If the boss is creating a hostile work environment, no amount of fix-it may save you in the lawsuit

Not this Boss. I’m talking about someone so high up in the company food chain that they serve as the organization’s proxy.

Ordinarily, when an employee accuses a supervisor of creating a hostile work environment, as long as the company has not taken a tangible employment action against that employee, it has a potential defense called a Faragher/Ellerth defense. Faragher and Ellerth are Supreme Court decisions from the late 90s that came out around the time I was behaving myself at an east coast Wu-Tang Clan / Rage Against The Machine concert.

The Faragher/Ellerth defense allows an employer to escape vicarious liability when a supervisor creates a hostile work environment if: (1) the employer exercised reasonable care to prevent and correct any harassing behavior; and (2) the plaintiff unreasonably failed to take advantage of the preventative or corrective opportunities provided.

But, buried in Faragher and Ellerth is an often overlooked exception to the rule. If the harasser is high enough in the food chain to serve as the company’s proxy or alter ego, the affirmative defense is out quicker than the Dallas Cowboys’ hopes of winning the Super Bowl.

The liability is automatic.

How do I know this? Well, forgive me. But this comes from a Third Circuit decision I meant to blog about sooner. Earlier this year, the Third Circuit clarified that “the Supreme Court did not intend for the Faragher/Ellerth defense to be available where the supervisor responsible for harassment was a proxy for the organization-employer.” Instead, “the Faragher/Ellerth affirmative defense builds upon rather than repudiates the theory of proxy/alter ego liability articulated in the Court’s prior cases.”

Indeed, every Circuit Court of Appeals addressing this issue has recognized the proxy-liability theory, holding the Faragher/Ellerth affirmative defense unavailable when the supervisor in question is the employer’s proxy or alter ego.

Fortunately, for the defendant in the Third Circuit’s decision, whether the alleged harasser served as the company’s proxy or alter ego proved immaterial because a jury concluded that the plaintiff had not been subjected to a hostile work environment.

Hopefully, your company does not find itself in a similar predicament. A proactive way to mitigate that risk is to ensure that all employees — from the bottom to the very top — receive anti-harassment training. Also, take all complaints of harassment seriously, investigate them, and exercise reasonable care to correct the problem. Doing so could help avoid fostering lousy behavior that could otherwise become severe or pervasive enough to create a hostile work environment.