• Third Circuit Court of Appeals Clarifies the Definition of "Management Level" Employee for Purpose of Imputing Liability to Employers under Title VII
  • August 4, 2009 | Author: Julie E. Reid
  • Law Firm: Blank Rome LLP - Philadelphia Office
  • On June 8, 2009, the United States Court of Appeals for the Third Circuit, which includes Pennsylvania, New Jersey and Delaware, decided Huston v. The Procter & Gamble Paper Products Corp., a Title VII case in which the plaintiff sought to impute liability for co-worker sexual harassment to her employer. 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 the defendant, Procter & Gamble (“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.

    Relevant Facts

    Priscilla Huston began working at P&G in the early 1990s. She worked as a technician, and her team was responsible for monitoring paper manufacturing machines. In May 2004, Huston heard about (but did not observe) a male employee exposing himself on the job. She did not report the incident, but alleged that someone had reported it to her supervising technicians, Romanchick and Traver, the following day. In June 2004, Huston alleged that a male co-worker exposed himself in her presence. At that point, Huston filed a formal complaint with senior level management and human resources. P&G immediately launched an investigation and took prompt remedial measures, issuing sanctions for vulgar language and behavior. Huston did not allege any inappropriate behavior after the sanctions.

    In the Fall 2004, 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. Romanchick caught Huston fabricating data in October 2004, and reported the incident to senior management. On October 21, 2004, P&G terminated Huston’s employment. Huston filed a complaint in the United States District Court for the Middle District of Pennsylvania, alleging sexual harassment and retaliation, asserting that P&G maintained a sexually hostile work environment in violation of Title VII and the Pennsylvania Human Relations Act. The District Court granted summary judgment on all grounds in favor of P&G, and Huston appealed.

    The Decision

    As the Third Circuit Court in Huston discussed, there are two 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). The second scenario, which Houston relied upon, 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. Huston argued that Romanchick and Traver were management level employees who had knowledge of a sexually hostile work environment in May 2004 when they first allegedly learned of the vulgar activity. Thus, Huston claimed that remedial action should have been taken in May 2004.

    The Third Circuit held that Romanchick and Traver were not management level employees, and in doing so clarified the definition of a management level employee for imputing liability to an employer. 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.

    Serving in a supervisory role, by itself, does not 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. Although Romanchick had a hand in Huston’s dismissal, this was within the scope of his employment as a technician and did not constitute a management level duty. 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.” For this reason, the Court upheld the District Court’s grant of summary judgment in favor of P&G.

    Implications

    When a management level employee has actual or constructive knowledge about the existence of a sexually hostile 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 employer. Huston reaffirmed 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.”

    Employers should examine their reporting procedures and training programs to prevent sexual harassment in light of this decision. Employees must be 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.