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STRICT POLICIES WILL PROTECT EMPLOYERS

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THE U.S. SUPREME COURT'S two June 26 landmark decisions in Faragher vs. Boca Raton and Burlington Industries Inc. vs. Ellerth establish a uniform standard for employer liability under Title VII of the Civil Rights Act of 1964 for sexual harassment committed by supervisory personnel. While the debate continues as to whether the rulings are pro-employee or pro-employer, the bottom line is simple: Employers should be prepared to be named in more lawsuits and to incur a much greater risk of liability.

The Supreme Court, voting 7-2 in each case, held in Faragher and Ellerth that employers may be held vicariously liable to a victimized employee under Title VII for the acts of supervisors that constitute sexual harassment, irrespective of the employer's policies and practices, and even if the employer lacks actual notice of the supervisor's conduct.

When the supervisor's sexual harassment results in an adverse tangible employment action-such as a termination, denial of a raise or promotion, or undesirable reassignment-suffered by the employee, the company's liability is absolute. When the supervisor's sexual harassment does not result in an adverse employment action, such as when the supervisor makes an unwelcome sexual advance or unfulfilled threats to deny job benefits unless the employee agrees to the sexual favors, the employee nonetheless may recover, though the claim is subject to an affirmative defense.

In turn, the affirmative defense has two components. First, the employer must prove that it exercised reasonable care to prevent and promptly correct any conduct constituting sexual harassment. Second, the employer must prove that the plaintiff unreasonably failed to take advantage of a personnel policy or procedure to report, prevent or correct any conduct amounting to sexual harassment.

An employer has the ultimate burden of proof to show sufficient facts to invoke the affirmative defense recognized in Faragher and Ellerth. The legal questions left unresolved by the Supreme Court portend that the future of sexual harassment litigation will focus on the issues underlying the affirmative defense. These issues most likely will center on the content of a company's personnel policies and practices; the timing, substance and sufficiency of a company's response to a complaint of sexual harassment; and the manner in which a plaintiff/alleged victim invoked the company's personnel policies with respect to sexual harassment. It is for these reasons that an employer's efforts at the prevention and correction of sexual harassment will be its main and, oftentimes, only practical defense in sexual harassment litigation involving acts of supervisory employees.

Faragher and Ellerth indicate that an employer with good loss control and risk management practices can avoid and/or minimize its exposure to liability for sexual harassment committed by its supervisory staff. A sound loss control and risk management program will solidify the elements of the affirmative defense. Risk managers, human resource professionals and corporate counsel should get their company's employment house in order to take advantage of the affirmative defense and to bulletproof their policies and practices.

Given the Supreme Court's rulings, it is expected that plaintiffs' attorneys will attempt to avoid the affirmative defense with arguments that the employee was unaware of the anti-sexual harassment policy (or that the company did not repeatedly communicate the policy to its workforce) or the employer failed to institute effective mechanisms for workers to report harassment without fear of reprisals. For these reasons, a good loss control and risk management program should include the following components:

A state-of-the-art sexual harassment complaint procedure.

An orientation program for all new employees that communicates and documents the dissemination of the company's anti-sexual harassment policy.

Management's institution of a "zero tolerance" program as to discrimination and harassment.

Regular training-and documentation of that training-of supervisors regarding appropriate workplace behavior, enforced with performance appraisals and evaluations tied, in part, to a supervisor's adherence to and enforcement of the company's zero-tolerance program as to discrimination and harassment.

Institution of an open-door policy and internal complaint review procedure.

An exit interview form and exit interview protocol for all employees leaving the company for any reason.

The use of a protocol for conducting internal investigations into allegations of sexual harassment.

Proper personnel policies will provide an employer with the full benefit of the affirmative defense. Such policies also will enable management to identify problem situations or to resolve employee grievances before the problems escalate into lawsuits. As a result of the Faragher and Ellerth rulings, all employers should have state-of-the-art personnel policies dealing with sexual harassment.

These personnel policies should be modeled upon the U.S. Equal Employment Opportunity Commission's Guidelines on Employer Liability for Sexual Harassment. The guidelines were issued March 19, 1990.

The guidelines specify that the personnel policy should define sexual harassment; prohibit sexual harassment as a matter of company policy; identify internal corporate mechanisms for complaints and redress for aggrieved employees; allow employees to submit complaints above and beyond their immediate supervisors; and prohibit retaliation or reprisals as a matter of corporate policy against any complaining parties.

The Supreme Court's rulings indicate that the affirmative defense can be established by proof that the plaintiff failed to bring a complaint of sexual harassment to the attention of the employer. In this respect, employers would be well served by instituting additional personnel policies designed to provide alternative mechanisms to workers to assert grievances, complaints and problems. One such personnel policy is an open-door policy and internal complaint review procedure. This policy enables an employer to identify personnel problems more quickly and to resolve problems before they mushroom into administrative charges and/or lawsuits.

The open-door policy and internal complaint review procedure also are of significant utility to an employer in warding off or defending against all types of employee-initiated claims. An employee's written complaint, supplied in accordance with the internal complaint procedure, locks him or her into a factual scenario that cannot be changed effectively at a later date. The absence of a contemporaneous oral or written grievance, in breach of the policy, makes it harder for an employee to assert-and easier for an employer to defend-a job-related claim at a later date in a subsequent lawsuit.

Use of an anti-sexual harassment complaint procedure, coupled with an open-door grievance policy, effectively establishes part of the employer's affirmative defense, as it blocks an employee from asserting a belated claim of sexual harassment-the employee would be hard-pressed to explain why he or she never complained about sexual harassment on a contemporaneous basis in light of the complaint procedures in both policies.

The affirmative defense recognized by the Supreme Court is further solidified by proof of dissemination of personnel policies to the workforce. An employer must be able to show that there is no question among employees as to their rights and responsibilities under the company's policies with respect with what to do when a problem arises on the job in the context of sexual harassment. Given that the affirmative defense is dependent upon the workforce's awareness of personnel policies, proof of dissemination is critical. This proof could be established either electronically-with a digital signature through an intranet human resources-based system-or by written documentation with an acknowledgement form for all new and existing employees to fill out upon dissemination of any personnel policies to new hires or current employees.

Employers should put in place a mechanism to document the specific policies provided to employees during orientation. The appropriate management official that provides the orientation to each new hire should be required to complete a checklist to show the information and documentation disseminated to each new employee. These mechanisms will set up the necessary proof to demonstrate appropriate dissemination of required personnel policies. Once employees sign the acknowledgement and orientation forms, they will be hard-pressed to explain how they were unaware of the company's policies with respect to registering complaints of sexual harassment.

Given the rulings, employers are absolutely liable for quid pro quo sexual harassment committed by supervisors. This reinforces the notion that preventive training is the most important risk management device in this context. As discussed in the context of the zero-tolerance program, training on appropriate workplace behavior is critical. Training should be ongoing, well-documented and an essential corporate priority.

Plaintiffs' attorneys will attack an employer's proof for the affirmative defense by contending that an employee reasonably failed to pursue a complaint of sexual harassment because of fear of reprisal. As a result, consideration should be given by an employer to instituting a toll-free hot line number for any employee to report sexual harassment. The toll-free hot line number could keep confidential the identity of the aggrieved employee. When coupled with a strong protocol for investigating complaints and the zero-tolerance program, an employer will have a solid factual basis for combating a plaintiff's argument that a legitimate fear of reprisal justified his or her failure to register a complaint about harassment.

In this day and age, management's attitude towards harassment and discrimination in the workplace is critical. To further solidify the affirmative defense recognized by the Supreme Court, an employer is well served by demonstrating the existence of an attitude on the part of management-which can be documented and proved-that the company has zero tolerance for discrimination or harassment in the workplace.

First, corporate management should communicate the zero-tolerance policy to all employees on an annual basis. The policy statement should be signed by the chief executive officer or the president of the company. A similar notice should be posted on bulletin boards in each facility of the company, and it should be reprinted and made part of a corporate communications program such as newsletters.

The zero-tolerance program will serve the dual proof purposes of the affirmative defense by showing the existence of the applicable complaint procedure and awareness on the part of a potential plaintiff as to his or her responsibility for contacting the company with the complaint. An equally important component of a zero-tolerance program is the attitude of line managers and supervisors. When and if conduct constituting sexual harassment occurs in the workplace, management personnel need to act immediately and affirmatively to combat the problem. Management personnel need to express the company's position of zero tolerance for this type of behavior. To that end, it behooves the interest of an employer to communicate to management personnel that it is their specific responsibility to put an end to any sexual harassment in the workplace they observe or hear about at any time.

Employers could do several things in this respect. First, supervisors should get sensitivity training regularly. Documentation of the training should be signed by each supervisor and put in his or her personnel file.

Second, each supervisor should be evaluated in performance appraisals with respect to his or her work in enforcing and abiding by the company's anti-sexual harassment policy. A portion of the performance appraisal-and perhaps even a decision as to whether to provide a supervisor with any pay increases-should be dependent, at least in part, upon his or her work in implementing the company's zero-tolerance program.

The Faragher and Ellerth rulings indicate that an employer must be able to promptly respond in an appropriate fashion to a complaint of sexual harassment. To prove the affirmative defense, an employer must show that it promptly investigated the complaint of sexual harassment and instituted disciplinary action in circumstances where the complaint was substantiated.

In this respect, an employer needs to be able to prove the existence of a protocol for what it does when it receives a complaint. The protocol must allow any aggrieved employee immediate access to multiple company decision-makers in order to register any complaints about conduct that allegedly constitute sexual harassment or discrimination. The protocol must be designed in a manner such that a complaining party is unable to argue that he or she decided not to complain because complaining would have been futile.

Second, an employer needs to be ready to immediately investigate any complaint of sexual harassment. The manner in which complaints are investigated is exceedingly important.

Third, an employer must be ready to institute prompt remedial measures, when and if necessary, to prevent any further reoccurrence of the harassment. It is also important that the remedial measures be documented in an appropriate form.

The affirmative defense also has implications for an employee who resigns or is terminated. At that point, an employer is presented with the last opportunity to flush out a complaint of sexual harassment-or, in other words, to assemble the facts necessary to prove the affirmative defense. As employees depart, a company should take that opportunity to lock them into any factual complaints-or, more importantly, the lack of any complaint-regarding their treatment on the job.

The absence of a complaint is of infinite aid in defending any subsequent charges. Often a disgruntled ex-employee asserts a charge of discrimination or harassment months after his or her departure in hopes of extorting a quick settlement. The documented exit interview helps to defeat such belated charges and to prove the affirmative defense. Moreover, if adverse information surfaces during the exit interview, the company can immediately investigate the problem and try to resolve it before litigation ensues.

Institution of loss control and risk management practices will enable an employer to bolster its potential defense to discrimination and harassment claims. To take advantage of the affirmative defense in Faragher and Ellerth, an employer needs documentary proof that:

Its personnel policies comply with the EEOC's Guidelines On Employer Liability For Sexual Harassment.

All employees know that sexual harassment is prohibited as a matter of company policy.

All employees know that if they have any harassment or discrimination problems in the workplace, they have direct access to a management official.

All employees know the company prohibits retaliation and reprisals against complaining parties.

All supervisors know their responsibilities in the workplace include the enforcement and maintenance of the company's zero-tolerance program as to discrimination and harassment.

All employees are informed of all these company policies during new-hire orientation.

A protocol exists for management officials to immediately investigate any allegations of harassment or discrimination.

Supervisors undergo sensitivity training on discrimination and harassment issues at least once a year.

The company maintains and enforces a zero-tolerance program with respect to discrimination and harassment.

At the time any employee leaves the company, an exit interview is conducted to ascertain whether or not the employee had any problems in the workplace with respect to harassment and/or discrimination.

If these policies and procedures are implemented, a company will have instituted loss control and risk management devices to enable the employer to intervene in problem situations and to resolve them prior to the problems getting worse-and before employees feel the need to visit an attorney to assist in resolving their problems. Employee grievances will be identified through the complaint procedure and open-door grievance policy; complaints of harassment and discrimination will be uncovered during exit interviews; problems will be resolved immediately when the company follows its protocol for responding to complaints of harassment and discrimination; individuals harassing others will be disciplined as a result of the investigations, if and where warranted, that are carried out pursuant to the protocol; and management personnel will be accountable for implementing and enforcing the zero-tolerance program.

Therefore, these loss control and risk management devices will form a factual basis for the affirmative defense recognized in Faragher and Ellerth. This would be a solid foundation upon which to defend a company in any subsequent litigation.

Gerald L. Maatman Jr. is a partner in the law firm of Baker & McKenzie in Chicago. He is chairman of the firm's global and U.S. labor, employment and employee benefits practice groups.