July 1, 2013

By Daniel P. Field

Editors’ Note: On June 24, 2013, the U.S. Supreme Court handed down decisions in two employment cases that significantly affect the scope of employment discrimination law, both of which are “friendly” to employers. In this eBlackboard, we review the Court’s interpretation of who is a supervisor for purposes of imputing liability to an employer in Title VII discrimination claims. In our next edition, we will review the stiffer legal standard the Court announced a plaintiff must meet in order to be successful in a retaliation claim under Title VII.

Title VII of the Civil Rights Act of 1964 makes it “an unlawful employment practice for an employer…to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex or national origin,” 42 U.S.C., §2000e-2(a)(1). While this provision obviously was intended to prohibit discrimination with respect to employment decisions that have direct economic consequences, such as termination, demotion and pay cuts, shortly after it was adopted lower courts held that Title VII also reaches the creation or perpetuation of a discriminatory work environment.   Most frequently seen are claims of a “hostile environment” in the workplace.

Under Title VII, an employer’s liability for such harassment may depend on the status of the harasser. If the harassing employee is the victim’s co-worker, the employer is liable only if it was negligent in controlling working conditions. The burden of proof is on the employee to establish such negligence by a preponderance of the e vidence.  In cases where the harasser is a “supervisor” however, different rules apply.  If the supervisor’s harassment culminates in a tangible employment action, then the employer is strictly liable.  But if no tangible employment action is taken, the em ployer may escape liability by establishing, as an affirmative defense, upon which it bears the burden of proof, that (1) the employer exercised reasonable care to prevent and correct any harassing behavior and (2) that the plaintiff unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided, e.g., by failing to avail itself of any anti-harassment policies that the employer had in place.

Prior to the decision of the Supreme Court of the United States in the case of Vance v. Ball State University, handed down on June 24, 2013, there was a split in the federal circuit courts of appeals concerning who was considered a supervisor.  Some circuits, including the Seventh, which hears cases arising in Illinois, held that a person was only a supervisor for purposes of Title VII if he or she was empowered by the employer to take tangible employment actions against the employee such as firing, demoting, transferring or disciplining the subordinate employee.  Other circuits had a looser definition and considered anyone that possessed the ability to exercise direction over another’s daily work was considered a supervisor.  The latter definition is the one favored by the United States Equal Employment Opportunity Commission, EEOC, Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors (1999).

The Supreme Court granted certiorari in the Vance case to resolve the conflict in the circuits.  The Supreme Court has put that conflict to rest by 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 action 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.”  In doing so the Court noted that it was rejecting the “nebulous” definition of a supervisor advocated in the EEOC Guidance and adopted by several courts of appeals.

The Court noted that the framework of its precedents interpreting Title VII draws a sharp line between co-workers and supervisors.   Co-workers can inflict psychological injuries by creating a hostile work environment but cannot dock another‘s pay nor can one co-worker demote another.  Only a supervisor as defined in Vance has the power to cause direct economic harm by taking a tangible employment action.  Tangible employment decisions fall within the special province of the supervisor.  The supervisor has been empowered by the employer as a distinct class of agent to make economic decisions affecting other employees under his or her control. Tangible employment actions are the means by which the supervisor brings the official power of the enterprise to bear on subordinates.

Under Title VII there are two frameworks where an employer may be vicariously liable for the acts of a supervisor’s harassment.  The first (which results in strict liability) exists when a supervisor actually takes a tangible employment action based on, for example, a subordinate’s refusal to accede to sexual demands.  The second situation (which results in vicarious liability if the employer cannot make out the requisite affirmative defense) is present when no such tangible action is taken, such as creating a hostile environment or making threats to alter a subordinate’s terms or conditions of employment based on e.g., sex, race, color or religion but fails to carry out the threat.  It is the power to carry out such a threat that separates a supervisor from a co-worker in the law of Title VII.