Managing The Risks Of Sexual Harassment

By Melanie Herman, Executive Director of the Nonprofit Risk Management Center

Sexual harassment and its legal issues continue to catch the media's attention. Multi-million dollars judgements and recent court rulings have generated renewed interest in the topic. Consequently, employees have a growing awareness of the availability of legal remedies for perceived sexually harassing behavior. Any employment related complaint takes time and energy away from meeting the needs of the nonprofit s constituents. However, sexual harassment cases can be especially draining and damaging to the organization. Every nonprofit manager ought to be aware of these trends and take the appropriate actions to minimize the possibility of a sexual harassment complaint and potential lawsuit. One of the key risk management strategies is an effective anti-harassment policy and complaint procedures. Let s review the legal trends of sexual harassment cases to help manage this risk.

According to the Equal Employment Opportunity Commission, sexual harassment is unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. In 1976, in the case of Williams v. Saxbe, the courts first recognized sexual harassment as a legitimate form of sex discrimination under Title VII of the Civil Rights Act of 1964. The case introduced the concept of quid pro quo sexual harassment which occurs when submission to or rejection of this conduct explicitly or implicitly affects an individual s employment. The victim suffers a tangible employment action such as discharge, demotion, or undesirable reassignment. The case of Bundy v. Jackson in 1981 introduced hostile environment sexual harassment which when the conduct detailed above unreasonably interferes with an individual s work performance or creates an intimidating, hostile, or offensive work environment. The key difference between quid pro quoand hostile environment is whether or not the employee suffered a tangible employment action. A quid pro quo case involves a tangible employment action and a hostile environment does not.

For an employer, the underlying issue in all sexual harassment cases is determining whether or not the organization is liable for the sexual harassment of its employees. The U. S. Supreme Court offered some insight with the Meritor Savings Bank v. Vinson ruling in 1986. The court ruled that an employer is not automatically or strictly liable for its supervisors behavior in a hostile environment allegation. The decision states that the courts must consider agency principles for guidance in determining the organization s liability. Since Meritor the various courts have issued many conflicting and confusing rulings on employer liability. The U.S. Supreme Court last summer clarified the application of agency principles to sexual harassment cases and provided additional insights on how an employer can avoid liability.

In its long-awaited decisions in Faragher v. City of Boca Raton and Burlington Industries Inc. v. Ellerth, the U.S. Supreme Court ruled that the employer is subject to vicarious liability for an actionable hostile environment created by an supervisor with immediate or higher authority over an employee. However, when there is no tangible employment action taken (hostile environment), the employer can raise an affirmative defense subject to proof by the preponderance of evidence. The defense must have two elements:

1. an employer can prove it exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and

2. an employer can show the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

No affirmative defense is available if the supervisor s harassment results in a tangible employment action (quid pro quo). Therefore, the employer is strictly liable for the supervisor s conduct. The Supreme Court s new vicarious liability rules apply only to Federal Civil Rights Act of 1964 Title VII claims. The basis of the ruling is the common law theory of respondeat superior, where the master is responsible for his servant s actions. However, some states do not recognize respondeat superior liability. Therefore, employers are liable only if they become party to harassment by encouraging or condoning the supervisor s behavior.

Employers can also be liable for hostile environment sexual harassment by co-workers and third parties such as clients and vendors. The negligence standard applies in these cases. Under the negligence standard, the employee must prove that employer either knew (had actual knowledge) or had reason to know (constructive knowledge) about the harassment before he or she can collect damages. This places a greater burden on the employee.

The key element in distinguishing a quid pro quo (strict liability) case from a supervisory hostile environment situation is the existence of a tangible employment action. Understanding the vocabulary of sexual harassment is essential to protecting your nonprofit. A tangible employment action is defined by two criteria, it must:

1. be adverse; and

2. reflect a significant change in the conditions of employment.

An employee that receives additional job benefits from a harassing situation cannot recover in a quid pro quo harassment claim. In addition, an employer can presumably erase an existing employment action by correcting the inappropriate actions of a harassing supervisor. These corrections might include crediting lost salary, expunging negative references, or other actions overruling a discriminatory action. Decisive action by the employer upon discovering adverse treatment is appropriate and may serve to limit its liability.

In both the Faragher and Burlington cases, the Court provided examples of tangible employment acts (usually a significant change in employment status):

• hiring,
• firing,
• failing to promote,
• denial of a raise,
• a decrease in wages,
• undesirable reassignment with significantly different responsibilities, and
• significant change in benefits.

The Third U.S. Circuit Court of Appeals in one of the first major decisions following the Faragher and Burlington rulings further clarified tangible employment action. In this Delaware case, the court rejected the defendant employer s contention that forcing an employee to vacate her office and firing her secretary were not tangible employment actions. The defendant insurance company had recruited the plaintiff (a female life agent) away from a prior position through a promise of a secretary and private office. New supervisors were appointed to the agent and they decided that her private office and secretary constituted special treatment. They also took steps to remove her from her office, including telling her that she would be transferred and should pack up her files. Upon returning to her office, she found that her files had disappeared. The Third Circuit found that the disappearance of the plaintiff s files could also be an adverse employment action, adding that although direct economic harm is an important indicator of a tangible employment action, it is not mandatory. Lastly, the new supervisors assigned the plaintiff a lapsed book policies that were no longer active because poliyholders had switched insurance companies - which created a severe negative impact on the calculation of her bonus. The Court ruled that an employer s act can be a tangible employment action if it substantially decreases an employee s earning potential and causes significant disruption in his or her working conditions. The ruling is significant because it provides additional examples of acts that can constitute adverse employment actions, adding acts that disrupt working conditions to those that cause direct economic harm. (Durham Life Insurance Co. v. Evans, No. 97-1683 (3^rd Cir. Jan. 15, 1999).

Proactive Protection Against Costly Claims

The first step, if not done already, is to review your anti-harassment policy and update it, using the following as a guide:

1. Is the policy written broadly to prohibit all unlawful workplace harassment?

2. Is the policy employee-friendly and written in plain, easy-to-understand language?

3. Does the policy list examples of what is and what is not sexual harassment?

4. Does the policy list several persons with whom a complaint can be filed and indicate how to contact them? Does this section contain a provision allowing the employee to bypass his or her supervisor in the event the supervisor is the harasser?

5. Does the policy avoid any language that might discourage complaints (such as requiring complaints to be submitted in writing or made to a high level manager)?

6. Can employees in remote locations or field offices easily avail themselves of the protections afforded by the policy?

7. Does the policy prohibit retaliation?

8. Does the policy promise confidentiality to the maximum extent possible?

Plan Implementation

• Disseminate the policy widely to all locations, including field offices and any temporary work sites.

Ensure that every employee receives a copy of the policy by having each person sign an acknowledgement form.

• Have a system for informing any new hires or transferred employees about the policy.

• Provide anti-harassment training to all employees, and consider mandatory attendance.

• Offer a separate training program for supervisory personnel.

• Inform supervisors that satisfactory job performance requires the ability to prevent and correct harassment situations promptly.

• Ensure and monitor that all supervisors understand and follow their responsibilities when a complaint is made or they become aware of any harassing behavior. Make sure they know how to respond when the complainant asks specifically that nothing be done.

Prompt, Thorough Investigations Required

Under the new legal standard, an employer must prove that its complaint procedure was effective and that an employee failed to take advantage of the protections afforded by the organization.

Investigating Complaints

• Investigate any and all complaints of harassment included those made by non-victims and persons asking that no action be taken.

• Begin sexual harassment investigations within 48 hours after a complaint is made.

• Make certain that you complete your investigation and take remedial action within two to three weeks of the initial complaint.

• Keep detailed records of complaints, including notes on the steps taken in response to any complaint. These records will become evidence in mounting an affirmative defense.

Recap

1. Have an anti-harassment policy that includes sexual harassment and be alert for violations.

2. Provide more than one avenue for your employees to register complaints under the policy. An employee should never have to complain to the alleged harasser.

3. If a charge or allegation is made, conduct an immediate investigation. If necessary contact independent legal counsel to assist with the investigation. Talk to everyone identified by the employee and the alleged harasser as witnesses.

4. If necessary, suspend the alleged harasser with or without pay pending the outcome of your investigation.

5. Based upon the results of your investigation, take appropriate disciplinary action up to and including termination and referral of criminal conduct to law enforcement authorities.

6. Meet with the employee to inform him or her that you have concluded the investigation and have either been unable to substantiate the claim or have taken disciplinary action.

Some employers wonder whether they are bound to take the action requested by a victim of harassment. The answer is no. You do, however, need to take effective action to stop any harassment. In doing so, you should follow to the letter any written policies you have adopted. Never punish the complaining employee by requiring her to transfer to a different position or forego favorable working conditions.

If, after investigation, you find that there is no support for the complaint, you should meet with the employee to explain the reasons why you are not taking disciplinary action. You are not required to share confidential information about one employee with another. You should, however, make sure that you have conducted your investigation in a manner satisfactory to the complaining employee.

Sexual harassment is a serious issue that should concern every nonprofit. The law continues to evolve and can have adverse effects on an organization. The burden is on the employer to prove that it has a comprehensive and effective anti-harassment policy that is easy for the employees to use. Every nonprofit should commit to thoroughly investigating any and all complaints in a timely fashion, keeping detailed logs of the process used. Finally, remember to always seek the advice of local employment counsel before adopting any changes to your anti-harassment and complaint policies and procedures.

Melanie Herman is Executive Director of the Nonprofit Risk Management Center, a resource organization headquartered in Washington. For more information, visit www.nonprofitrisk.org or call (202) 785-3891.

Sample Anti-Harassment Policy

Specifically, sexual harassment is defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that adversely affects the employee's employment terms or conditions or creates an intimidating, hostile or offensive working environment. No employee or member of management, up to and including the executive director, has the right or authority to offer any benefits, including, but not limited to, tangible items, whether business-related, such as raises and promotions, or nonbusiness-related, such as gifts, trips, or any other item, in exchange for sexual favors. In the event an employee receives an offer in exchange for sexual favors, the employee should immediately notify his or her supervisor, or in the event his or her supervisor is the person making the offer, the employee should immediately contact the human resources manager. Both state and federal statutes make sexual harassment an unfair employment practice.

Should you feel you are being harassed by anyone at work or by the organization s employees after work hours, please inform your supervisor or the human resources manager of your concern. The organization will immediately investigate any allegation of harassment, and it will take prompt and effective remedial action to remedy the harassment. To the extent possible, the confidentiality of both the complaining party and the harasser will be protected during the investigation process. At the conclusion of the investigation, the complaining party will be provided a report of the conclusions of the investigation, as well as an opportunity to discuss future procedures.

Harassment will not be tolerated, and if the investigation substantiates the complaining employee's claim that he or she has been subject to harassment in violation of this policy, the offending employee shall be disciplined accordingly, up to and including discharge. However, a complaint an employee knows to be false when made will subject the complaining employee to disciplinary action.

Sample form acknowledging receipt of anti-harassment policy

I acknowledge that I have received and read the anti-harassment policy and have had it explained to me. I also acknowledge that I understand that no employee, up to and including the executive director, has the authority to offer me anything, whether work-related or personal, in return for sexual favors. I understand that it is my responsibility to be familiar with the information contained in the policy and I am expected to abide by the rules and requirements contained in the policy with regard to the reporting of harassment.

Employee's Printed Name ________________________

Employee's Signature and Date _____________________

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