The First Bite is Free: Employer Liability for Sexual Harassment

In June, 1998, the Supreme Court issued two decisions, Burlington Industries, Inc. v. Ellerth and Faragher v. City of Boca Raton that established new standards for employer liability for sexual harassment. Although the two cases presented different questions and factual predicates, the Court adopted a unified holding with respect to employer liability for supervisor harassment. Many commentators interpreted the new standards as a blow to employers based on the perception that employers would now be held accountable for workplace harassment without regard to their culpability. The thesis of this article is that the conventional wisdom with respect to Faragher and Ellerth is dead wrong. Those decisions, far from imposing additional liability on innocent employers, have instead created a virtual safe harbor that protects employers from liability unless their own conduct is found wanting. This protection for employers comes at a high price, depriving some victims of actionable sexual harassment of legal redress. Part I of this article outlines the new standards for employer liability for supervisory harassment and their doctrinal underpinnings. The Court in Faragher and Ellerth noted that negligence provides a minimum standard of liability for harassment by any employee, but concluded that in addition employers can be held vicariously liable for supervisor harassment based on the agency principle that holds masters liable for the actions of their servants when those servants are aided by the agency relation. Because supervisors who harass their subordinates meet that test, agency principles justify holding employers vicariously liable for the harassment. However, the Court fell short of a pure rule of strict vicarious liability by providing employers with an affirmative defense in cases where the supervisor did not take any tangible employment action against the victim (namely, hostile environment cases). An employer who can prove the affirmative defense can reduce its damages or escape liability altogether. Part II of the article revisits these new standards as applied to a series of hypothetical cases and demonstrates that the standards of liability are far more indulgent to employers than an abstract discussion suggests. The effective standard of employer liability turns primarily on the construction of the affirmative defense. If the affirmative defense affects only the remedies available, then the standard adopted more closely approximates strict liability: the employer\u27s after-the-fact efforts to stop the harassment and the victim\u27s failure to complain do not negate liability, but instead mitigate damages. If, however, the affirmative defense negates liability even for the prior acts, then the effective standard becomes far more lenient to employers-hence, the first free bite. Parts III critiques the new standards in theory and in practice: the Supreme Court would have the affirmative defense sometimes affect damages and liability; however, this part argues that the affirmative defense should never affect liability, but only damages. Finally, Part IV critiques the Court for ignoring the many instances in civil rights law where mitigating factors have not been permitted to affect the threshold finding of liability. This part proposes a legislative correction to the problem created by Faragher and Ellerth, one which strikes a reasonable compromise between the competing interests of employers and victims while remaining faithful to the underlying goals of Title VII