Court Watch
September 2000


The Seventh Circuit Court of Appeals recently commended an employer for its "textbook example" of how an employer should react when notified of potential sexual and/or racial harassment in the workplace.

The Harassment
In Hill v. American General Finance, Inc., Louise Hill ("Plaintiff"), an African-American female, filed suit against American General Finance ("AGF") alleging that she was sexually and racially harassed by her supervisor, Darin Brandt ("Brandt"), a white male.  Plaintiff alleged that within a month of her arrival, Brandt commented on the size of his penis, said "I like a woman with a big ass, like [Plaintiff's]," asked her if a doctor's appointment was for her breasts or between her legs, and frequently spoke of  sex and pornographic movies.  Plaintiff further alleged that Brandt once rubbed his pelvis against her buttocks and said, "Boy that feels good" and "Once you go black you never go back".  Plaintiff  claimed that Brandt told her, "Don't come into this office talking black, because this ain't no Aunt Jemima office" and that he was "sick of black people getting food stamps and having all those black babies."

Within five months Plaintiff wrote a letter which she signed "a very worried and frightened employee".   That month the Human Resources Department conducted an investigation.  Plaintiff was interviewed but did not acknowledge she had written the letter.  Gary English ("English"), Director of Operations,  issued Brandt a warning for allowing conversations of a sexual nature to take place.  At the same time, English, who suspected Plaintiff had written the letter, mentioned that AGF would be opening additional offices and suggested that Plaintiff might be interested in a new training program to become an assistant manager.

Notification and the Employer's Immediate Reaction    
Plaintiff subsequently wrote a letter to English in which she set out the instances of harassment and signed her own name.  Two days later, AGF's human resources attorney and outside traveled to Plaintiff's office to investigate the allegations.  English specifically spoke to Plaintiff and told her that if she had any problems she should call him.  AGF conducted a follow-up investigation and determined Brandt should receive a written warning, additional training, and that he should be transferred and demoted with a $10,000.00 reduction in pay.  AGF further transferred Plaintiff in order to prevent retaliation from her co-workers.

The Textbook Approach to Harassment Allegations
An employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate or successively higher authority.  The Court began its analysis by setting forth the two-prong affirmative defense that AGF (and all employers) must prove in order  to  avoid  vicarious liability.   AGF had to  show

1. it exercised reasonable care to prevent and correct promptly any sexually harassing behavior and
    
2. that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. [No affirmative defense is available, however, when the supervisor's harassment culminates in tangible employment action, such as discharge, demotion, or undesirable reassignment.  In this case, the Court did not find Plaintiff's transfer was undesirable, and thus, AGF had the option of proving the affirmative defense.]

The Court first concluded that Plaintiff's anonymous letter did not constitute a reasonable notice of  the  harassment    because   she  did  not  sign  or acknowledge during the investigation that she had written the letter.  Accordingly, the Court concluded that AGF did not have reasonable notification of the harassment until after AGF received Plaintiff's acknowledged letter.  In all, Plaintiff and Brandt were only in the same office together for five or six days after AGF received her complaint.  The Court further noted Brandt's immediate reprimand, transfer, demotion, and salary cut.

During all of these events, AGF had three relevant policies in place: an "Equal Employment Opportunity" policy setting forth AGF's commitment to comply with equal employment laws without regard to race;  a "Sexual Harassment in the Workplace" policy setting forth AGF's goal "to maintain a work environment free of sexual harassment"; and a memorandum setting forth a detailed complaint procedure. 

Although Plaintiff alleged she was not given copies of these policies, the Court found that because the policies were kept in a "public access type place" where employees could look at them and, further, because Plaintiff knew she could complain to human resources if there was a harassment problem, AGF had taken reasonable steps to prevent the harassment.  Accordingly, the Court upheld summary judgment for the employer.

A Winning Formula for Employers
Based on the Court's holding in Hill v. American General Finance, Inc., it is apparent that there are at least four vital components (all employers should have in order to prevent being held vicariously  liable) for supervisor harassment:

1. An easily accessible written employment policy (or multiple policies) setting forth the employer's commitment to comply with all equal employment opportunity laws and prevent all forms of harassment. [While the Hill court held that it was not necessary for the employee to have actually received the anti-harassment policies as long as they were kept in a "public access type place", the prudent employer should ensure that all employees receive copies of such policy and verify this receipt through a signed acknowledgment of receipt by the employee.]
    
2. A program designed to promote employee awareness of the above-stated policy;
    
3. A complaint procedure in which the employee has alternative avenues, outside of his/her immediate supervisor, to make the employer aware of the harassment; and
    
4. The ability to react quickly to harassment complaints, including the speedy investigation of said complaints and prompt corrective actions.