On November 26, 2012, the U.S. Supreme Court heard oral argument in Vance v. Ball State University regarding the definition of a “supervisor” for purposes of employer liability for harassment in violation of Title VII. The Court’s decision, which is expected in early 2013, could dramatically expand the scope and risk of liability employers face for the harassing actions of employees who possess the requisite authority to be a “supervisor” under Title VII. The Supreme Court’s decision to hear the case should serve as a wake-up call to employers who have not implemented aggressive risk management practices in regard to claims of harassment, discrimination, and retaliation, or who may not be training all of their supervisors and managers as they should.

Under current Title VII law, an employer can be liable for harassment by a “supervisor” but not harassment by a non-supervisory co-worker unless the employer knew or should have known of the non-supervisory co-worker’s harassing behavior. As a result, the broader the definition of “supervisor,” the more risk an employer faces and the more aggressive an employer should be in taking practical steps to minimize the risk.

In 1998, the U.S. Supreme Court ruled in Faragher v. The City of Boca Raton and in Burlington Industries, Inc. v. Ellerth that a “supervisor” is an employee who has authority to direct and oversee the daily actions of other employees. Since then, the lower federal circuit courts have split on the issue of who is a “supervisor.” Five circuits–the First, Third, Sixth, Seventh, and Eighth–have adopted a more narrow view, defining a “supervisor” as one with authority to hire, fire, demote, promote, or transfer others. Four circuits—including the Tenth (which governs Oklahoma employers) along with the Second, Fourth, and Ninth–have taken the broader view that a “supervisor” is anyone with authority to direct an employee’s daily activities even if they have no power to hire, fire, or discipline.

In the Vance v. Ball State University case, Ms. Vance filed a racial harassment action claiming a coworker who allegedly directed her daily activities made racially harassing remarks. At the trial court level, Ball State successfully argued it was not liable to Vance. On appeal, the Seventh Circuit ruled that Vance did not establish that her co-worker was a supervisor for whom Ball State could be held liable, since the evidence showed that the co-worker only had the authority to direct Vance’s day-to-day activities. Significantly, the Seventh Circuit also emphasized that Ball State “promptly investigated each complaint that she filed, calibrating its response to the results of the investigation and the severity of the alleged conduct.” Ball State’s prompt response, the court explained, is the “hallmark of reasonable corrective action” expected of employers. The Seventh Circuit concluded that “there is no basis for employer liability.”

The question now before the U.S. Supreme Court is whether the Faragher and Ellerth “supervisor” liability rule applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or is limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.

The question now before employers is whether they will take this opportunity to reevaluate their risk prevention practices and ensure they have policies, procedures, and educational initiatives in place to best mitigate against risk of harassment, discrimination, and retaliation claims. To be sure, employers should be regularly training all supervisors and managers regarding their roles and responsibilities in preventing and correcting any potentially harassing behavior, including those “lead” employees who may not have formal supervisory status but could be viewed as having sufficient authority to constitute a supervisor for Title VII purposes.

By Christopher S. Thrutchley, cthrutchley@dsda.com