Employer Liability for Sexual Harassment FAQ

When Is An Employer Liable For Quid Pro Quo or Hostile Work Environment Sexual Harassment by its Employee, Manager or Executive.
Whether an employer is liable to a victim of sexual harassment depends on various factors. The most important are as follows: the law under which the case is brought; the position of the harasser in the company; and the appropriateness of the company’s response to any complaint of sexual harassment.

Employer Liability - Sexual Harassment Laws

The law under which a sexual harassment case is brought is a significant determining factor as to employer liability. Under some laws, an employer is held strictly liable for the conduct of supervisory and managerial employees and harassment by nonsupervisory employees are treated differently. A different statute, forum or administrative agency may afford an employer a defense even in the case of supervisor sexual harassment. However, an employer is held strictly liable in cases of Quid Pro Quo sexual harassment under most laws if the victim loses a tangible job benefit..

The different laws and statutes provide for damages that differ which likely affects a company’s evaluation of the case. For example, some laws only permit recovery of actual and out-of pocket damages while others permit recovery of punitive damages, compensatory damages and attorney’s fees. A jury is also not provided by all of the different laws and statutes. Whether the case is tried to a judge or a jury significantly impacts an employer’s evaluation of the case.

The total number of employees that an employer has often determines what laws apply to them at all. Similarly, where damages are capped, the number of employees typically determines the total amount of damages that a particular employer would be exposed to in the event of a verdict on behalf of the victim.

To understand an employer’s possible financial exposure requires a thorough analysis of the forum where the charge of discrimination is filed as well as the court or administrative agency where the case is pending.

Employer Liability for Sexual Harassment - Harasser’s Job Position

Generally, the higher the position of the alleged harasser, the more likely it is that the employer will be held liable for his or her conduct. The reasoning is that since a company is not an individual but a corporate being, it can only act through its managers, officers and executives. As such, the higher the position of the actor is in the corporate chain, the more likely it is that his conduct will be attributed directly to the company.

Thus, while the conduct of a first-line supervisor could potentially be attributed to the company, the conduct of the President/Chief Executive Officer is most likely to be attributed to the company who will be required to pay damages for such.

The most important consideration on this issue rests on whether the victim of sexual harassment has an effective avenue to complain over the alleged harasser. Where a harasser holds so high a position that complaining to higher-ups is rendered or perceived as ineffective, the company is more likely to be held liable because the victim has no reasonable complaint avenue that will ensure appropriate disciplinary action against the harasser. In other words, the company is typically liable when the harasser has no real "boss."

Employees are also more likely not to complain for fear of retaliation where the harasser holds a high position in the organization. For instance, assume the only VP in an organization is sexually harassing a receptionist whose immediate supervisor is several levels below the VP in the reporting chain. A sexual harassment policy that requires the receptionist to complain to her immediately supervisor may not be viewed as effective. The receptionist may fail to complain for fear of retaliation because of the harasser’s dominant position in the chain of command that she is required to follow.

In this regard, it is important for an employer to craft and disseminate a policy that provides a meaningful complaint avenue with an effective mechanism that avoids harassers that occupy a high position in the reporting chain.

Sexual harassment by non-supervisory employees pose a lesser problem for employers in most instances. Most laws require that in such situations, the victim must prove that he or she reported the sexual harassment to management and management responded negligently. A swift and reasonable response accompanied by appropriate discipline will likely provide a good defense for the employer in such cases.

Sexual Harassment - Employer Liability Due To Negligent Investigation

Perhaps the since most important factor in evaluating employer liability rests on its response to the sexual harassment complaint. Here, the most important decision for an employer is the decision who to entrust with the duty to investigate. Often, those that are selected to conduct the investigation are so personally vested in the work situation with complex inter-personal relationships and office politics that they are simply unable to conduct a fair investigation.

Friendships, long-standing loyalties, possible previous biases against the victim as well as fear of possible blame for having permitted the situation to fester, frequently cause otherwise well-meaning investigators to slant the investigation against the victim in favor of this harasser. In some instances, the victim and her witnesses are retaliated against and possibly terminated while the harasser goes unpunished. Sometimes, the victim is transferred to an inferior position, location or shift while the harasser is viewed as more important to the organization and left untouched.

Such evidence can be devastating to an employer’s defense in court or an administrative agency. Depending on the nature and severity of the conduct, a jury might consider an award of punitive damages in the case. As a result, an employer who otherwise would not have been found guilty of sexual harassment at all may end up with significant financial liability, not resulting from the acts of sexual harassment, but the conduct of its officers charged with investigation and remedial actions.

In cases of this sort, it is important to carefully consider the decision to appoint an internal vs. an unbiased external investigator, the discipline to be given to the offender and the situation that the victim is left in after the complaint. A response that ultimately leaves the victim worse off after the complaint is generally viewed as negligent and insufficient.