Does your company conduct internal investigations? If so, you should be asking yourself these four crucial questions:
Click here to read more about these important internal investigation concerns in an article recently written by Kelly Ann Bird and published by The Metropolitan Corporate Counsel.
The Second Circuit, in a case of first impression, ruled that an employee is not protected against retaliation prohibited by Title VII of the Civil Rights Act of 1964 (“Title VII”) for participating in an investigation of sexual harassment conducted by an employer before a charge of discrimination has been filed with the Equal Employment Opportunity Commission (“EEOC”). Although under Title VII, employers are duty-bound to appropriately remedy discrimination and harassment in the workplace uncovered by such investigation, employers in the Second Circuit can breathe a modest sigh of relief that a negative employment action affecting an employee who claims protection under Title VII based on “participating” in an investigation following an internal complaint is not actionable.
Factual Background
In Townsend v. Benjamin Enterprises, Inc., plaintiff Martha Diane Townsend alleged that defendant Hugh Benjamin, the sole Vice President of Benjamin Enterprises, Inc. (“BEI”) and husband of defendant Michelle Benjamin, the President of BEI, sexually harassed her. Plaintiff Karlean Victoria Grey-Allen, BEI’s Human Resources Director, conducted an investigation in which she allegedly, inappropriately revealed confidential information during the investigation. Michelle Benjamin terminated Grey-Allen before she completed the investigation, which Grey-Allen claimed was retaliatory based on her participating in the internal investigation.
The District Court dismissed Grey-Allen’s retaliation claim on summary judgment. After a trial, a jury returned a verdict in favor of Townsend against all defendants. The defendants moved for judgment as a matter of law or for a new trial, which the District Court denied. The District Court found that the Farragher/Ellerth affirmative defenses to sexual harassment (established by showing the employer exercised reasonable care to prevent and promptly correct any sexually and harassing behavior, and the employee unreasonably failed to take advantage of any protective or corrective opportunities provided by the employer) are unavailable when the supervisor who committed the sexual harassment, in this case Hugh Benjamin, is sufficiently senior such as to constitute a “proxy” or “alter ego” of the employer. Absent Benjamin’s alter ego status, under Farragher/Ellerth the company could have escaped liability for harassment if it had demonstrated that it conducted an investigation of Townsend’s complaints and took appropriate remedial action.
Grey-Allen appealed the order granting summary judgment on her retaliation claim. The defendants appealed the order denying their motion for judgment as a matter of law of for a new trial. On appeal, the Second Circuit affirmed the District Court’s decision.
Anti-Retaliation Protections
In granting summary judgment, the District Court concluded that although Grey-Allen was investigating an allegation of sexual harassment, the investigation was not connected to any charge of discrimination filed with the EEOC. In interpreting the language of the “participation clause” of Title VII, the Second Circuit looked to other Courts of Appeals which consistently have held that the protections afforded to employees under Title VII from retaliation do not apply to an internal investigation by an employer that is not associated with a formal EEOC proceeding.
Alter Ego Liability
The Circuit Court concluded that Hugh Benjamin’s high managerial rank and significant control over the company’s operations sufficiently enabled a jury to reasonably conclude he was a proxy or alter ego of the company. The Court also ruled that, although the District Court’s jury instructions on the alter ego theory were an error because they lowered the threshold to find Hugh Benjamin an alter ego, the error was harmless because a reasonable juror could not find that he was not an alter ego given the facts of the case. Significantly, he reported directly to the President, exercised managerial responsibility for the company’s day-to-day operations and was a corporate shareholder. Thus the Second Circuit affirmed the District Court’s ruling that the Farragher/Ellerth defense was not available to the company.
Analysis for Employers
Before a formal charge of discrimination has been filed, an employer has a better chance of withstanding a retaliation claim based on its taking action against an employee who participates in an internal investigation. Often an employer may not receive immediate notice from a state agency or the EEOC when a complaint is filed. Therefore, an employer still may be at risk when acting based upon its findings in an investigation and negatively affects an employee who participates in the investigation. Nevertheless, the earlier it implements remedial steps, the better its chances to overcome a retaliation claim. Furthermore, the employer should appropriately document its findings and formulate well-reasoned bases for any response it implements. Finally, employers should train managers to understand potential ramifications resulting when company policy is violated by senior managers. Gibbons attorneys in the Employment & Labor Department are available to assist employers in workplace investigations and related litigation.
Mitchell Boyarsky is a Director in the Gibbons Employment & Labor Law Department.
The adoption and enforcement of a policy regarding consensual workplace relationships is essential for all employers. With the American workforce spending at least one-third of their lives at work, it is inevitable that some employees will engage in romantic and sexual relationships with one another. A recent case in the Eastern District of Pennsylvania, Lucchesi v. Day & Zimmerman Group, reinforces that such relationships may have business and legal costs. While employers cannot prevent these relationships from forming or ending, they can take steps to manage their effect on the workplace and to reduce the potential liability stemming from them. A well-drafted policy is a critical first step.
Office Romances At-a-Glance
According to a recent survey 59% of employees admitted that they have been involved in an office romance, while an additional 64% answered that they would be willing to do so if the opportunity arose. This same survey reported that 75% of employers do not have a policy regarding workplace relationships.
While often harmless, consensual co-worker relationships can create a myriad of problems for the employees involved, their co-workers, and their employer. In addition to the obvious distractions of the romance, when the relationship sours, ends or is no longer consensual, the potential for sexual harassment, discrimination, or retaliation claims increases. Claims arising out of workplace romances, however, are not only brought by the parties to the relationship - as in the Lucchesi case - but also by third-parties. Indeed, a growing number of “paramour favoritism” claims have been brought by employees who claim to be undervalued or “passed over” as a result of a favoritism shown toward a co-worker who is engaged in a romantic relationship with the supervisor. In addition to the obvious impact on employee morale, these situations have led to claims of discrimination and retaliation. While at least one California Supreme Court case held that widespread paramour favoritism may be actionable, most courts, including the New Jersey Appellate Division and the Southern District of New York have found that claims of isolated favoritism are not viable under Title VII and similar state anti-discrimination statutes. This is consistent with the EEOC’s published guidance on employer liability for sexual favoritism. Nevertheless, plaintiffs continue to bring the claims.
The Lucchesi Case
In Lucchesi, No 10-4164 (E.D. Pa. Apr. 21, 2011), the plaintiff sued his former employer alleging he was unlawfully terminated based upon his gender, as well as in retaliation for challenging the fairness of Day & Zimmerman’s handling of a dispute between himself and a female colleague with whom he had engaged in a consensual sexual relationship. During his employment, plaintiff was informed by two human resources officers that his co-worker felt “uncomfortable” in his presence, and that she had complained about text messages and emails she received from the plaintiff on her personal phone and email accounts. The plaintiff then complained to Day & Zimmerman’s senior vice president of Human Resources “that he felt that he was being treated differently than his female co-worker in the company’s ‘investigation’ into her complaint,” noting that one HR officer had spoken to his female co-worker in connection with her complaint, whereas Plaintiff had been “interrogated” by two. Roughly four days after his meeting with HR to discuss these issues, Plaintiff was terminated. According to Plaintiff, one of the HR officers who had spoken with him allegedly told him that the reason he was being terminated was because he might “walk past [the female co-worker’s cubicle],” and this possibility of future interaction between the two created a “gray area” for the company. Plaintiff’s Complaint also excerpted an email from Day & Zimmerman’s counsel to Plaintiff’s previous counsel, in which Day & Zimmerman’s counsel allegedly asserted that Plaintiff was being terminated because he had “admitted to . . . conduct . . . that could be construed as harassment or stalking,” and also because the two HR officers had objected to Plaintiff’s “tone” during their conversation.
In denying Day & Zimmerman’s motion to dismiss the Complaint, which alleged gender discrimination in violation of the Pennsylvania Human Rights Act and Title VII of the Civil Rights Act of 1964, the court held that the facts “raise[d] a reasonable expectation that discovery will reveal evidence of discriminatory animus.”
Practice Tips
Employers who do not already have a policy regarding office-relationships should adopt and implement one, and those who already do, should periodically review and disseminate it. At a minimum, such a policy should require timely and discrete disclosure of the existence (or termination) of a romantic or sexual relationship to a designated member (or members) of company management or Human Resources. This is especially important when the employees involved are in a supervisor/subordinate relationship. Mandatory disclosure allows the employer to address the impact of the relationship proactively, such as whether it is necessary to alter reporting structures or change job responsibilities.
To discuss your company’s policy needs, contact any attorney in the Gibbons Employment Law Department. And watch for more posts on training and information about exciting new Gibbons educational programs on this blog.
Michael J. Riccobono is an Associate in the Gibbons Employment Law Department.
An effective anti-harassment policy has long been recognized as a key component to an employer’s avoidance of liability for sexual harassment. As the New Jersey Appellate Division recently made clear, however, the mere existence of such a policy is insufficient to insulate an employer from liability for its employee’s sexually harassing conduct. Though an unpublished decision, Allen v. Adecco, Inc., provides a powerful reminder that to protect an employer from liability, an anti-harassment policy must be widely publicized, supported by training, and routinely enforced. Indeed, in Allen, although the employer promptly investigated plaintiff’s harassment claim and took prompt remedial action, the court ruled that the employer might still be held accountable if the harassment could have been prevented in the first place but for the employer’s alleged insufficient publication and training with regard to its anti-harassment policies.
Under New Jersey law, an employer will be liable for sexual harassment by a supervisor when the employer is negligent in protecting against a hostile work environment and the supervisor (1) is acting within the scope of the employment when engaging in harassment and (2) has abused delegated authority. An anti-harassment policy is relevant to the issue of the employer’s negligence in protecting against sexual harassment and may also provide the basis for an affirmative defense to vicarious liability imposed on an employer for a supervisor’s harassment of another employee under agency principles.
At issue in Allen was a University of Medicine and Dentistry of New Jersey (UMDNJ) temporary employee’s claim that she was sexually harassed by a supervisor and then terminated in retaliation for complaining about the harassment. The trial judge dismissed the plaintiff’s claims on summary judgment on the basis that UMDNJ had an anti-harassment policy, promptly addressed plaintiff’s complaint by transferring her harasser, and subsequently terminated plaintiff’s assignment due to her job performance and attendance. In reversing summary judgment, the Appellate Division stated that to be entitled to an affirmative defense based on an anti-harassment policy, an employer must demonstrate the policy’s effectiveness through “periodic publication of the policy; an effective and practical grievance process; and training for workers, supervisors and managers on recognition and eradication of unlawful harassment.” The court found issues of fact regarding the effectiveness of UMDNJ’s policy, specifically, whether UMDNJ’s policy was made known to temporary employees like plaintiff, whether the alleged harasser had been trained on the policy, and whether there was an effective monitoring system in place. These issues entitled plaintiff to present her claims before a jury, which “could well conclude that UMDNJ’s commitment to training and monitoring and to eradicating harassment was insufficient to allow it to avail itself of the case law’s safe haven.”
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