HR Management & Compliance

Morgan Stanley Wins Bet on Untimeliness to Scotch Sexual Harassment Claim

2017 saw an unprecedented number of people come forward with stories of hostile work environments dating back 20 years or more. The impact of those stories has undoubtedly left countless people (and possibly their employers) worrying that their improper conduct from years ago may be the next story to break.

harassment

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A recent decision from the U.S. 7th Circuit Court of Appeals—which covers Illinois, Indiana, and Wisconsin—discusses not only when conduct from years past counts but also how outrageous the conduct must be to create a hostile work environment.

Nest Egg

“Alice” worked as a sales associate at Morgan Stanley from 2001 until she was fired in 2012. After she was terminated, she claimed that she had been mistreated throughout her time at the company. She claimed coworkers unduly criticized and harassed her and made sexual advances toward her between 2003 and 2009. She never reported the alleged misconduct to Morgan Stanley.

In 2005, Alice partnered with “Parker,” a senior financial adviser, to service a variety of client accounts. She claimed that Parker regularly commented about a CNBC news anchor’s revealing outfits in 2011 and 2012. She also claimed that Parker repeatedly questioned her about her pregnancy plans and requested that she plan her pregnancy to accommodate his work schedule.

On September 19, 2012, “Fred,” another financial adviser, joined Alice and Parker in a client meeting and allegedly told the client that Alice planned to start a family. Alice did not report the alleged behavior.

Is Your Refrigerator Running?

In 2012, Alice processed a fraudulent wire transfer after a person she believed was a client’s husband called her to confirm a transaction that had been previously requested in a series of e-mails. The person Alice spoke with was not the client’s husband, and the client was a victim of identity theft.

Morgan Stanley launched an investigation into the way Alice handled the request. The investigation included interviewing Alice, fraud prevention and compliance officers, and in-house counsel and reviewing notes and e-mails related to the transfer. The investigation also included reviewing Alice’s previous discipline for violations: a suspension for signing a client’s name to a letter of authorization and a letter of education for adding information to a form that had already been signed by a client.

Alice was fired at the conclusion of the investigation. She sued Morgan Stanley, claiming, among other things, that her coworkers’ mistreatment of her created a hostile work environment in violation of Title VII of the Civil Rights Act of 1964.

Morgan Stanley argued that the alleged bad acts that contributed to the hostile work environment were untimely. The company also said that even if Alice asserted the claim in a timely manner, the alleged conduct was not severe or pervasive enough to create a hostile work environment. The district court agreed with Morgan Stanley and entered judgment in its favor without a trial. Alice appealed.

Time Is Money

To establish a hostile work environment claim under Title VII, Alice had to show that:

  1. The conduct was both subjectively and objectively offensive.
  2. Her sex was the cause of the harassment.
  3. The harassment was severe or pervasive.
  4. There was a basis for employer liability.

Additionally, Title VII requires a complaining party to file a claim with the Equal Employment Opportunity Commission (EEOC) within 180 days after the allegedly unlawful conduct occurred or within 300 days in states with a parallel state fair employment practices agency. However, if the alleged conduct forms a single unlawful employment practice that falls at least in part within the relevant limitations period, courts can consider older conduct outside the period.

In this case, Alice filed an administrative claim with the Illinois Department of Human Rights on March 6, 2013, meaning that only conduct that occurred after May 10, 2012 (300 days earlier) fell within the limitations period.

However, the 7th Circuit considered whether alleged conduct that occurred before May 10, 2012, was part of a single unlawful employment practice. The court looked at the length of time between the alleged incidents, noting that large gaps between incidents can prevent the alleged conduct from forming a single employment practice.

Economic Downturn

To complicate matters, Alice was not sure exactly when the misconduct occurred. She claimed the alleged misconduct probably started in 2003 and occurred until 2009 or 2010. She also claimed that subsequent misconduct probably occurred in 2011.

However, the 7th Circuit held that her assertions lacked the specificity necessary to show that the allegations referred to a single employment practice, noting that unspecific, speculative allegations cannot connect otherwise distant claims into a single employment practice. The court, therefore, declined to consider events that allegedly occurred before May 10, 2012.

The only allegations that survived the statute of limitations were Alice’s claims about Parker’s news anchor comments, Parker’s questions about Alice’s pregnancy, and Fred’s comments at the client meeting.

The alleged conduct did not create a hostile work environment because it was not sufficiently severe or pervasive to alter the conditions of Alice’s employment when taking into account (1) the severity of the alleged conduct, (2) its frequency, (3) whether it was physically threatening or humiliating, and (4) whether it unreasonably interfered with her work performance. The judgment in favor of Morgan Stanley was affirmed. Milligan-Grimstad v. Morgan Stanley, No. 16-4224 (7th Cir., Dec. 11, 2017).

Taking Stock

Employers that receive hostile work environment claims that include conduct dating back a few years should not ignore the allegations as untimely. Instead, determine whether the allegations are part of an ongoing situation by looking at factors such as the gap in time between the alleged acts and whether the acts involve common actors or are otherwise connected. If the claims are old, details are lacking, and there is a significant gap between the alleged events, it is less likely courts will consider the untimely bad acts. Even so, prudent employers will do their best to determine whether improper conduct occurred and, if so, how the conduct should be addressed under the circumstances.

This article was written by Kelly Smith-Haley of Fox, Swibel, Levin & Carroll, LLP, and an editor of the Illinois Employment Law Letter. She can be reached at ksmithhaley@fslc.com.  

 

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