In a decision handed down only last week, the Third Circuit Court of Appeals has increased the burden on employees bringing sexual harassment claims by requiring notice of harassment not just to mere supervisors but to “management-level employees.”

In Huston v. The Procter and Gamble Paper Products Corporation, Priscilla Huston sued her former employer, Procter and Gamble, for sexual harassment and retaliation under Title VII for alleged lewd language used by male coworkers and for them allegedly exposing themselves in the workplace to her. 

In order to establish a claim for sexual harassment under Title VII, a plaintiff must prove that: the plaintiff suffered intentional discrimination because of his or her gender; the discrimination was pervasive and regular; the discrimination detrimentally affected the plaintiff; the discrimination would detrimentally affect a reasonable person of the same gender in that position; and the existence of respondeat superior liability.

The federal district court found, and the Third Circuit affirmed, that Huston had established the first four elements.  However, the Third Circuit ultimately held that Huston could not establish the fifth element which would establish the basis of the employer’s liability for the harassment. 

When a hostile work environment is created by a victim's non-supervisory co-workers, as was the case with Huston, the employer is held liable only if the employer failed to provide a reasonable avenue for complaint or, alternatively, if the employer “knew or should have known” of the harassment and failed to take prompt and appropriate remedial action. 

The Third Circuit pointed out that an employer “knew or should have known” about workplace sexual harassment only if "management-level employees had actual or constructive knowledge about the existence of a sexually hostile environment."  Thus, the outcome of the decision turned on who falls within the definition of “management-level employees”. 

Huston argued that Procter and Gamble knew or should have known of the harassment when her supervising technicians became aware of it, maintaining that they were management level employees because they had the authority to report on employees who were in breach of company policies and one of them facilitated her termination.  Importantly, however, she did not dispute Procter and Gamble’s argument that they did not have the authority to discipline employees or otherwise change their employment status.

In setting out the rule as to who actually falls within the definition of “management-level employees”, the Third Circuit turned to the principles of agency law as it noted that Congress had directed federal courts to interpret Title VII based upon agency principles. 

The Third Circuit found that, under agency principles, an employee's knowledge of facts may be imputed (or attributed) to the employer only if that knowledge is important to the function the employee is employed to perform.

The Third Circuit ultimately concluded that an employee's knowledge of allegations of co-worker sexual harassment may typically be imputed to the employer in two circumstances.  First, where the employee is sufficiently senior in the employer's governing hierarchy, or otherwise in a position of administrative responsibility over employees under him, such as a departmental or plant manager, so that such knowledge is important to the employee's general managerial duties.  In this case, the employee usually has the authority to act on behalf of the employer to stop the harassment, for example, by disciplining employees or by changing their employment status or work assignments. As such, mere supervisory authority over the performance of work assignments by other co-workers is not, by itself, sufficient to qualify an employee for management level status.  The Third Circuit emphasized that an employee “in the governing body of the entity” must be on notice, as opposed to merely a supervisory employee in the labor force. 

The second circumstance when an employee's knowledge of sexual harassment will be imputed to the employer is when the employee is specifically employed to deal with sexual harassment, such as when the employee is part of the employer's human resources, personnel, or employee relations group or department.  In this circumstance, employee knowledge is imputed to the employer based upon the specific mandate from the employer to respond to and report on sexual harassment. 

Applying this rule, the Third Circuit found that the supervisory technicians were merely technicians responsible for ensuring that its machines ran correctly and were not “management level employees” as they did not have the authority to hire, discipline, discharge or otherwise affect the employment status of their teammates. Additionally, they did not have the corporate authority to police for and to stop harassment, or the managerial duty to report any rumors of potential harassment that they might hear about.