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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

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Labor Talk Blog: Supreme Court Decision Narrows Potential for Employer Liability in Harassment Claims

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July 17, 2013

The Supreme Court recently narrowed the definition of "supervisor" in harassment suits. In Vance v. Ball State University the Court defined supervisors as those empowered by the employer to take tangible employment actions against the alleged victim. Previously those that directed employees' day-to-day activities were considered supervisors. While seemingly mere "word games," this decision will have an important impact on employment litigation.

As news of the decision made its way around the web, some commentators misconstrued the decision by stating or implying employers face liability only if a supervisor engages in harassment. Such a construction is flat-out wrong. There are three standards of liability in harassment cases brought under Title VII:

  • strict liability for supervisor harassment: harassment that results in a tangible employment action (i.e., hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits);
  • vicarious liability for supervisor harassment: harassment that does not result in a tangible employment action, but places the burden on the employer to establish a defense; or
  • direct liability for co-worker harassment: harassment for which the employer has been negligent in addressing.

The Vance ruling simply defines who fits into which scenario. Resolving a circuit split in favor of a narrow definition "supervisor," the Court limited the number of people who could subject their employers to strict or vicarious liability. The negligence standard now applies in a greater number of instances, thus placing the burden on the plaintiff employee to establish not only a prima facie case of harassment, but also that an employer has been negligent in addressing that harassment.

The case is good news for employers: fewer of their employees can subject them to vicarious liability. The Supreme Court's narrow definition of supervisor means fewer employees will be considered supervisors, and more harassment scenarios will involve co-workers. As noted, these cases require claimants to show an employer has been negligent in addressing that harassment. The Vance decision, however, should not be wrung for more than it can give. The Court was clear that simply re-labeling positions will not protect employers from vicarious liability. Those employees who have the knowledge and judgment necessary for taking an adverse employment action will likely be considered supervisors, regardless of their title or whether others officially take the action while relying upon that knowledge and judgment. Additionally, workers given some authority over others, while continuing to work closely with their co-workers, are often the employees charged with implementing employer policies and addressing potentially-harmful situations as they occur. Employers should continue to invest in training and relationship-building with these employees so that potential issues can be identified and resolved as quickly as possible.

Finally, this issue may not be resolved. The dissent called upon Congress to correct the Court's "wayward interpretation[] of Title VII" as it had in the past. Keep apprised of developments in the law and stay in contact with your employment attorneys who will be watching for action in Congress, interpretation of the decision by lower courts and guidance from the EEOC.

The difference in liability standards is important and has appreciable impact on employers. Under the strict liability standard, an employer has no defense once a plaintiff makes out a case of harassment that results in a tangible job action. Under the vicarious liability standard, a "rogue" supervisor has not effected a tangible employment action but only created a hostile work environment. In those instances, the employer is liable but has an affirmative defense if the employer can show 1) that the employer took reasonable care to prevent and promptly correct any harassment (i.e., has a well-publicized policy in place) and 2) the plaintiff unreasonably failed to take advantage of the procedures in place.

Under the negligence standard, the employee must establish the case of harassment and also prove the employer knew or should have known about the harassment and failed to take remedial action.

In its reasoning in the Vance decision, the Court relied heavily upon agency law as grounds for reducing the pool of employees who qualify as supervisors in a harassment case. The ability to take an adverse employment action "is the defining characteristic of a supervisor"1 and allows a supervisor to exert power from an official role for the employer. A supervisor, then, is limited to those who can take such tangible employment actions against another employee and, as a result, can subject the company to liability for those actions.

Importantly, the Court did not accept the Equal Employment Opportunity Commission's Enforcement Guidance on the issue. The EEOC, and several circuits that followed its guidance, defined a supervisor as one who has the ability to exercise significant direction over another's daily work. The Court acknowledged co-workers empowered to make assignment and scheduling decisions can create intolerable working environments – as any co-worker can – but found a negligence standard was appropriate where these co-workers were not empowered to take tangible job actions.

The Court split 5-4 on the decision, with a vigorous dissent authored by Justice Ginsburg, who expressed the view that co-workers who could direct the daily activities of others should have supervisor status. This dissent asserted many employees who would not meet the rigorous test set forth by the majority exercise employer-conferred supervisory authority over potential victims of harassment sufficient to aid in their harassment.

The dissent also supported the more fact-based test of the EEOC's Guidance. But, a great benefit of the narrower interpretation, according to the majority, is that determining whether an alleged harasser is a supervisor should be accomplished at the earliest stages of litigation, thereby permitting accurate assessment of a case’s merits and increasing the possibility of pre-trial resolution.

The case is good news for employers: fewer of their employees can subject them to vicarious liability. But, as noted earlier, the Court was clear that simply re-labeling positions will not protect employers from vicarious liability. Those employees who have the knowledge and judgment necessary for taking an adverse employment action will likely be considered supervisors, regardless of their title or whether others officially take the action while relying upon that knowledge and judgment. Additionally, workers given some authority over others, while continuing to work closely with their co-workers, are often the employees charged with implementing employer policies and addressing potentially-harmful situations as they occur. Employers should continue to invest in training and relationship-building with these employees so that potential issues can be identified and resolved as quickly as possible.


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