In the second of two recent Title VII harassment cases, the Seventh Circuit U.S. Court of Appeals decided that a supervisor need not have hiring or firing authority in order to create liability for failing to respond properly to a harassment complaint. Lambert v. Peri Formworks Sys., Inc., Case No. 12-2502 (7th Cir., 7/24/13). The decision comes on the heels of last month's U.S. Supreme Court decision that clarified that a supervisor must have authority to make tangible employment decisions, such as hiring, firing and discipline, in order for that supervisor to create strict liability for the employer for his or her own harassing conduct. See[U.S. Supreme Court Defines "Supervisor" Status for Purposes of Assessing Harassment Liability Under Title VII]

Employee Did Not Follow Written Complaint Procedure

McKinley Lambert was a yard worker for Peri Formworks Systems, Inc. ("PFS"). Mr. Lambert complained to two yard leads, Jesus Santiago and Redalfo Avila, several times between 2004 and 2007 about alleged ongoing sexual harassment. According to Mr. Lambert, a male co-worker repeatedly made sexual overtures toward him that included unwanted touching, requests for sexual acts, and exposing himself to Mr. Lambert. Mr. Santiago had overheard the male co-worker make graphic sexual comments to other employees, but thought it was a joke.

Mr. Lambert also complained to a logistics manager of race discrimination by that logistics manager and another employee, who both allegedly used offensive racial slurs to refer to Mr. Lambert and another African-American employee.

In 2005, PFS implemented a written anti-harassment policy. That policy instructed employees to report complaints of harassment to PFS's human resources manager or CEO. Mr. Lambert did not report complaints of harassment in accordance with the policy.

In 2007, Mr. Lambert was terminated for having a blood alcohol level of 0.01 at work, in violation of PFS' zero tolerance policy for alcohol use on the job. Mr. Lambert sued, alleging sexual and racial harassment, race discrimination, and retaliation. The federal district court granted summary judgment to PFS and dismissed the case.

Complaints to "Leads" Could Trigger Notice to the Employer

On appeal, the Seventh Circuit reversed summary judgment for PFS on Mr. Lambert's claims of sexual harassment. The court rejected PFS' argument that the company was not put on notice of the harassment because the yard leads to whom Mr. Lambert complained did not have sufficient managerial authority to trigger notice to the company. Yard leads at PFS such as Mr. Santiago and Mr. Avila were responsible for instructing and organizing yard worker teams but could not hire, fire or discipline employees.

Instead, the Seventh Circuit held that although the yard leads were not "supervisors" who would trigger strict liability under Title VII if they had themselves engaged in sexual harassment, a reasonable jury could conclude that they had sufficient authority to place PFS on notice of the alleged harassment based on Mr. Lambert's harassment complaints to them. The court observed that employer liability for alleged co-worker harassment may be triggered not just by notice to an individual with authority to take corrective action, but by notice to "someone who could reasonably be expected to refer the complaint up the ladder to the employee authorized to act on it." The proper inquiry, according to the court, is "whether the information comes to the attention of someone who ought¨¨¨ to do something about it, either directly or by referring the matter to some other corporate employee." In this case, the testimony of one of the yard leads reflected that yard leads at PFS were expected to report "anything that was going wrong" to the yard manager, including complaints of sexual harassment. Such testimony would permit a trier of fact to conclude that a complaining employee could reasonably expect that a yard lead had the responsibility to, and would, refer harassment complaints to someone who could address the problem.

The court further determined that despite PFS' promulgation of a written policy in 2005 that identified individuals at corporate headquarters to whom employees should report harassment complaints, it did not insulate PFS from on-site managers who ignore complaints and evidence of coworker harassment. The court did note, however, that the existence of the harassment policy and complaint procedure, that was not followed by Mr. Lambert, made this a "close case".

(The court also reversed summary judgment on Mr. Lambert's claims of racial harassment, finding that a reasonable jury could conclude that the comments, that were admitted but allegedly not intended to be racially offensive, were in fact intended as racial slurs. The court affirmed summary judgment on the race discrimination and retaliation claims, finding that there was insufficient evidence that the company's reason for termination — violation of its zero tolerance alcohol policy — was pretextual.)

Training on Responding to Complaints Essential

This decision may serve as a wake-up call for many employers. The Seventh Circuit has clarified that an employee can demonstrate employer notice of harassment in the workplace even where notice is given to lower-lever, quasi-supervisory employees, and even though not necessarily consistent with instructions in a written anti-harassment policy. Prudent employers in the Seventh Circuit (Illinois, Wisconsin and Indiana) will want to review and implement employee training programs with added vigor in light of this decision. Any employee who has any authority whatsoever over subordinates should be well-trained on how to respond to a harassment or discrimination complaint, regardless of whether that employee has any authority to make tangible employment decisions such as hiring, firing and discipline. Even first-line supervisors or team leads may have sufficient authority to put an employer on notice of harassment or discrimination occurring in the workplace, and can trigger liability if a complaint is not promptly reported to appropriate personnel for prompt investigation and remedial action.