HARASSMENT AND RETALIATION: Two New California Supreme Court Cases Increase Your Risks; How to Protect Your Company Audio Conference Thursday, September 15, 2005 10:30 a.m. – noon PDT Presented by: Mark Kanelos Peter Rukin Mary L. Topliff 99410500_0509_handout © 2005 EMPLOYER RESOURCE INSTITUTE This publication is designed to provide accurate and authoritative information about the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.) All rights reserved. These materials may not be reproduced in part or in whole by any process without written permission from the publisher. This program has been approved for 1.5 recertification credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI). For more information about certification or recertification, please visit the HRCI homepage at www.hrci.org. Questions or comments about this publication? Contact: Employer Resource Institute 1819 Polk Street, #290 San Francisco, CA 94109 (800) 695-7178 Peter Rukin of Rukin Hyland Doria & DuFrane in San Francisco has litigated class action and individual employment cases in California and across the United States. He is the author of the section on Rule 23(b)(1) class actions in the upcoming BNA treatise Class Actions in Employment Law, and he has published numerous articles on employment issues in national and state bar publications. Peter has served as counsel of record in various state and federal reported decisions, including as counsel for amici Mexican American Legal Defense and Education Fund et al in Kolstad v. American Dental Association, 119 S.Ct. 2118 (1999). He has also been appointed class counsel in various class action cases since forming his own firm in March 2003. Peter graduated from New York University School of Law in 1991 and served as law clerk to U.S. District Court Judge Harry D. Leinenweber in Chicago. Following his clerkship, Peter practiced at employee-side firms in Chicago (Stowell & Friedman) and New York (Vladeck Waldman Elias & Engelhard) and served as Of Counsel in the Employment Law Department at Paul, Hastings, Janofsky & Walker in San Francisco before starting his own firm. Peter is admitted to the State Bars of California and New York, the bars of various federal district courts, the Ninth Circuit Court of Appeals, and the United States Supreme Court. He is a member of the California Employment Lawyer’s Association and the National Lawyers Guild, and regularly volunteers his pro bono services to the Lawyers’ Committee for Civil Rights. Peter is “AV” rated by Martindale Hubbell. Peter Rukin Rukin Hyland Doria & DuFrane LLP 100 Pine Street, Suite 725 San Francisco, CA 94111 phone: 415-421-1800 fax: 415-421-1700 [email protected] © 2005 EMPLOYER RESOURCE INSTITUTE (1) Mary L. Topliff, of the Law Offices of Mary L. Topliff in San Francisco, specializes in employment law counseling, training, and compliance. Her proactive approach to employee relations issues offers practical solutions consistent with legal requirements and good management principles. She regularly advises business owners and human resources professionals on all aspects of workplace issues. She also drafts and negotiates employment and separation agreements on behalf of executives. Ms. Topliff designs and implements customized training and resource tools on various subjects, including harassment prevention, employment law for managers, exempt/nonexempt job classifications, disability accommodations, and leaves of absence. Ms. Topliff is a frequent speaker on practical applications of workplace legal issues and recent legal/legislative developments. She has been an adjunct faculty member with San Francisco State University’s College of Extended Learning since 1999. Her courses include Employee Relations and Legal Aspects of Human Resources Management. She has also taught the Employment Law course at California State University at Hayward College of Continuing Education. Ms. Topliff is the statewide Legislative Director for the Society of Human Resource Management, and she is the past chair of the Legislative Affairs Committee for the Northern California Human Resources Association. She is on the Board of Directors of the Financial Women’s Association and is a member of the Board of Trustees and Chair of the Human Resources Committee of the Fort Mason Foundation in San Francisco. She is an active member of the Labor and Employment Law sections of the Bar Association of San Francisco, the American Bar Association, and the State Bar of California. She serves as an arbitrator for the Bar Association of San Francisco’s Attorney Fee Dispute Panel. She was admitted to the California State Bar in 1988. Ms. Topliff received her Juris Doctorate from The Ohio State University in 1988 and her Bachelor of Science in Business Administration with an emphasis on Human Resource Management from Bowling Green State University in 1982. Prior to attending law school, Ms. Topliff was a human resources practitioner for the United States Court of Appeals for the Tenth Circuit. Law Offices of Mary L. Topliff One Embarcadero Center, Suite 2300 San Francisco, CA 94111 home: 415-398-9597 fax: 415-398-9599 w: www.joblaw.com © 2005 EMPLOYER RESOURCE INSTITUTE (2) Mark Kanelos is ERI’s audio conference producer; he coordinates and moderates many ERI audio conferences. Prior to joining ERI, he was a partner with the law firm of Kanelos, Kanelos, and Tichenor, P.C., where he handled numerous cases dealing with various aspects of employment law. He earned his J.D. from the John Marshall Law School and his B.S. from Roosevelt University. © 2005 EMPLOYER RESOURCE INSTITUTE (3) I. Miller v. Department of Corrections A. Case Summary • Issue Presented to the Court: Whether favoritism by a supervisor toward a female employee with whom the supervisor is conducting a consensual sexual affair can create a hostile environment for co-workers in violation of the Fair Employment and Housing Act? • The events in this case took place from 1994 to 1998. Plaintiff Edna Miller was a correctional officer. The male warden at a women’s correctional facility had sexual affairs with three women co-workers at various times. One of the women interviewed for a promotional position, was initially not selected by the interviewing panel, although the warden interceded to ensure the promotion. The paramour in question bragged that she could get what she wanted due to her sexual relationship with the warden. Later, Miller and another of the “paramours” compete for a promotion, who informed Miller that she was assured the promotion due to her relationship. Again, the paramour received the promotion, despite the interviewing panel’s conclusion that Miller was more qualified. Following the plaintiffs’ internal complaint, an internal affairs investigation was conducted in which it noted that the staff viewed the sexual relationships as creating a hostile environment and unethical. • Plaintiff Frances Mackey was a records manager at the same facility who desired to be promoted to a correctional counselor. One of the warden’s paramours believed that Mackey had complained about the affair and thereafter engaged in retaliatory conduct. Mackey felt powerless to take any action after witnessing another employee being fired after complaining about the warden’s conduct. Following the internal affairs investigation, the warden reduced her responsibilities and denied her access to work experience she would need to be promoted. • The court noted that hostile environment claims are evaluated based on the totality of the circumstances as to whether the conduct was severe or pervasive enough to alter the conditions of employment. It relied on an EEOC Policy Guidance on Employer Liability under Title VII for Sexual Favoritism, which was issued under thenCommissioner Clarence Thomas. That guidance notes that widespread sexual favoritism may create a hostile work environment by sending the demeaning message that managers view female employees as “sexual playthings” or that the way for women to get ahead in the workplace is by engaging in sexual conduct. • Posture of the case: Summary judgment entered in the employer’s favor by the trial court was affirmed by the Court of Appeal, meaning that the court found there to be no issue for the jury to decide. The Supreme Court’s reversal of the lower courts’ decisions means the case will go back to the trial court for a jury trial. One of the plaintiffs died before the case was decided by the Supreme Court. © 2005 EMPLOYER RESOURCE INSTITUTE (4) B. What Does This Case Mean? • Expect more favorable cases for employees by the California Supreme Court • Favoritism cases likely to be favorable for plaintiffs in front of a jury • Case should not be a surprise, especially given the facts • Difficult to defend these types of cases (e.g., arguing that this type of behavior is acceptable) • Legal Standard requires more than isolated instance of favoritism C. Action Steps for Employers • Harassment prevention policies are only effective if carried out • Never a good practice for a manager to have sexual relationships with direct reports • Important to conduct neutral internal investigations and taking remedial action • Hold managers accountable for their own personal behavior © 2005 EMPLOYER RESOURCE INSTITUTE (5) II. Yanowitz v. L’Oreal A. Case Summary • Issue Presented to the Court: Whether an employee’s refusal to follow a supervisor’s order that she reasonably believed to be discriminatory constitutes protected activity under FEHA and that an employer may not retaliate against the employee on the basis of that conduct when the employer knows the employee’s belief even when she has not explicitly objected? • Plaintiff had been a regional sales manager since 1986. After a reorganization in 1997, her job responsibilities expanded to include responsibility for the Ralph Lauren sales force and marketing campaigns. That year, her new manager toured different stores with her and later instructed her to terminate a dark-skinned female associate because he did not find her to be sufficiently attractive. He also told her to “get me somebody hot.” On a return trip to the store, the manager noticed that the employee was still there and he told Yanowitz again to terminate her. Yanowitz asked him to provide adequate justification for dismissing the associate. Although she did not ever terminate the associate, she never explicitly told the manager that she believed it to be discriminatory. In April 1998, the VP of Sales for the division began soliciting negative information about Yanowitz from her subordinates. This led to a meeting with Yanowitz to discuss her performance and later a detailed memorandum. Two days after a meeting in which these performance deficiencies were discussed, Yanowitz went on a stress leave of absence from which she did not return. • To establish a claim of retaliation under FEHA, plaintiff must show that she engaged in a protected activity, the employer subjected the employee to an adverse employment action and a causal link between the protected activity and the employer’s action. • The Court notes that “protected activity” for retaliation purposes includes an employee’s opposition to conduct that the employee reasonably believes to be unlawful, whether or not it is ultimately found to be so. Further, “a rule that permits an employer to retaliate against an employee with impunity whenever the employee’s reasonable belief turns out to be incorrect would significantly deter employees from opposing conduct they believe to be discriminatory.” • The Court focused not on whether a formal accusation of discrimination had been made by Yanowitz but whether her communications to the employer sufficiently conveyed her reasonable concerns that the employer had acted in an unlawful discriminatory manner. It found that her refusal to carry out the termination order and request for a valid reason to do so was sufficient. © 2005 EMPLOYER RESOURCE INSTITUTE (6) The other issue in the case involved whether Yanowitz suffered an “adverse employment action.” The Court adopted the standard that this requires either a showing of a tangible employment action, such as termination or demotion, or adverse treatment that is reasonably likely to impair a reasonable employee’s job performance or prospects for advancement. Yanowitz’s evidence included unwarranted criticism of her performance and her manager’s gathering of negative feedback. The Court held that this was sufficient to be decided by the jury. • Posture of the case: Summary judgment entered in the employer’s favor by the trial court was reversed by the Court of Appeals, meaning that the court found there to be issues for the jury to decide. The Supreme Court affirmed the Court of Appeals’ decision and the case will go back to the trial court for a jury trial. • © 2005 EMPLOYER RESOURCE INSTITUTE (7) B. What Does This Case Mean? • Very favorable decision for plaintiffs who could wait until after they leave the company to raise these types of issues. • Difficult from practical perspective to guard against these types of claims. • Case had unfavorable facts for employer, including other potentially retaliatory conduct (e.g., fishing expedition for co-worker and subordinate complaints about plaintiff). C. Action Steps for Employers • Important to train managers regarding appropriate hiring practices and what constitutes unlawful discrimination • Encourage employees at all levels to report concerns about discrimination and retaliation • Ensure that performance criticisms are valid; discourage “fishing expeditions” for negative feedback © 2005 EMPLOYER RESOURCE INSTITUTE (8) III. Closing Thoughts and Tips © 2005 EMPLOYER RESOURCE INSTITUTE (9) Thank You We hope you’ve found this conference valuable. CD recordings of this conference can be ordered by calling 1-800-695-7178. You can also go to www.employeradvice.com/audio for information about CD recordings of this and past conferences, as well as information about our upcoming audio conferences. We hope you’ll consider joining us again soon. Please be sure to complete and return your program evaluation. Evaluations will be e-mailed to participants shortly after the conference. © 2005 EMPLOYER RESOURCE INSTITUTE (10) HARASSMENT AND RETALIATION: Two New California Supreme Court Cases Increase Your Risks; How to Protect Your Company Supplemental Materials 1. Sexual Harassment: Workplace Romance May Now Lead to Harassment Claims by Co-Workers Alleging “Sexual Favoritism”; How to Protect Yourself © Employer Resource Institute 2. Discrimination: New Decision Makes It Easier for Employees to Sue for Retaliation When They Oppose Workplace Bias; 4 Protection Measures © Employer Resource Institute 3. Sexual Harassment: Employer Fights Off Big Punitive Damages Award; What Went Wrong and How to Protect Yourself © Employer Resource Institute 4. Sexual Harassment: High Court Clarifies Law on Constructive Discharge in Harassment Cases; Lawsuit Prevention Strategies © Employer Resource Institute 5. Employee Dating: Court Upholds Employer’s Nonfraternization Policy After Supervisor Terminated for Dating Subordinate © Employer Resource Institute 6. Miller v. Department of Corrections, Calif. Supreme Court No. S114097, 2005 This case is available at www.courtinfo.ca.gov/opinions/documents/S114097.PDF. 7. Yanowitz v. L’Oreal, Calif. Supreme Court No. S115154, 2005 This case is available at www.courtinfo.ca.gov/opinions/documents/S115154.PDF. Every month, the California Employer Advisor provides all the news California employers need to know in an information-packed eight-page newsletter. We combine breaking case news, government regulations, and new legislation with practical tips to keep you in the loop and out of court. For more information on subscribing to this valuable resource, go to www.employeradvice.com. © 2005 EMPLOYER RESOURCE INSTITUTE (11) Sexual Harassment: Workplace Romance May Now Lead to Harassment Claims by Co-Workers Alleging “Sexual Favoritism”; How to Protect Yourself SEPTEMBER 2005 In a significant expansion of harassment law, the California Supreme Court has ruled that when a boss grants promotions or other favorable treatment to a sexual paramour, that “sexual favoritism” can give rise to a hostile work environment sex harassment claim by colleagues who weren’t the target of sexual advances. Until now, sexual harassment suits had been confined to those who had been actual harassment victims. Unfortunately for employers, the new ruling will likely open the floodgates to harassment claims based on sexual favoritism. We’ll explain the decision and the steps all employers should take to help limit their risk. Boss’s Affairs Lead to Lawsuit Edna Miller and Frances Mackey, who worked for the California Department of Corrections at Valley State Prison for Women in Chowchilla, charged that warden Lewis Kuykendall had ongoing sexual relationships with several of their female co-workers, and that these women received preferential treatment, including promotions. They contended that the very public nature of Kuykendall’s amorous relationships with these co-workers created a hostile work environment, and that they were retaliated against when they complained. A California appeals court threw out the lawsuit (see CEA April 2003), ruling that any unfair treatment Miller and Mackey may have experienced wasn’t based on their gender. Sexual Favoritism Can Create Hostile Work Environment But the California Supreme Court has reversed the earlier ruling.1 According to the high court, employees who are not the target of sexual advances can sue for sexual harassment if a supervisor’s favoritism that is based on the granting of sexual favors is widespread in the workplace, creating a hostile work environment for colleagues. This is true even when the sexual favors are given consensually, as occurred here. Borrowing from an Equal Employment Opportunity Commission policy statement on employer liability for sexual favoritism, the court said that when such conduct is widespread, a message is implicitly conveyed that managers view women as sexual playthings, which creates a demeaning atmosphere for women in the workplace. What’s more, supervisors who engage in sexual favoritism send a message that the way to get ahead in the workplace is to sleep with the boss. Green Light for Trial The court concluded that a reasonable jury could find that the favoritism was sufficiently widespread to create a hostile work environment for Miller and Mackey, in light of the “considerable flaunting” of the sexual relationships between Kuykendall and his various paramours and because the favoritism appeared to be on “public display.” This was reflected, for example, in Kuykendall’s permitting a paramour to abuse Miller and Mackey, and in his awarding a sequence of promotions to a flame. Thus, said the court, Miller and Mackey can now take their case to a jury. © 2005 EMPLOYER RESOURCE INSTITUTE (12) Decision’s Impact This ruling opens the door for sexual harassment claims from employees—both female and male—whenever bosses are involved in office romances. Whether you can be held liable will depend on whether any sexual favoritism resulting from the relationship is widespread or merely isolated—but this will likely be a difficult determination to make. The knee-jerk reaction for many employers might be to completely prohibit supervisors from having consensual affairs with employees. But, cautions Wendy Woldt, a lawyer with Woldt & Associates in Torrance, such an across-the-board ban may violate privacy rights, as well as a California law that bars employers from taking adverse action against an employee based on the employee’s legal off-duty conduct. However, it is clear that employers will need to take serious measures to ensure that office romances, which are inevitable, don’t create a hostile work environment for others in the workplace. Here are some proactive steps to take: 1. Consider adopting a nonfraternization policy. A nonfraternization policy informs employees that if a personal relationship creates conflicts of interest, causes workplace disruptions, or engenders a negative or hostile work environment, one or both individuals involved may be asked to transfer or resign. The conflict of interest component can bar managers from participating in employment decisions if they have a romantic or other close relationship with the employee. These policies can also require employees to inform you of office relationships. 2. Expand sexual harassment policy and training. Woldt suggests adding language to your antiharassment policy regarding sexual favoritism. A sample policy is available in the Subscriber Resources section of our website. Also, make sure this topic is discussed in the sexual harassment training you conduct for all employees, as well as during the mandatory A.B. 1825 training for managers and supervisors. 3. Take complaints seriously. If an employee claims a supervisor is engaging in sexual favoritism, make sure to follow up on the complaint immediately, just as you would for any other sexual harassment complaint. 1 Miller v. Department of Corrections, Calif. Supreme Court No. S114097, 2005 © 2005 EMPLOYER RESOURCE INSTITUTE (13) Discrimination: New Decision Makes It Easier for Employees to Sue for Retaliation When They Oppose Workplace Bias; 4 Protection Measures OCTOBER 2005 (IN PRESS) The California Supreme Court has expanded the rights of employees to sue for retaliation when they oppose workplace discrimination. The court’s ruling concludes that retaliation protections are available under the state’s antibias law even if an employee’s opposition to conduct perceived as discriminatory is silent. We’ll explain the ruling and provide guidance on how you can avoid these types of claims. Supervisor Ordered to Replace Employee Over Looks Elysa Yanowitz received consistently high performance ratings during her career at cosmetics company L’Oréal USA Inc., although there was some criticism of her communication and listening skills. She was eventually promoted to regional sales manager. Problems began when L’Oreal general manager John Wiswall told Yanowitz to fire a darkskinned female sales associate at a San Jose Macy’s store because she was “not good-looking enough.” Wiswall also reportedly said that Yanowitz should instead get him “somebody hot.” When Wiswall later discovered the sales associate hadn’t been dismissed, he allegedly again told Yanowitz to fire the associate. Then, referring to an attractive blond woman nearby, Wiswall said to Yanowitz, “God damn it, get me one that looks like that.” Manager Refuses Order Yanowitz refused to terminate the sales associate, who was among the top fragrance salespeople at the Macy’s store. However, Yanowitz never complained to anyone at L’Oreal that Wiswall was pressuring her to fire the sales associate. When Wiswall, on several occasions, asked why the sales associate hadn’t been dismissed, Yanowitz asked him to provide “adequate justification” for the termination. From that point on, Wiswall and Yanowitz’s immediate supervisor allegedly subjected Yanowitz to heightened scrutiny, including baseless audits of her travel expenses and hostile evaluations. She went out on stress leave and was eventually replaced. Yanowitz sued, contending she was retaliated against because she opposed sex discrimination under the California Fair Employment and Housing Act (FEHA). L’Oréal countered that Yanowitz’s refusal to carry out the order wasn’t protected activity for purposes of an FEHA retaliation claim. A California appeals court ruled Yanowitz could take her case to a jury (see CEA May 2004), and L’Oreal appealed. Silence Doesn’t Defeat Retaliation Claim Now the California Supreme Court has weighed in. The court explained that to prove retaliation under the FEHA, the employee must demonstrate that they were subjected to an adverse employment action because they engaged in a “protected activity.” Protected activity includes complaints or opposition to conduct the employee reasonably and in good faith believes to be illegal under the FEHA, even if it turns out the conduct isn’t actually prohibited by the FEHA. © 2005 EMPLOYER RESOURCE INSTITUTE (14) The court said that an employee doesn’t have to explicitly inform the employer that they believe the challenged conduct is discriminatory--the employee’s opposition is protected so long as the circumstances surrounding the employee’s actions are sufficient to convey to the employer the employee’s concerns that the employer has engaged in discrimination. A jury could find that Wiswall was on notice that Yanowitz declined to follow his order because it was discriminatory, in light of the nature of his order and that Yanowitz repeatedly requested an “adequate justification.” Plus, there was evidence that Yanowitz reasonably believed that requiring a certain physical attractiveness was sex discrimination—and, the court added, the FEHA does bar such requirements when they’re not gender-neutral. What’s an Adverse Action? The supreme court also addressed the definition of an “adverse employment action.” According to the court, it is one that materially impacts a worker’s terms and conditions of employment. This encompasses ultimate employment actions such as termination or demotion, but also actions that are reasonably likely to adversely and materially affect an employee’s job performance or opportunity for advancement, although mere offensive statements or petty social slights wouldn’t qualify. The court rejected a broader definition—embraced by the EEOC and the federal appeals court that covers California—that includes any action that is reasonably likely to deter employees from engaging in protected activities. The court ruled that Yanowitz was subjected to a pattern of conduct that, taken as a whole, could qualify as an adverse employment action. This included the negative performance evaluations and unwarranted criticism, as well as the company’s refusal to permit her to respond to these actions. Protection Measures The key risk for employers in the aftermath of this decision is that employees will claim retaliation even though they never openly complained about discrimination or harassment in the first place. Here are some measures that can help manage this risk and avoid retaliation charges: 1. Review policies. Make sure you have strong policies prohibiting bias and harassment, and that you have spelled out a comprehensive system that makes it easy for employees to complain about problems, including having multiple avenues for an employee to raise issues of concern. Be sure to distribute the policy, at least annually, and conduct training for all employees. 2. Train managers. In the required A.B. 1825 training (see CEA November 2004), make sure to address the issue of retaliation, including what amounts to an adverse employment action. 3. Be proactive. If there’s even a hint that an employee may be opposing conduct that could be perceived as biased—even if the employee hasn’t expressly said so--make efforts to followup with the employee to determine the basis for their actions, such as refusing a manager’s orders. 4. Build in review. As the court noted, adverse employment actions can encompass many types of workplace decisions. To help ensure that management actions aren’t retaliatory, consider having the HR department or a higher-level supervisor review adverse decisions or actions, including negative performance reviews or warnings that will become part of an employee’s file. 1 Yanowitz v. L’Oréal USA Inc., Calif. Supreme Court No. S115154, 2005 © 2005 EMPLOYER RESOURCE INSTITUTE (15) Sexual Harassment: Employer Fights Off Big Punitive Damages Award; What Went Wrong and How to Protect Yourself JULY 2005 Diane Gober worked at a Ralphs Grocery Co. store in Escondido managed by Roger Misiolek. Gober’s husband complained to Ralphs management that Misiolek harassed Gober and other female employees by touching them inappropriately, using profanity, commenting on their sex lives, and throwing objects at them. A sexual harassment lawsuit ensued, and now Ralphs is fighting off a staggering punitive damages verdict that was fueled by evidence that the company knew about Misiolek’s propensity for misconduct but took no action. Discipline Not Effective Ralphs moved Misiolek out of the store while it investigated Gober’s complaint and eventually concluded the allegations had merit. Misiolek was given a written memo concerning the harassment, stating that failure to improve could lead to further discipline, including termination. Misiolek was then transferred to a store in Mission Viejo, which was farther from his home; Ralphs intended the longer commute to be a form of punishment. Ralphs never told the Mission Viejo operations manager why Misiolek was transferred there. Misiolek’s misconduct continued at the new store and, as a result, he was demoted to a clerk position. Second Time’s Not a Charm Gober and five female employees who had worked with Misiolek at the Escondido store sued Ralphs for sexual harassment. A jury found Ralphs didn’t take reasonable steps to prevent the harassment and awarded $550,000 in compensatory damages, plus another $3.3 million in punitive damages. Ralphs won a new trial on the punitive damages amount. But the second time around, a jury awarded each woman a whopping $5 million in punitive damages. The trial judge reduced the damages and told the women they could choose between another new trial or accepting the lesser punitive damages. Some women accepted, but the others appealed. Ralphs also appealed the entire award. Prior Misconduct Admissible Now, a California appeals court has ruled that evidence supported a punitive damages award, but Ralphs can have another trial to determine the proper amount of such damages.1 To do so, the appeals court made clear, the new jury can consider evidence of harassment by Misiolek that occurred prior to his assignment to the Escondido store, as this could demonstrate that Ralphs knew about problems with Misiolek but allowed the harassment to occur. But the court also ruled that evidence of harassment occurring after Misiolek left Escondido wasn’t relevant. That’s because it had no bearing on Ralphs’ knowledge at the time the wrongful acts at the heart of the lawsuit took place—those occurring while Misiolek worked at the Escondido store. However, such evidence can come in to play if Ralphs opens the door by arguing that it “’cleaned up’ its act when it first learned of Misiolek’s misconduct.” © 2005 EMPLOYER RESOURCE INSTITUTE (16) Take Prompt Action on Complaints This case is a cautionary tale of the consequences that can result from not taking prompt and decisive action when harassment occurs. Misiolek had apparently engaged in harassment even before the incidents involving Gober and others at the Escondido store—and there was evidence that Ralphs knew about these prior problems but still gave him a position of authority as the Escondido store manager earlier in article. As a result, Ralphs is facing punitive damages and mountains of legal bills. For details on how to properly respond to harassment problems, see the newly revised CEA Special Report, “The Step-by-Step Sexual Harassment Prevention Guide for California Employers.” You can read the new decision in the Subscriber Resources section of our website. 1 Gober v. Ralphs Grocery Co., Calif. Court of Appeal (4th Dist.) No. D040473, 2005 © 2005 EMPLOYER RESOURCE INSTITUTE (17) Sexual Harassment: High Court Clarifies Law on Constructive Discharge in Harassment Cases; Lawsuit Prevention Strategies AUGUST 2004 The U.S. Supreme Court has ruled that a constructive discharge—in which the work environment becomes so intolerable that an employee is forced to quit—can amount to an adverse employment action in a hostile environment sexual harassment case. And, depending on the circumstances, you could be held automatically liable in this situation if the harasser is a supervisor. We’ll explain the new ruling and why having a strong anti-harassment program is more important than ever. Harassed Employee Asks for Help, Then Quits Nancy Drew Suders was a dispatcher for the Pennsylvania State Police (PSP). She claimed her bosses continually subjected her to severe sexual harassment, including sexual comments and obscene gestures. Suders requested help from PSP’s equal employment opportunity officer but didn’t feel she received an adequate response. A few days later, she resigned. Employee Sues Suders sued PSP for sexual harassment, claiming PSP should be held automatically liable for the harassment because the perpetrator named in her suit was a supervisor. PSP said it wasn’t liable and pointed to a defense of supervisor harassment that the U.S. Supreme Court established several years ago. Specifically, employers can escape liability— provided no tangible employment action was taken against the employee if 1) the employer exercised reasonable care to prevent and correct harassing behavior, and 2) the employee didn’t take advantage of the employer’s corrective or preventive opportunities or otherwise failed to avoid harm. (This employer defense does not apply in California, however. See below for more.) PSP argued that Suders didn’t avail herself of PSP’s internal antiharassment procedures. Suders responded that the defense didn’t apply because she was constructively discharged or, in other words, was the victim of a tangible employment action. Employers Automatically Liable for “Official Actions” The Supreme Court explained in this case that to establish constructive discharge, the employee must demonstrate that the abusive working environment became so intolerable that her resignation was a fitting response. What’s more, said the court, a constructive discharge can qualify as a tangible employment action, eliminating the employer defense to supervisor harassment. In particular, an employer will be automatically liable if an employee quits in reasonable response to an employer-sanctioned action that “officially” changes the person’s employment status or situation. The court’s examples of such actions include a humiliating demotion, extreme cut in pay, or transfer to a position in which the employee would face unbearable working conditions. If no such official act occurs, the employer defense will be available in a constructive discharge case. © 2005 EMPLOYER RESOURCE INSTITUTE (18) The court was not absolutely clear about what an official action is. Nor did the court reach a conclusion as to whether Suders was subjected to an official action that resulted in her constructive discharge. The high court returned Suders’s case to a lower court for trial, which will determine whether PSP was entitled to use the employer defense.1 Protect Yourself The Supreme Court’s decision is a mixed victory for employers. On the one hand, the ruling establishes that you may be able to avoid automatic liability for supervisor sexual harassment when a constructive discharge is involved. On the other hand, if the employee can tie his or her resignation to an official adverse action by the supervisor, you will be held strictly liable for the harassment. Smart employment practices include a strong anti-harassment policy, comprehensive complaint and investigation procedures, and a thorough training program for all employees and managers. For more details on preventing harassment, see the CEA Special Report, “The Step-by-Step Sexual Harassment Prevention Guide for California Employers.” California Rules Different It is important to keep in mind that under California law, the employer defense relied on in the Suders case won’t absolve the employer of liability for supervisor harassment. Rather, the employer remains automatically liable but can limit the victim’s damages by showing that she failed to avail herself of the employer’s antiharassment program to avoid harm. (See CEA January 2004 for details.) 1 Pennsylvania State Police v. Suders, U.S. Supreme Court No. 03-95, 2004 © 2005 EMPLOYER RESOURCE INSTITUTE (19) Employee Dating: Court Upholds Employer’s Nonfraternization Policy After Supervisor Terminated for Dating Subordinate FEBRUARY 2004 Given how much time employees spend at work, it’s no surprise that romantic liaisons often develop. Many turn into happy relationships, but some end in disaster—for both the participants and their employer. This is particularly true when one person has direct or indirect control over the other at work, which can lead to allegations of sexual harassment if the relationship sours. To prevent these problems, some employers have adopted nonfraternization policies. Now, a new California appeal court ruling demonstrates how these policies can protect you. Supervisor Dates Sales Worker Robert Barbee, the national sales manager for Household Automotive Finance Corp. (HAFC), began dating Melanie Tomita, a member of HAFC’s sales force. Because relationships between employees may raise a conflict of interest, HAFC has a conflictof-interest policy that requires a supervisor in a relationship with a subordinate to bring the situation to management’s attention “for appropriate action (i.e., possible reassignment to avoid a conflict of interest).” Supervisor Given Ultimatum When rumors of Barbee’s relationship with Tomita reached company CEO John Vella, he and the company’s HR director, Pat Boney, met with Barbee to tell him the relationship raised a potential conflict of interest. They told Barbee he could either end the relationship or he or Tomita could resign. Barbee was given the weekend to decide. The following Monday, Barbee told Vella and Boney that he and Tomita wanted to keep their jobs. Based on this conversation, Vella and Boney allegedly assumed that Barbee chose to end his relationship with Tomita. But soon after, Barbee attended several basketball games with Tomita using tickets given to him by an HAFC customer. When Vella and Boney learned of this, Barbee was terminated. Supervisor Sues Barbee sued HAFC, claiming that being terminated because of his personal relationship was an invasion of his privacy. He also charged he was wrongfully discharged in violation of a public policy barring employers from taking adverse action against an employee for lawful conduct during nonworking hours away from the employer’s premises. No Invasion of Privacy A California appeal court ruled the termination didn’t violate Barbee’s right to privacy. According to the court, supervisors don’t have a reasonable expectation of privacy in pursuing an intimate relationship with employees who work for them. That’s because employers have legitimate interests in avoiding conflicts of interest between work-related and family-related obligations, in reducing favoritism issues, and in preventing family conflicts from affecting the workplace. © 2005 EMPLOYER RESOURCE INSTITUTE (20) Plus, HAFC limited Barbee’s privacy expectation by issuing a policy regarding the potential for conflict of interest in these situations. The appeal court also rejected Barbee’s wrongful termination claim. The court explained the law Barbee relied on that bars employers from interfering with employees’ outside activities doesn’t set forth a public policy. That’s because this law, Labor Code section 96(k), doesn’t actually give employees any rights but merely sets up a procedure for the labor commissioner to assert constitutional protections on behalf of employees. Thus, said the court, to rely on Labor Code section 96(k) for a wrongful termination claim, Barbee would first have to show that the discharge violated a constitutional interest, such as his right to privacy, which he didn’t do.1 Practical Impact This ruling endorses the use of nonfraternization policies as a way to avoid conflicts of interest in the workplace that can arise out of supervisor-subordinate personal relationships. These policies can be an important part of your efforts to prevent sexual harassment complaints. It’s also important to note this is the first published opinion to look at Labor Code section 96(k), which bars interference with an employee’s outside activities. The court limited the scope of that law’s protection for employees by ruling employees could only sue under the law if the employer’s actions violated a constitutional right. But future decisions could tip the law more favorably toward employees—which could mean greater restrictions on when you can limit what an employee does on his or her own time. That’s because, as this court noted, another Labor Code provision incorporates the prohibitions on employer interference delineated in section 96(k). The court didn’t delve into the scope of this other law because neither Barbee nor HAFC raised it. 1 Barbee v. Household Automotive Finance Corp., Calif. Court of Appeal No. D040421, 2003 © 2005 EMPLOYER RESOURCE INSTITUTE (21)
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