In recent years, the Equal Employment Opportunity Commission (EEOC) has increasingly focused its enforcement initiatives on prohibiting sexual orientation discrimination in the workplace. Now, the agency has a concrete victory to show for its efforts. A federal district court in Pittsburgh recently awarded more than $55,000, representing the statutory maximum in compensatory and punitive damages, to the EEOC on behalf of a former employee of Scott Medical Health Center (Scott Medical).

The case, EEOC v. Scott Medical Health Center, P.C., was previously newsworthy as one of the first two sexual orientation discrimination lawsuits that the EEOC filed. It was also one of the first cases in which a federal court held that sexual orientation is a form of sex discrimination prohibited by the gender discrimination prohibitions of Title VII of the Civil Rights Act of 1964 (Title VII).

Now that the EEOC has successfully litigated this type of case through to a damages award, its enforcement actions – and related private actions brought by plaintiffs – are likely to increase. Fortunately for employers, the court’s decision contains several important reminders of steps to mitigate the risk of discrimination and harassment in the workplace and to minimize liability in this realm.

Factual Background and Legal Decision

Dale Massaro worked as a telemarketer for Scott Medical. Almost immediately upon beginning in this position, Massaro’s supervisor began harassing him on the basis of his sexual orientation, which took the form of derogatory comments, slurs, and offensive questioning about his personal relationships. When Massaro reported this harassment to his employer’s owner and CEO, the owner and CEO responded that the supervisor was “just doing his job,” and failed to take further action.  The supervisor’s harassing behavior continued, however, and eventually Massaro quit his job less than a month after starting.

The EEOC subsequently sued Scott Medical on Massaro’s behalf, alleging that the employer violated Title VII by discriminating against, and harassing, Massaro because of his sexual orientation.  After its earlier decision holding that sexual orientation discrimination was protected under Title VII, the court entered a judgment finding Scott Medical liable to Massaro.

At the damages phase, the court found that the statute’s maximum permitted damages were appropriate in this instance based on a few factors. For one, although Scott Medical’s anti-harassment policy stated that harassment on the basis of sexual orientation was unlawful, the employer failed to educate its employees and supervisors on this policy and did not enforce it.  Likewise, Massaro had not been permitted to read or have a copy of the policy, and the supervisor who harassed Massaro had not been trained on the policy (nor had other employees).

With respect to punitive damages in particular, the court found it significant that the employer was aware of the harassment, but nonetheless claimed the plaintiff’s supervisor was “just doing his job.” By tolerating the manager’s behavior, the court found that the employer permitted the manager to create and perpetuate a sexually hostile working environment.

These facts were sufficient to support a finding that Scott Medical acted with malice or reckless indifference to Massaro’s protected rights, and therefore punitive damages were appropriate. Additionally, Scott Medical could not avail itself of the “good faith defense” – under which an employer may establish an affirmative defense to punitive damages by proving that a managerial employee’s conduct was contrary to the employer’s efforts to comply with Title VII – because Scott Medical both failed to take corrective action in response to the plaintiff’s complaints and actually ratified the harasser’s conduct and allowed it to persist. 

Employer Takeaways

This decision represents a major victory for the EEOC and reflects the growing protections that courts are providing against sexual orientation discrimination. To protect themselves from liability and the types of resulting damages awarded in this lawsuit, employers should, at a minimum, ensure that they take the following measures.

First, educate and train employees on workplace anti-discrimination and harassment policies, and actually enforce those policies when an issue arises. In this case, the employer had a policy expressly prohibiting discrimination based on sexual orientation, which was directly applicable to the harassing conduct at issue. The policy was essentially meaningless, however, because none of the employees – including the supervisor who was tasked with enforcing it – were aware of its provisions or trained on how to enforce it.

Second, employers should strengthen internal investigation procedures to ensure that employee complaints of harassment and discrimination are thoroughly investigated in a prompt fashion. The owner and CEO of Scott Medical failed to investigate Massaro’s claims or the supervisor’s behavior – had he done so and implemented corrective action, Scott Medical could have potentially availed itself of the good faith defense against punitive damages.

Finally, shore up internal complaint procedures to ensure that no employee complaints about discrimination or harassment slip through the cracks.