding of these items caused plaintiff difficulty in successfully performing her job, employer's conduct was deemed tantamount to taking tangible employment action;

• elimination of feedback meetings, flexible start-times, reductions of route, and imposing lockdown procedures could make out claim of adverse employment action;

• harassment by co-workers after employee raised complaint of hostile work environment, where such conduct was effectively permitted to occur and was severe and pervasive, was viewed as adverse employment action; and

• imposition of additional work, coupled with decrease in authority (which might have eventually resulted in a decrease in potential maximum salary) was sufficient, even though there was no actual decrease in salary.

3. Establishing a Link Between Hostile Environment and Tangible Job Action

   One of the first post-Faragher cases to analyze the standard for establishing a connection between an alleged hostile environment and a subsequent employment action was Vandermeer v. Douglas County, 15 F.Supp.2d 970 (D.Nev. 1998). The Vandermeer court took a novel approach and utilized the burden-shifting analysis from traditional discrimination claims. The court opined that the plaintiff should first be required to put on a prima facie case by showing the harassment, the adverse action, and some evidence connecting the two. The burden should shift to the employer to articulate a legitimate, non-discriminatory reason for its action. The burden should then shift back to the plaintiff to produce evidence that the reason stated by the employer was pretextual, and that the reason for the adverse action was because of the harassment (or the employee's response to it).

   The burden-shifting approach has not gained widespread acceptance, and other courts looking at the issue of causation rely, instead, on a variety of factors, including the following:

• the existence of only a lawful versus both a lawful and an unlawful reason for the employment action;

• the passage of significant time between the end of the alleged harassment and the employment action; and

• the lack of knowledge of the alleged harassment by the person responsible for imposing the employment action.

These cases clarify that a plaintiff must do more than merely allege the tangible job detriment was due to the harassment to receive the benefit of strict liability analysis B the plaintiff must be able to prove it. Thus, because the issue of causation is often fact-dependent, employers may be forced to litigate this issue as well. This will mean that juries may decide whether a tangible job detriment occurred and whether the strict liability analysis should be applied. Clearly, this will dramatically increase the complexity of sexual harassment trials for lawyers, judges, and jurors. Employers, now more than ever, should take steps to ensure that all potential tangible employment actions taken against employees who have raised harassment concerns are, in fact, legitimate. Review of such proposed actions by the company's human resources department and/or legal counsel is a good place to start.

The primary consideration in determining whether an individual is a supervisor is the significance of the individual's authority over the victim and the extent to which he or she can impact the terms and conditions of the victim's employment, i.e., has the power to hire, fire, demote, promote, transfer, or discipline. In Faragher, the Court recognized that supervisors are different from co-workers because they are empowered by the employer to make economic decisions affecting other employees under his/her control. Thus, when a supervisor makes a tangible employment decision, there is some certainty that the injury could not have been inflicted absent the authority provided by the employer. It is the existence of this authority, i.e., agency relationship, that is the basis for transferring liability upward, from the supervisor to the employer.

It should be no surprise that the EEOC, in interpreting the Court's analysis in Faragher, has taken an expansive position as to which employees are supervisors. The EEOC views a supervisor as any individual who has the authority to: (1) undertake and/or recommend tangible employment actions; or (2) direct the employee's daily work activities. The EEOC even advocates classifying an employee as a supervisor if he or she only directs the work of others on a temporary basis.

Lower courts have struggled in deciding which employees have sufficient authority to qualify as supervisors and which do not. However, a review of the case law illustrates that there are some common principles that seem to be well accepted by these courts, including the following:

• employees who review the performance of others are vested with the type of power only held by supervisors;

• employees who are empowered to make recommendations (particularly those with sufficient authority to have such recommendations followed) concerning hiring and firing may well be considered supervisors; and

• employees who are reasonably believed to have the authority to make such decisions, even if they, in fact, do not, may be deemed supervisors.

What these cases illustrate is that an employer can end up being held strictly liable for the harassing conduct of employees it did not intend to be supervisors. Thus, the importance of reviewing the titles of quasi-supervisors, the scope of their authority, and how they are realistically viewed by subordinate employees cannot be understated. Employers who have such employees may want to take additional steps to ensure such employees are not regarded by others as supervisors, including training both these employees and their co-workers about the limitations of authority, documenting these limits and the training, and ensuring that these limits are respected.

The first component of the employer's affirmative defense is commonly referred to as the "reasonable care" prong. This prong requires the employer to establish that it exercised reasonable care to prevent and correct the alleged harassment. The importance of establishing both elements of this prong was articulated by the court in Fall v. Indiana Univ. Bd. Of Trustees, 12 F. Supp.2d 870 (N.D.Ind. 1998), when it noted that the "primary objective of Title VII is not to provide redress for harassed employees, but to avoid the harm in the first place." Thus, "the affirmative defense requires employers to prove that they exercised reasonable care not only to promptly correct any sexually harassing behavior, but also to prevent such behavior from occurring."

1. An employer should have a policy which specifies prohibited conduct, sets forth a clear reporting procedure, and encourages reporting

   In evaluating the employer's conduct, the typical starting point is the anti-harassment policy and related procedures. One employer was recently criticized for its global anti-discrimination policy because it addressed various forms of discrimination but did not specifically mention sexual harassment nor did it provide direction as to what employees should do if they felt they were victims of such conduct. By contrast, another court held that, in the absence of a specific anti-harassment policy, the employer's policy that all work-related problems not resolved by supervisors should be brought to managers, was sufficient to assert the Faragher defense. Most often, courts seem to hold that evidence that an employer distributed its anti-harassment policy provides compelling proof that it exercised reasonable care in preventing and promptly correcting sexual harassment. The employee is then free to rebut this proof by showing that the employer adopted or administered the policy in bad faith or that it was otherwise defective or dysfunctional.

2. The employer's policy should be familiar to employees

   Beyond having a well-worded harassment policy, it is important for employers to ensure that the policy is well publicized, that the complaint procedures are known and understood by employees, and that employers can prove their efforts in this regard. In one case, the employer took significant steps to familiarize its employees with the company's sexual harassment policy, including: (1) providing a copy of the policy in the new employee packet; (2) sending out periodic mailings regarding the policy; (3) publishing an article in the company newsletter about the policy; and (4) conducting harassment and orientation training. However, because the employer could not prove that the plaintiffs were the beneficiaries of any of these efforts, the jury found in the plaintiffs' favor, and the appellate court affirmed.

3. Employees should be able to invoke the reporting procedures without retaliation

   Employers should also ensure that employees are able to utilize the complaint procedures, and that there are no impediments or deterrents to making reports to the company. An anti-retaliation statement in the policy is a good starting place. However, it is equally important that the employer's practice is consistent with this portion of the policy. Otherwise, the words of the policy will be viewed as hollow and will not protect the company from liability.

4. The policy should be consistent with the company culture and supported by management

   It goes without saying that well-worded policies and effective training will not save a company that does not also ensure that an appropriate workplace environment is maintained and that violations of the policy are not condoned. This point is well illustrated by one case where the employee was able to establish that senior management tolerated and participated in lewd conversation and publication of sexually explicit jokes and cartoons in the workplace. The employee was also able to prove that another employee's complaint about such conduct produced no corrective action. Given these facts, the court had no problem concluding that the plaintiff had no effective channels of complaints, and that the Faragher defense was unavailable to the company.

5. The standards of reasonable care may change, and employers should be mindful of the possible need to do more in the future

   As employers, courts, and jurors become more familiar with the issues of sexual harassment and its prevention, the expectation of what are "reasonable" steps designed to prevent harassment may well change. For example, as cost-effective measures to prevent harassment become available, employers, even small ones, will likely be expected to use them. This has already been seen in the area of harassment training. Several years ago, training was somewhat uncommon and generally only occurred at the upper levels of management or within very large companies. Because of the proliferation of video training programs, many companies are now training all of their employees, and some are even doing it annually. As such training becomes more common, it may well become a fundamental component of the reasonable care standard.

To invoke the Faragher affirmative defense, employers must also be able to establish that they took reasonable steps to correct alleged harassment in the workplace. In cases where the employer acted promptly in investigating the matter and took remedial action designed to end the harassment, courts generally find this element has been satisfied. Employers are not required to prove success in preventing and correcting sexually harassing conduct; rather, they need only prove that they endeavored to investigate and remedy problems reported by employees.

On the other hand, courts have been quite willing to deny relief under the Faragher defense when employers take inadequate remedial steps after receiving a complaint of harassment. For example, where an employer minimized the plaintiff's complaints, did only a cursory investigation which focused more on her performance problems than the alleged harassment, failed to discipline the alleged harasser, and created an environment which led to constructive discharge, the court upheld a jury verdict in favor of the plaintiff, denying the request to reverse the verdict based on the Faragher defense. Courts also seem willing to find no reasonable care to correct harassment if the plaintiff can show a history of the employer ignoring other employees' complaints of harassment.

The second component of the employer's affirmative defense is commonly referred to as the "failure to avail" prong. This prong requires the employer to prove that the employee did not take advantage of the means reasonably available to avoid or minimize damage and was explained by the Faragher Court in the following way:

If the plaintiff unreasonably failed to avail herself of the employer's preventative or remedial apparatus she should not recover damages that could have been avoided if she had done so. If the victim could have avoided harm, no liability should be found against the employer who has taken reasonable care, and if damages could reasonably have been mitigated no award against a liable employer should reward a plaintiff for what her own efforts could have avoided.

Since the Faragher decision, courts have been faced with the task of sorting out whether all circumstances in which the employee failed to report harassment warrant avoidance of liability by the employer. Typically, there are three factors courts look at in resolving this issue: (1) did the employee know of the reporting procedure and her obligation to invoke it; (2) was there adequate justification for her failure to avail herself of the procedure; and (3) did the employee otherwise fail to avoid harm, such that no liability should result. Each of these considerations is explored briefly, below.

1. Was the Employee Aware of the Procedure and Her Reporting Obligation

There are multiple examples of cases in which an employer was able to invoke the Faragher defense by pointing to the plaintiff's failure to use the employer's clear and adequate complaint procedure, including those where:

• the plaintiff failed to complain about the alleged conduct for over a year, and had lied during another investigation, telling the employer that the accused had treated her "professionally";

• the employee failed to complain, despite the opportunity to do so, based on the frequent presence of the supervisor of the offending employee; and

• the employee was familiar with the complaint procedure, yet significantly delayed raising her complaint.

These cases suggest that to satisfy the "failure to avail" prong, it will be important for an employer to offer evidence that the plaintiff was aware of the reporting procedure and did more than simply delay providing information to the employer. Where the employer is able to show no report, or significant or unreasonable delay in making one, its burden should be satisfied.

2. Was There a Reason the Employee Failed to Use the Reporting Procedures

   Even after an employer establishes that the employee knew of the appropriate reporting mechanism and failed to use it, there is still a possibility that Faragher defense will not be available. Indeed, if an employee who delayed significantly or failed to use the company's anti-harassment can establish some reasonable excuse, she may still prevail. To date, courts seem surprisingly willing to consider such excuses but still require more than just generalized allegations in support. One such example involves the alleged fear of retaliation. In these types of cases, courts have consistently held that a general statement of fear is insufficient B the plaintiff must offer specific facts showing a reasonable basis for her fear. One court opined that requiring less of the employee would eviscerate the employer's affirmative defense.

   Another common excuse relates to the plaintiff's lack of understanding of the anti-harassment policy or reporting procedure. In Smith v. First Union Nat'l Bank, 202 F.3d 234 (4^th Cir. 2000), the plaintiff claimed that she did not use the reporting procedure in the anti-harassment policy because she thought that it was only violated when there was a sexual advance by a supervisor, and she claimed she had been told by another employee not to complain to Human Resources if she wanted to advance in the company. Surprisingly, the appellate court concluded that the plaintiff's failure to complain was "entirely reasonable," and that she had offered sufficient evidence that the company's policy was "defective or dysfunctional."

3. Did the Employee Fail to Avoid Harm Otherwise?

   Even if the employee's failure to report is deemed reasonable, an employer can still satisfy the "failure to avail" prong if it can establish that the plaintiff unreasonably failed to avoid harm otherwise when, for example, she placed herself in situations that permitted repetition of the offending behavior. One court recently concluded that the plaintiff failed to "avoid harm" when she voluntarily went to a bar with her supervisor and, thereafter, remained alone with him in a hotel room, even though he had made sexual advances toward her in a different hotel room six months earlier. Under such circumstances, it was inappropriate to impose vicarious liability on the employer for a situation the employee took an active role in creating.

Perhaps the biggest and most concerning question for employers struggling to prevent and correct inappropriate behavior in the workplace is the uncertainty of their liability if both they and their employees did the right thing. Two cases reaching opposite conclusions have addressed this situation and have provided some insight into how this issue could be analyzed in the future.

In Moore v. Sam's Club, 55 F.Supp.2d 177 (S.D.N.Y. 1999), the employer was found to have exercised reasonable care in preventing and correcting sexual harassment and the employee was found to have properly availed herself of the preventative and corrective opportunities. In light of the plaintiff's conduct, the court held that the Faragher defense was not available to the employer. The court concluded that an employer who exercises reasonable care in preventing and correcting harassment will, nonetheless, be liable for such harassment if the jury finds a basis for imposing vicarious liability on the employer for the conduct of its supervisory employee.

A more reasoned and persuasive analysis is contained in the court's decision in Indest v. Freeman Decorating, Inc., 164 F.3d 258 (5^th Cir. 1999). In that case, the employer was found to have exercised reasonable care in preventing and promptly correcting sexual harassment and the plaintiff, likewise, had fulfilled her duty to complain about the alleged harassment. The court believed that, under such circumstances, judgment in the employer's favor was appropriate, based on four important considerations:

• the plaintiff received the benefit that Title VII was meant to provide when she promptly complained about harassment and, as a result, prevented the creation of a hostile work environment;

• the employer, because it promptly responded to the complaint, should be shielded from vicarious liability from the harassment because it prevented the creation of a hostile work environment;

• in carving out the employer's affirmative defense, the Supreme Court left intact its earlier ruling in Meritor, that an employer is not automatically liable for hostile environment harassment. Thus, to impose vicarious liability on an employer who takes prompt, corrective action, would undermine Meritor, and Title VII's policy of deterrence; and

• the Faragher Court's discussion of the avoidable consequences doctrine and the employee's duty of damage mitigation relieves the employer from liability under these exceptional circumstances.

The analysis of the Court in Faragher provides a balance between the responsibility of the employer to provide an appropriate workplace for its employees and of the employee to mitigate or avoid harm. Even those courts that struggle with answering the many questions left unaddressed by the Faragher Court, often return to this underlying principle in articulating their holdings. Because we cannot yet predict how Idaho courts and juries will look at some of these issues, Idaho employers should err on the side of caution and take sufficient pro-active steps to hopefully prevent harassment and, if not, to at least be able to rely upon the affirmative defense should the allegation of harassment be against one of the employer's supervisors.