The U.S. Court of Appeals for the 6th Circuit—which covers Kentucky, Michigan, Ohio, and Tennessee—has held that liability cannot be imputed to an employer for a manager’s alleged sexual harassment when the manager lacked decision-making authority over the employee.
Further, even if a manager or supervisor possesses decision-making authority over an aggrieved employee, the employer may escape liability for sexual harassment if (1) it exercised reasonable care to prevent and promptly correct sexually harassing behavior and (2) the aggrieved employee unreasonably failed to take advantage of preventive or corrective opportunities provided by the employer.
“Allison,” “Kylie,” and “Theresa” worked at an AutoZone store in Cordova, Tennessee. In May 2012, “Paul” was transferred to the store and made store manager. Three months later, trouble began. In August 2012, Paul began making lewd and obscene sexual comments to Kylie. His actions included groping Kylie and propositioning her for sex on a number of occasions.
In mid to late October 2012, Kylie complained about Paul’s harassment to “Eva,” the store’s district manager. Eva talked to Allison, who confirmed that Paul had also made offensive comments to her and that she had brushed them off. On November 2, 2012, Eva took Kylie’s and Allison’s accusations to regional HR manager “Karen.”
The following Monday, Karen called Kylie to discuss her complaint, and Kylie complained about operational issues with the company. At Karen’s request, Kylie faxed her a letter that outlined her complaints that afternoon. The three-page letter mainly discussed the operational issues and included only a brief section alleging that an unidentified person had sexually harassed her.
The next day, Karen went to the store to investigate further, and Kylie reported the harassment. Karen interviewed Allison and Theresa, who both said Paul had made lewd sexual comments. Also, Theresa told Karen that Paul tried to show her pornography on his phone. Karen talked to Paul, who denied harassing the female workers.
On November 14, 2012, Karen returned and informed Kylie that AutoZone would transfer Paul out of the store a few days later. Kylie said she had no problem working with Paul until his transfer because AutoZone would schedule an additional person to work on days both of them would be at the store. AutoZone transferred Paul on November 18 and fired him on December 6, 2012.
The Equal Employment Opportunity Commission (EEOC) filed a complaint alleging that AutoZone subjected Kylie, Allison, and Theresa to sexual harassment. After discovery (the pretrial exchange of evidence), AutoZone moved for summary judgment (dismissal without a trial). The district court reasoned that Paul was not a supervisor under Title VII of the Civil Rights Act of 1964, which precluded the company from being vicariously liable for his actions. Thus, it granted AutoZone’s motion for summary judgment, and the EEOC appealed.
6th Circuit’s Decision
The 6th Circuit affirmed the district court’s decision to grant AutoZone’s motion for summary judgment. In doing so, the court held that the company could not be held vicariously liable for Paul’s actions because he was not the employees’ manager or supervisor under the law.
Under Title VII, an employer may be vicariously liable for the harassment of an employee by her supervisor. For purposes of Title VII vicarious liability, an individual is a supervisor if he is empowered by the employer to take tangible employment action against the victim. Tangible employment actions are actions that “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 this case, Paul was not a supervisor. According to the court, “AutoZone did not empower [him] to take any tangible employment action against the victims.” He could not fire, demote, promote, or transfer any employees he supervised. Further, Eva was on-site once a week, actively participated in store management, scheduled shifts, and interacted with employees.
Although Paul could initiate the disciplinary process and recommend demotion or promotion, Eva did not blindly delegate responsibilities or merely sign the paperwork. Instead, she took an active role in the process and was the arbiter of discipline. Thus, because Eva—not Paul—had the ability to take tangible action against the aggrieved employees, Paul was not a supervisor for Title VII’s purposes. AutoZone could not be held vicariously liable for his actions.
The court further noted that even if Paul was a supervisor, AutoZone established an affirmative defense against liability. Under the U.S. Supreme Court’s Ellerth decisions, an employer establishes an affirmative defense to Title VII liability when (1) it exercises reasonable care to prevent and correct sexual harassment and (2) the harassed employee unreasonably fails to take advantage of preventive or corrective opportunities.
The court found that AutoZone exercised reasonable care to both prevent and correct sexual harassment. In an effort to safeguard the workplace from sexual harassment, the company not only posted an effective antiharassment policy in the workplace but also included the policy in its employee handbook, which it required every employee to read and acknowledge.
Although Allison, Kylie, and Theresa claimed that they had never read the policy, the court stated that an HR representative “need not look over each employee’s shoulder as she reads each page of AutoZone’s handbook.” The court stated that AutoZone was not responsible for their failure to read the handbook and that the company “exercised reasonable care by requiring employees to acknowledge their responsibility to read the policy by signing a form to that effect.” Further, the company took prompt and effective action after learning of the complaints, including transferring Paul and terminating him after conducting an investigation.
While the company did its part to prevent and correct sexual harassment, the employees failed to take advantage of preventive or corrective opportunities in a reasonable amount of time. The employees’ undue delay in reporting the harassment meant 2-½ months went by before the company was informed of Paul’s actions.
Although one of the employees talked to a colleague at another store, that alone was not sufficient to bring the matter to AutoZone’s attention. The company had a clear procedure for reporting misconduct, and the employees failed to follow it.
Thus, because of AutoZone’s swift response and the employees’ not-so-swift effort to report Paul’s misconduct, the company had an affirmative defense to liability, even if Paul was a supervisor for Title VII’s purposes.
Employers faced with a lawsuit alleging vicarious liability for the harassment of an employee by a “supervisor” should conduct a thorough analysis of the duties of the “supervisor.” Merely having a job title that suggests supervisory status is not enough for vicarious liability under Title VII. Instead, under Title VII, an employer is vicariously liable for the actions of a supervisor only if the supervisor has the authority to take tangible employment action against the aggrieved employee.
Further, this decision reaffirms the importance of having an effective policy (preferably acknowledged by employees as part of a handbook or other document) and taking prompt and effective action to address harassment when it arises. That way, even if the alleged harasser is a supervisor or manager under the law, the company will not be vicariously liable.
This article originally appeared in Michigan Employment Law Letter.