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Liability for Sexual Harassment

Conduct that constitutes sexual harassment can come from several sources, including supervisors, co-workers, customers and vendors. The courts determine who bears the liability for the harassing conduct when the conduct originates from different sources.​​​​​​​​

Employer Liability for Sexual Harassment: In most cases, the employer will be held responsible for harassment that occurs on the premises or in connection with the employment relationship. The degree to which the employer will be held liable depends, in part, on the unlawful conduct’s source.

Liability for Harassment Between Co-Workers: You are liable for harassment between co-workers only if you knew (or should have known) about the conduct and fail to take immediate and appropriate correction action. If you did not know about the conduct but should have known it was going on, you must show that you took reasonable steps to prevent harassment from occurring. These steps include distributing sexual harassment pamphlets, creating an anti-harassment policy and providing effective sexual harassment training.

Liability for Harassment by Non-employees: You may be responsible for the acts of non-employees who harass employees, applicants or independent contractors in the workplace if you, your agents or supervisors knew or should have known of the harassment and you fail to take immediate and appropriate corrective action. The obligation to protect against sexual harassment committed by nonemployees is part of FEHA. When reviewing sexual harassment cases that involve non-employees, the DFEH, the EEOC and the courts consider the extent of your control of and legal responsibility for the conduct.

Third Party Harassment: Though most employers know of their duty to protect employees from harassment by co-workers, employers must protect employees from harassment by third parties, such as customers. Joyce Turman worked the night shift at a halfway house that transitioned felons from prison back into the workforce and society. Turman complained that she was frequently subject to sexual gestures, sexual propositions, and derogatory comments. The halfway house argued that the harassment by these former prisoners was inherently part of the job. The court disagreed, and held that the employer has a duty to investigate and take corrective action, even when harassment may be inherently part of the job. Employers are not off the hook just because they have rude or inappropriate customers.

Employee Liability for Sexual Harassment: Employees can be held personally liable for sexual harassment. Therefore, the employee’s personal assets are at risk.16 Employees can be held personally liable for sexual harassment regardless of whether you know or should have known of the conduct. You must reimburse employees for expenses they incur while performing their duties. In Jacobus v. Krambo Corp., a Court of Appeal addressed the question of when an employer must reimburse an employee for defense costs. Two co-workers admitted to joking and trading personal information on sexual matters at work. The court ruled that the employer’s liability for reimbursement is based on whether the conduct was in the course and scope of employment. The court noted that because a jury found that the male employee did not engage in sexual harassment and both parties admitted that the sexually explicit comments were consensual, “the conduct was “part of the social intercourse that occasionally occurs in modern office settings.”

Franchiser Liability for Sexual Harassment: Franchisers are generally not liable for employment claims brought by employees of the franchisee. In most instances, the franchisee, not the franchiser, is the “employer” and only the franchisee will be liable for employment claims. Franchise agreements are normally crafted in such a manner as to limit the potential liability of the franchiser for the franchisee’s conduct.

Defining Supervisor. Because employers can be strictly liable for the harassing acts of their supervisors, the question of who actually is a “supervisor” under federal and state law matters. The U.S. Supreme Court decided an important case that determines who is a “supervisor” for purposes of employer liability in federal harassment cases brought under Title VII. The case, Vance v. Ball State University, provides a narrow definition of a supervisor as one who has the power to hire and fire or effect other significant change in employment status. The Vance ruling may have little impact on cases brought under state law because California provides a statutory definition of who is a "supervisor" under the Fair Employment and Housing Act (FEHA). This definition is broader than the definition under Title VII. Maetta Vance, a catering specialist at Ball State University (BSU), argued that she was repeatedly harassed by another employee, Saundra Davis, on the basis of her race. Vance sued the school under federal law, alleging that the university was automatically liable since Davis was Vance’s supervisor. But the lower court held that Davis, who had no hiring and firing authority, was not Vance’s supervisor and threw the case out before trial. The Supreme Court agreed and found that Davis was not Vance’s supervisor under Title VII. The Court ruled that an employer can be automatically liable for an employee’s unlawful harassment only when the employer has given that employee the power to take “tangible employment actions” against the victim, such as hiring, firing demotion, promotion or transfer. “Because there is no evidence that BSU empowered Davis to take any tangible employment actions against Vance, the judgment of the Seventh Circuit [holding that BSU is not automatically liable for Davis’s actions] is affirmed,” said Justice Samuel Alito, writing for the majority. Although Davis directed Vance’s daily activities, the parties agreed that she had no power to hire, fire, demote, promote, transfer or discipline Vance.

California provides a statutory definition of who is a “supervisor” under the FEHA. This definition is broader than the definition under Title VII, and the Vance decision may have little impact on cases brought under state law. The definition of “supervisor” under state law is as follows:

• "Supervisor" means any individual having the authority, in the interest of the employer, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment. 

The state law definition of supervisor includes not just those with the power to make decisions, but also those with the authority to make recommendations. It further includes those with the responsibility for directing employees…which was the same authority possessed by the employee accused of harassment in Vance.

• Liability for Harassment by Supervisors: Employers are strictly liable for sexual harassment of a subordinate by a supervisor. Strict liability means that the employer has absolute legal responsibility for any harm – the employer does not have to be found careless or negligent. The availability of a defense based on preventive action depends largely on whether the lawsuit is brought under state or federal law. In Burlington Industries v. Ellerth and Faragher v. City of Boca Raton, the U.S. Supreme Court ruled that an employer has strict liability for sexual harassment by a supervisor. This strict liability applies whether the harassment is quid pro quo or hostile environment. Under California law, you may be held strictly liable for a supervisor’s sexual harassment of a subordinate. You will not be held liable for acts that result from a completely private relationship that is unconnected with the employment that does not occur at the workplace or during normal working hours. If sexual harassment occurs when an employee substantially deviates from employment duties for personal purposes, the California Supreme Court ruled that an employer is not strictly liable.
  
• Supervisor Liability for Sexual Harassment: Managers and supervisors serve as your first line of defense in avoiding liability for sexual harassment. Their actions or inaction can result in costly judgments against your company and themselves. In some circumstances, the supervisor may also be subject to personal liability.
  
• Supervisors Liable for Engaging in Sexual Harassment: FEHA allows for personal liability for supervisors who sexually harass employees. Although the company can be held partially legally responsible for the conduct, the supervisor’s personal assets are also at risk. In Farmers Ins. Group v. County of Santa Clara, the California Supreme Court decided that an employer is not obligated to reimburse a supervisory employee who was forced to pay money to settle a sexual harassment claim. The court said that sexually harassing conduct is outside of the scope of an employee’s duties, and that the employer has no obligation to indemnify its employee for the cost of the misconduct.
  
• Supervisor Not Liable for Not Stopping Harassment by Others: A supervisor who was not the harasser is not personally liable for failing to stop known sexual harassment. In Fiol v. Doellstedt, a California Court of Appeal decided that a supervisor who was informed that another employee was sexually harassing his subordinate was not personally liable for the sexual harassment simply because he failed to act on the complaint. The court ruled that the supervisor’s failure to prevent the employee’s sexual harassment did not make him personally liable for sexual harassment as the harasser’s aider and abettor, the employer’s aider and abettor or as an agent of the employer under FEHA. This decision does not eliminate the employer’s or harasser’s liability.
  
• Supervisor Not Liable for Retaliation: In Jones v. The Lodge at Torrey Pines Partnership, the California Supreme Court ruled that supervisors are not personally liable for retaliation under FEHA. Retaliation is different from harassment, for which supervisors can be held personally liable. At issue was the legal meaning of the word “person,” and if the Legislature intended to make individual employees personally liable for retaliation.