The Definition of 'Management-Level' Employee Under Title VII

The United States Court of Appeals for the Third Circuit recently decided a sexual harassment case that has consequences for nearly every employer, regardless of industry. This decision serves as an important reminder for all employers regarding the reporting and proper handling of discrimination and harassment complaints.

On June 8, 2009, the Third Circuit decided Huston v. The Procter & Gamble Paper Products Corp., 568 F.3d 100 (3d Cir. 2009), a case involving allegations under Title VII of the Civil Rights Act of 1964, as amended, in which the plaintiff, Priscilla Huston, sought to impute liability for co-worker sexual harassment to her employer, Procter & Gamble (“P&G”). Under Title VII, an employer can be held directly liable for maintaining a sexually hostile work environment if a management-level employee has actual or constructive knowledge that such an environment exists in the workforce and does not take prompt remedial measures. In finding for P&G, the Third Circuit clarified the definition of a “management-level” employee, for the purpose of imputing liability to employers under Title VII, in a manner favorable to employers. The lessons from this case in identifying who is a management-level employee and who is tasked with receiving complaints of harassment should be heeded by all employers.

Relevant Chronology

Priscilla Huston began working at P&G in the early 1990s. She worked as a technician, and her team was responsible for monitoring large paper manufacturing machines. In May and June 2004, Huston became aware of incidents of male co-workers exposing themselves on the job in front of other male employees (involving all non-supervisory employees). Specifically, on May 13 and May 22, 2004, Huston heard about, but did not observe, alleged incidents of this nature. Huston alleged that someone informed supervising technicians, Pete Romanchick and Jack Traver, of the May 13 incident the following day, May 14, 2004. Huston did not report those incidents to anyone at the time.

Then, on June 7 and June 8, 2004, Huston allegedly witnessed a male co-worker exposing himself. On June 30, 2004, Huston lodged a formal, internal complaint regarding the alleged incidents to a senior-level manager and a Human Resources Manager, and she also alleged that males viewed pornography at work. P&G launched an investigation that day and took prompt remedial measures, sanctioning everyone on Huston's team (including Huston) for engaging in vulgar language and behavior in the workplace. Due to Huston's prior discipline at P&G, she could have been terminated for her participation in vulgar discussions in the workplace. However, P&G chose to continue her employment. Huston did not allege that any inappropriate behavior occurred after P&G took remedial action and issued sanctions.

In the Fall of 2004, due to some concerns about proper data recording, P&G held a meeting reminding technicians to be diligent and thorough when recording data. Supervising technicians were required to sign a statement declaring they would report any data fabrication they observed, and technicians understood they risked termination for any such fabrication. Soon thereafter, in October 2004, one of the supervising technicians, Romanchick, caught Huston fabricating data, and he reported the incident to senior management. Confronted by Romanchick, Huston admitted to falsifying data. Based on this admission of wrongdoing, P&G terminated Huston's employment on Oct. 21, 2004.

In November 2005, Huston filed a complaint in United States District Court for the Middle District of Pennsylvania, asserting claims for sex discrimination, sex harassment, and retaliation, alleging that P&G maintained a sexually hostile work environment in violation of Title VII and the Pennsylvania Human Relations Act (“PHRA”). In May 2007, the district court granted summary judgment on all grounds in favor of P&G, and Huston appealed.

The Huston Decision

As the Third Circuit in Huston reiterated, there are two general scenarios in which an employer can be directly liable for non-supervisory co-worker sexual harassment. The first is when the employer fails to provide a reasonable avenue for complaint (which Huston did not allege). This could occur when an employer fails to publish or utilize a reporting procedure for concerns about discrimination or harassment in the workplace. The second scenario, which Houston relied upon in asserting her claims, is when the employer knew or should have known of the harassment and failed to take prompt and appropriate remedial action. One way this scenario arises is when management level employees have actual or constructive knowledge of the harassment and fail to take action or ignore the complaint. Another way this scenario arises is when harassment is so pervasive and open that an employer is deemed to have known, or should have known, of the alleged events.

An employee's knowledge of co-worker sexual harassment may typically be imputed to the employer in two circumstances where: 1) the employee is sufficiently senior in the employer's hierarchy (such as a vice president), or otherwise in a position of administrative responsibility over employees under him or her (i.e., a departmental or plant manager), so that such knowledge is important to the employee's general management duties; or 2) the employee is specifically employed to deal with sexual harassment (i.e., a member of the employer's human resources department). Huston argued that Romanchick and Traver were “management-level” employees who had actual knowledge of a sexually hostile work environment in May 2004 when they first allegedly learned of the vulgar activity by an employee report on or about May 14, 2004. Thus, Huston claimed that remedial action should have been taken immediately, in May 2004, prior to her filing an internal complaint on June 30, 2004.

In this case, the Third Circuit closely examined the roles that Romanchick and Traver, the supervisory technicians, held in the workplace to determine whether or not they were management-level employees for purposes of imputing liability to their employer. In holding that Romanchick and Traver were not management-level employees, the Third Circuit clarified the definition of such an employee. According to the court, management-level employees must be sufficiently senior in the employer's hierarchy and in a position of administrative responsibility over the employees under them. In addition, management-level employees most likely will have authority to act on behalf of the employer to stop the harassment by either disciplining or terminating the harasser.

The Third Circuit further held that serving in a supervisory role in the workforce overseeing work assignments of others (as opposed to regulating the workplace environment) is not, by itself, sufficient to qualify someone as a management-level employee. Romanchick and Traver held supervisory positions, but the scope of their authority was limited to ensuring that P&G's machines were running smoothly. They oversaw the production line work, had no authority to affect employment status of their teammates, and had not been charged with corporate authority to police or stop harassment. Although Romanchick had a hand in Huston's dismissal, as he reported Huston for fabricating data, that was within the scope of his employment as a technician and was not a management level duty; protecting against sexual harassment was not integral to his duties.

Furthermore, neither Romanchick nor Traver had any capacity to fire or discipline the harassers, nor was it within their power to improve the working environment. In short, P&G “did not employ them to discover or act upon knowledge or rumors of sexual harassment.”

The court concluded that P&G took prompt remedial action after becoming aware of the issues at hand. P&G had notice of Huston's allegations on June 30, 2004, the date she lodged a complaint with two P&G managers. There was no genuine issue of material fact as to whether P&G responded promptly and adequately once it was on notice. Additionally, the Third Circuit affirmed the district court's grant of summary judgment to P&G on Huston's retaliation claim. As such, the court upheld the District Court's grant of summary judgment on all grounds in favor of P&G.

Implications

The Third Circuit's opinion serves as a reminder of the general proposition that when a management-level employee has actual or constructive knowledge about the existence of a sexually hostile work environment, the employer will be deemed on notice. Employers should be aware of Huston's clarification of who will be considered a management-level employee and determine which employees meet the criteria to potentially impute liability to the company. This is necessarily a case-by-case determination depending on the nature of the position at hand. For instance, in relying upon the factors set forth in Huston, the Third Circuit recently found that an assistant manager-trainee was not a management-level employee. Neely v. McDonald's Corp., No. 07-2186, 2009 U.S. App. LEXIS 17747 (3d. Cir. Aug. 10, 2009) (unpublished). Those individuals who are management-level employees should be reminded about and trained regarding their role in reporting concerns of discrimination and harassment in the workplace. The Huston decision reaffirms that reporting allegations to an employee who is specifically employed to deal with reports of sexual harassment (i.e., a human resources manager or compliance officer specifically designated as the point person for receiving harassment complaints) will also put the employer on notice. If an employee handbook designates a point person to handle sexual harassment claims, Huston does not require that person to be a “management-level employee.”

Conclusion

Employers should examine their reporting procedures and training programs to prevent harassment ' sexual and other forms of harassment ' in light of this decision. Employers should ensure that employees are clear on who to notify in the event they perceive a sexually hostile work environment, and appropriate personnel, equipped to handle such reported allegations, must be involved.

Donald D. Gamburg is a partner and Julie E. Reid is an associate in the Employment, Benefits and Labor Practice Group of Blank Rome LLP in Philadelphia. Mr. Gamburg can be reached at 215-569-5330 or [email protected]. Ms. Reid can be reached at 215-569-5584 or [email protected]. Contributions to this article were made by Michael J. Meehan, a 2009 summer associate.

The United States Court of Appeals for the Third Circuit recently decided a sexual harassment case that has consequences for nearly every employer, regardless of industry. This decision serves as an important reminder for all employers regarding the reporting and proper handling of discrimination and harassment complaints.

On June 8, 2009, the Third Circuit decided Huston v. The Procter & Gamble Paper Products Corp. , 568 F.3d 100 (3d Cir. 2009), a case involving allegations under Title VII of the Civil Rights Act of 1964, as amended, in which the plaintiff, Priscilla Huston, sought to impute liability for co-worker sexual harassment to her employer, Procter & Gamble (“P&G”). Under Title VII, an employer can be held directly liable for maintaining a sexually hostile work environment if a management-level employee has actual or constructive knowledge that such an environment exists in the workforce and does not take prompt remedial measures. In finding for P&G, the Third Circuit clarified the definition of a “management-level” employee, for the purpose of imputing liability to employers under Title VII, in a manner favorable to employers. The lessons from this case in identifying who is a management-level employee and who is tasked with receiving complaints of harassment should be heeded by all employers.

Relevant Chronology

Priscilla Huston began working at P&G in the early 1990s. She worked as a technician, and her team was responsible for monitoring large paper manufacturing machines. In May and June 2004, Huston became aware of incidents of male co-workers exposing themselves on the job in front of other male employees (involving all non-supervisory employees). Specifically, on May 13 and May 22, 2004, Huston heard about, but did not observe, alleged incidents of this nature. Huston alleged that someone informed supervising technicians, Pete Romanchick and Jack Traver, of the May 13 incident the following day, May 14, 2004. Huston did not report those incidents to anyone at the time.

Then, on June 7 and June 8, 2004, Huston allegedly witnessed a male co-worker exposing himself. On June 30, 2004, Huston lodged a formal, internal complaint regarding the alleged incidents to a senior-level manager and a Human Resources Manager, and she also alleged that males viewed pornography at work. P&G launched an investigation that day and took prompt remedial measures, sanctioning everyone on Huston's team (including Huston) for engaging in vulgar language and behavior in the workplace. Due to Huston's prior discipline at P&G, she could have been terminated for her participation in vulgar discussions in the workplace. However, P&G chose to continue her employment. Huston did not allege that any inappropriate behavior occurred after P&G took remedial action and issued sanctions.

In the Fall of 2004, due to some concerns about proper data recording, P&G held a meeting reminding technicians to be diligent and thorough when recording data. Supervising technicians were required to sign a statement declaring they would report any data fabrication they observed, and technicians understood they risked termination for any such fabrication. Soon thereafter, in October 2004, one of the supervising technicians, Romanchick, caught Huston fabricating data, and he reported the incident to senior management. Confronted by Romanchick, Huston admitted to falsifying data. Based on this admission of wrongdoing, P&G terminated Huston's employment on Oct. 21, 2004.

In November 2005, Huston filed a complaint in United States District Court for the Middle District of Pennsylvania, asserting claims for sex discrimination, sex harassment, and retaliation, alleging that P&G maintained a sexually hostile work environment in violation of Title VII and the Pennsylvania Human Relations Act (“PHRA”). In May 2007, the district court granted summary judgment on all grounds in favor of P&G, and Huston appealed.

The Huston Decision

As the Third Circuit in Huston reiterated, there are two general scenarios in which an employer can be directly liable for non-supervisory co-worker sexual harassment. The first is when the employer fails to provide a reasonable avenue for complaint (which Huston did not allege). This could occur when an employer fails to publish or utilize a reporting procedure for concerns about discrimination or harassment in the workplace. The second scenario, which Houston relied upon in asserting her claims, is when the employer knew or should have known of the harassment and failed to take prompt and appropriate remedial action. One way this scenario arises is when management level employees have actual or constructive knowledge of the harassment and fail to take action or ignore the complaint. Another way this scenario arises is when harassment is so pervasive and open that an employer is deemed to have known, or should have known, of the alleged events.

An employee's knowledge of co-worker sexual harassment may typically be imputed to the employer in two circumstances where: 1) the employee is sufficiently senior in the employer's hierarchy (such as a vice president), or otherwise in a position of administrative responsibility over employees under him or her (i.e., a departmental or plant manager), so that such knowledge is important to the employee's general management duties; or 2) the employee is specifically employed to deal with sexual harassment (i.e., a member of the employer's human resources department). Huston argued that Romanchick and Traver were “management-level” employees who had actual knowledge of a sexually hostile work environment in May 2004 when they first allegedly learned of the vulgar activity by an employee report on or about May 14, 2004. Thus, Huston claimed that remedial action should have been taken immediately, in May 2004, prior to her filing an internal complaint on June 30, 2004.

In this case, the Third Circuit closely examined the roles that Romanchick and Traver, the supervisory technicians, held in the workplace to determine whether or not they were management-level employees for purposes of imputing liability to their employer. In holding that Romanchick and Traver were not management-level employees, the Third Circuit clarified the definition of such an employee. According to the court, management-level employees must be sufficiently senior in the employer's hierarchy and in a position of administrative responsibility over the employees under them. In addition, management-level employees most likely will have authority to act on behalf of the employer to stop the harassment by either disciplining or terminating the harasser.

The Third Circuit further held that serving in a supervisory role in the workforce overseeing work assignments of others (as opposed to regulating the workplace environment) is not, by itself, sufficient to qualify someone as a management-level employee. Romanchick and Traver held supervisory positions, but the scope of their authority was limited to ensuring that P&G's machines were running smoothly. They oversaw the production line work, had no authority to affect employment status of their teammates, and had not been charged with corporate authority to police or stop harassment. Although Romanchick had a hand in Huston's dismissal, as he reported Huston for fabricating data, that was within the scope of his employment as a technician and was not a management level duty; protecting against sexual harassment was not integral to his duties.

Furthermore, neither Romanchick nor Traver had any capacity to fire or discipline the harassers, nor was it within their power to improve the working environment. In short, P&G “did not employ them to discover or act upon knowledge or rumors of sexual harassment.”

The court concluded that P&G took prompt remedial action after becoming aware of the issues at hand. P&G had notice of Huston's allegations on June 30, 2004, the date she lodged a complaint with two P&G managers. There was no genuine issue of material fact as to whether P&G responded promptly and adequately once it was on notice. Additionally, the Third Circuit affirmed the district court's grant of summary judgment to P&G on Huston's retaliation claim. As such, the court upheld the District Court's grant of summary judgment on all grounds in favor of P&G.

Implications

The Third Circuit's opinion serves as a reminder of the general proposition that when a management-level employee has actual or constructive knowledge about the existence of a sexually hostile work environment, the employer will be deemed on notice. Employers should be aware of Huston's clarification of who will be considered a management-level employee and determine which employees meet the criteria to potentially impute liability to the company. This is necessarily a case-by-case determination depending on the nature of the position at hand. For instance, in relying upon the factors set forth in Huston, the Third Circuit recently found that an assistant manager-trainee was not a management-level employee. Neely v. McDonald's Corp., No. 07-2186, 2009 U.S. App. LEXIS 17747 (3d. Cir. Aug. 10, 2009) (unpublished). Those individuals who are management-level employees should be reminded about and trained regarding their role in reporting concerns of discrimination and harassment in the workplace. The Huston decision reaffirms that reporting allegations to an employee who is specifically employed to deal with reports of sexual harassment (i.e., a human resources manager or compliance officer specifically designated as the point person for receiving harassment complaints) will also put the employer on notice. If an employee handbook designates a point person to handle sexual harassment claims, Huston does not require that person to be a “management-level employee.”

Conclusion

Employers should examine their reporting procedures and training programs to prevent harassment ' sexual and other forms of harassment ' in light of this decision. Employers should ensure that employees are clear on who to notify in the event they perceive a sexually hostile work environment, and appropriate personnel, equipped to handle such reported allegations, must be involved.

Donald D. Gamburg is a partner and Julie E. Reid is an associate in the Employment, Benefits and Labor Practice Group of Blank Rome LLP in Philadelphia. Mr. Gamburg can be reached at 215-569-5330 or [email protected]. Ms. Reid can be reached at 215-569-5584 or [email protected]. Contributions to this article were made by Michael J. Meehan, a 2009 summer associate.