*The U.S. Equal Employment Opportunity Commission*

----

|       | ***NOTICE*** | **Number** |
|------------|--------------|------------|
| ***EEOC*** | 915.002      |
| **Date**   |
|       |         | 6/18/99    |

1. SUBJECT: Enforcement Guidance: Vicarious EmployerLiability for Unlawful Harassment by Supervisors

2. PURPOSE: This document provides guidance regardingemployer liability for harassment by supervisors based on sex,race, color, religion, national origin, age, disability, orprotected activity.

3. EFFECTIVE DATE: Upon receipt.

4. EXPIRATION DATE: As an exception to EEOC Order205.001, Appendix B, Attachment 4, § a(5), this Notice willremain in effect until rescinded or superseded.

5. ORIGINATOR: Title VII/EPA/ADEA Division, Office ofLegal Counsel.

6. INSTRUCTIONS: File after Section 615 of Volume II ofthe Compliance Manual.

```

6/18/99                      /s/
Date                      Ida L. Castro
                          Chairwoman
```

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# Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors

## Notice Concerning the Supreme Court�s Decision in Vance v. Ball State University, 133 S. Ct. 2434 (2013)

## I. Introduction

In *Burlington Industries, Inc. v. Ellerth*, 118 S. Ct. 2257  (1998), and *Faragher v. City of Boca Raton*, 118 S. Ct. 2275 (1998), the  Supreme Court made clear that employers are subject to vicarious liability for  unlawful harassment by supervisors.  The standard of liability set forth in these decisions is premised on  two principles: 1) an employer is responsible for the acts of  its supervisors, and 2) employers should be encouraged to prevent  harassment and employees should be encouraged to avoid or limit the harm from harassment. In order to accommodate these principles, the  Court held that an employer is always liable for   a supervisor’s harassment if it culminates in a tangible employment  action. However, if it does not, the  employer may be able to avoid liability or limit damages by establishing an  affirmative defense that includes two necessary elements:

- the  employer exercised reasonable care to prevent and correct promptly any  harassing behavior, and
- the  employee unreasonably failed to take advantage of any preventive or corrective  opportunities provided by the employer or to avoid harm otherwise. 

While  the *Faragher* and *Ellerth* decisions addressed sexual harassment,  the Court’s analysis drew upon standards set forth in cases involving  harassment on other protected bases.  Moreover, the Commission has always taken the position that the same  basic standards apply to all types of prohibited harassment.1 Thus, the standard of liability set forth in  the decisions applies to all forms of unlawful harassment. (See section II,  below.) 

Harassment  remains a pervasive problem in American workplaces. The number of harassment charges filed with  the EEOC and state fair employment practices agencies has risen significantly  in recent years. For example, the number  of sexual harassment charges has increased from 6,883 in fiscal year 1991 to  15,618 in fiscal year 1998. The number  of racial harassment charges rose from 4,910 to 9,908 charges in the same time  period.

While  the anti-discrimination statutes seek to remedy discrimination, their primary  purpose is to prevent violations. The  Supreme Court, in *Faragher* and *Ellerth*, relied on Commission guidance  which has long advised employers  to take all necessary steps to prevent harassment.2 The new affirmative defense gives credit for  such preventive efforts by an employer, thereby “implement[ing] clear statutory  policy and complement[ing] the Government’s Title VII enforcement efforts.”3

The  question of liability arises only after there is a determination that unlawful  harassment occurred. Harassment does not  violate federal law unless it involves discriminatory treatment on the basis of  race, color, sex, religion, national origin, age of 40 or older, disability, or  protected activity under the anti-discrimination statutes. Furthermore, the anti-discrimination statutes  are not a “general civility code.”4 Thus federal law does not prohibit  simple teasing, offhand comments, or isolated incidents that are not “extremely  serious.”5 Rather,  the conduct must be “so objectively offensive as to alter the ‘conditions’ of  the victim’s employment.”6 The conditions of employment are  altered only if the harassment culminated in a tangible employment action or  was sufficiently severe or pervasive to create a hostile work environment.7 Existing Commission guidance on the standards  for determining whether challenged conduct rises to the level of unlawful  harassment remains in effect.

 This document supersedes previous Commission guidance on  the issue of vicarious liability for harassment by supervisors.8 The Commission’s long-standing guidance on  employer liability for harassment by co-workers remains in effect - - an  employer is liable if it knew or should have known of the misconduct, unless it  can show that it took immediate and appropriate corrective action.9 The standard is the same in the case of  non-employees, but the employer’s control over such individuals’ misconduct is  considered.10

## II.  The Vicarious Liability Rule Applies to Unlawful Harassment on All Covered Bases 

The  rule in *Ellerth* and *Faragher* regarding vicarious liability  applies to harassment by supervisors  based on race, color, sex (whether  or not of a sexual nature11), religion, national origin, protected  activity,12 age, or disability.13 Thus, employers should establish  anti-harassment policies and  complaint procedures covering *all* forms of unlawful harassment.14

## III.  Who  Qualifies as a Supervisor? 

###  A.  Harasser  in Supervisory Chain of Command

An  employer is subject to vicarious liability for unlawful harassment if the  harassment was committed by “a supervisor with immediate (or successively  higher) authority over the employee.”15 Thus, it is critical to determine whether the  person who engaged in unlawful harassment had supervisory authority over the  complainant.

The  federal employment discrimination statutes do not contain or define the term  “supervisor.”16  The statutes make employers liable for the discriminatory acts of their  “agents,”17 and supervisors are agents of their employers. However, agency principles “may not be  transferable in  all their particulars” to the federal employment discrimination statutes.18 The determination of whether an individual  has sufficient authority to qualify as a “supervisor” for purposes of vicarious  liability cannot be resolved by a purely mechanical application of agency law.19 Rather, the purposes of the  anti-discrimination statutes and the reasoning of the Supreme Court decisions  on harassment must be considered.

The  Supreme Court, in *Faragher* and *Ellerth*, reasoned that vicarious  liability for supervisor harassment is appropriate because supervisors are  aided in such misconduct by the authority that the employers delegated to them.20 Therefore, that authority must be of a  sufficient magnitude so as to assist the harasser explicitly or implicitly in  carrying out the harassment. The  determination as to whether a harasser had such authority is based on his or  her job function rather than job title (*e.g.*, “team leader”) and must be  based on the specific facts.

An  individual qualifies as an employee’s “supervisor” if:

- the  individual has authority to undertake or recommend tangible employment  decisions affecting the employee;  or
- the  individual has authority to direct the employee’s daily work activities.

### 1. Authority to Undertake or Recommend Tangible  Employment Actions

An  individual qualifies as an employee’s “supervisor” if he or she is authorized  to undertake tangible employment decisions affecting the employee. “Tangible  employment decisions” are decisions that significantly change another  employee’s employment status. (For a  detailed explanation of what constitutes a tangible employment action, see  subsection IV(B), below.) Such actions  include, but are not limited to, hiring, firing, promoting, demoting, and  reassigning the employee. As the  Supreme Court stated,“[t]angible employment actions fall within the special  province of the supervisor.”21

An  individual whose job responsibilities include the authority to recommend  tangible job decisions affecting an employee qualifies as his or her supervisor even  if the individual does not have the final say.  As the Supreme Court recognized in *Ellerth*, a tangible employment  decision “may be subject to review by higher level supervisors.”22 As long as the individual’s recommendation is  given substantial weight by the final decision maker(s), that individual meets  the definition of supervisor.

### 2.  Authority  to Direct Employee’s Daily Work Activities 

An  individual who is authorized to direct another employee’s day-to-day work  activities qualifies as his or her supervisor even if that individual does not  have the authority to undertake or recommend tangible job decisions. Such an individual’s ability to commit  harassment is enhanced by his or her authority to increase the employee’s  workload or assign undesirable tasks, and hence it is appropriate to consider  such a person a “supervisor” when determining whether the employer is  vicariously liable.

In *Faragher*, one of the harassers was authorized  to hire, supervise, counsel, and discipline lifeguards, while the other  harasser was responsible for making the lifeguards’ daily work assignments and  supervising their work and fitness training.23 There was no question that the Court viewed  them *both* as “supervisors,” even though one of them apparently lacked  authority regarding tangible job decisions.24

An individual who is temporarily authorized to direct another  employee’s daily work activities qualifies as his or her “supervisor” during  that time period. Accordingly, the  employer would be subject to vicarious liability if that individual commits  unlawful harassment of a subordinate while serving as his or her supervisor.

On the other hand, someone who merely relays other officials’  instructions regarding work assignments and reports back to those officials  does not have true supervisory authority. Furthermore, someone who directs only  a limited number of tasks or assignments would not qualify as a “supervisor.” For example, an individual whose delegated  authority is confined to coordinating a work project of limited scope is not a  “supervisor.”  

### B.  Harasser  Outside Supervisory Chain of Command

In some circumstances, an employer may be subject to vicarious  liability for harassment by a supervisor who does not have actual authority  over the employee. Such a result is  appropriate if the employee reasonably believed that the harasser had such  power.25 The employee might  have such a belief because, for example, the chains of command are  unclear. Alternatively, the employee  might reasonably believe that a harasser with broad delegated powers has the  ability to significantly influence employment decisions affecting him or her  even if the harasser is outside the employee’s chain of command.

If the harasser had no actual supervisory power over the employee,  and the employee did not reasonably believe that the harasser had such  authority, then the standard of liability for co-worker harassment applies.

## IV. Harassment by Supervisor That Results in a Tangible  Employment Action

### A. Standard  of Liability 

An  employer is always liable for harassment by a supervisor on a prohibited basis  that culminates in a tangible employment action. No affirmative defense is available in such  cases.26 The Supreme Court  recognized that this result is appropriate because an employer acts through its supervisors, and a supervisor’s undertaking of a tangible  employment action constitutes an act of the employer.27

### B. Definition  of “Tangible Employment Action”

A tangible employment action is “a significant change in employment  status.”28 Unfulfilled threats are insufficient. Characteristics of a tangible employment  action are:29

#### 1. A tangible  employment action is the means by which the supervisor brings **the official  power of the enterprise to bear on subordinates, as demonstrated by the  following :**

- it  requires an official act of the enterprise;
- it  usually is documented in official company records;
- it  may be subject to review by higher level supervisors; and
- it  often requires the formal approval of the enterprise and use of its internal  processes.

#### 2. A tangible  employment action usually inflicts direct economic harm.

#### **3.  A tangible employment action, in most  instances, can only be caused by a supervisor or other person acting with the  authority of the company.**

Examples  of tangible employment actions include:30****

- hiring and firing;
- promotion and failure to promote;
- demotion; 31
- undesirable reassignment;
- a  decision causing a significant change in benefits;
- compensation  decisions; and
- work  assignment.

Any  employment action qualifies as “tangible” if it results in a significant change  in employment status. For example,  significantly changing an individual’s duties in his or her existing job  constitutes a tangible employment action regardless of whether the individual  retains the same salary and benefits.32 Similarly, altering an individual’s duties in  a way that blocks his or her opportunity for promotion or salary increases also  constitutes a tangible employment action.33

On  the other hand, an employment action does not reach the threshold of “tangible”  if it results in only an insignificant change in the complainant’s employment  status. For example, altering an  individual’s job title does not qualify as a tangible employment action if  there is no change in salary, benefits, duties, or prestige, and the only  effect is a bruised ego.34 However, if there is a significant change  in the status of the position because the new title is less prestigious and  thereby effectively constitutes a demotion, a tangible employment action would  be found.35

If  a supervisor undertakes or recommends a tangible job action based on a  subordinate’s response to unwelcome sexual demands, the employer is liable and  cannot raise the affirmative defense.  The result is the same whether the employee rejects the demands and is  subjected to an adverse tangible employment action or submits to the demands  and consequently obtains a tangible job benefit.36 Such harassment  previously would have been characterized as “quid pro quo.” It would be a perverse result if the employer  is foreclosed from raising the affirmative defense if its supervisor denies a  tangible job benefit based on an employee’s rejection of unwelcome sexual  demands, but can raise the defense if its supervisor grants a tangible job  benefit based on submission to such demands. The Commission rejects such an  analysis. In both those situations the  supervisor undertakes a tangible employment action on a discriminatory  basis. The Supreme Court stated that  there must be a significant *change* in employment status; it did not  require that the change be adverse in order to qualify as tangible.37

If  a challenged employment action is not “tangible,” it may still be considered,  along with other evidence, as part of a hostile environment claim that is  subject to the affirmative defense. In *Ellerth*,  the Court concluded that there was no tangible employment action because the  supervisor never carried out his threats of job harm. Ellerth could still proceed with her claim of  harassment, but the claim was properly “categorized as a hostile work  environment claim which requires a showing of severe or pervasive  conduct.” 118 S. Ct. at 2265.

### C.  Link  Between Harassment and Tangible Employment Action 

When  harassment culminates in a tangible employment action, the employer cannot  raise the affirmative defense. This sort  of claim is analyzed like any other case in which a challenged employment  action is alleged to be discriminatory.  If the employer produces evidence of a non-discriminatory explanation  for the tangible employment action, a determination must be made whether that  explanation is a pretext designed to hide a discriminatory motive. 

For  example, if an employee alleged that she was demoted because she refused her supervisor’s  sexual advances, a determination would have to be made whether the demotion was *because* of her response to the advances, and hence because of her  sex. Similarly, if an employee alleges  that he was discharged after being subjected to severe or pervasive harassment  by his supervisor based on his national origin, a determination would have to  be made whether the discharge was *because* of the employee’s national  origin.

A  strong inference of discrimination will arise whenever a harassing supervisor  undertakes or has significant input into a tangible employment action affecting  the victim,38 because it can be “assume[d] that the  harasser...could not act as an objective, non-discriminatory decision maker  with respect to the plaintiff.”39 However, if the employer produces evidence of  a non-discriminatory reason for the action, the employee will have to prove  that the asserted reason was a pretext designed to hide the true discriminatory  motive.

If  it is determined that the tangible action was based on a discriminatory reason  linked to the preceding harassment, relief could be sought for the entire  pattern of misconduct culminating in the tangible employment action, and no  affirmative defense is available.40 However, the harassment preceding the  tangible employment action must be severe or pervasive in order to be  actionable.31 If  the tangible employment action was based on a non-discriminatory motive, then  the employer would have an opportunity to raise the affirmative defense to a  claim based on the preceding harassment.42

## V.  Harassment  by Supervisor That Does Not Result in a Tangible Employment Action 

### A.  Standard  of Liability 

When  harassment by a supervisor creates an unlawful hostile environment but does not  result in a tangible employment action, the employer can raise an affirmative  defense to liability or damages, which it must prove by a preponderance of the  evidence. The defense consists of two  necessary elements:

- the  employer exercised reasonable care to prevent and correct promptly any  harassment; and
- the  employee unreasonably failed to take advantage of any preventive or corrective  opportunities provided by the employer or to avoid harm otherwise.

### B.  Effect of  Standard

If  an employer can prove that it discharged its duty of reasonable care and that  the employee could have avoided all of the harm but unreasonably failed to do  so, the employer will avoid all liability for unlawful harassment.43 For example, if an employee was subjected to  a pattern of disability-based harassment that created an unlawful hostile  environment, but the employee unreasonably failed to complain to management  before she suffered emotional harm and the employer exercised reasonable care  to prevent and promptly correct the harassment, then the employer will avoid  all liability.

If  an employer cannot prove that it discharged its duty of reasonable care *and* that the employee unreasonably failed to avoid the harm, the employer will be  liable. For example, if unlawful  harassment by a supervisor occurred and the employer failed to exercise  reasonable care to prevent it, the employer will be liable even if the employee  unreasonably failed to complain to management or even if the employer took  prompt and appropriate corrective action when it gained notice.44

In  most circumstances, if employers and employees discharge their respective  duties of reasonable care, unlawful harassment will be prevented and there will  be no reason to consider questions of liability. An effective complaint procedure “encourages  employees to report harassing conduct before it becomes severe or pervasive,”45 and if an employee promptly utilizes that procedure, the employer can usually  stop the harassment before actionable harm occurs.46

In  some circumstances, however, unlawful harassment will occur and harm will  result despite the exercise of requisite legal care by the employer and  employee. For example, if an employee’s  supervisor directed frequent, egregious racial epithets at him that caused  emotional harm virtually from the outset, and the employee promptly complained,  corrective action by the employer could prevent further harm but might not  correct the actionable harm that the employee already had suffered.47 Alternatively, if an employee complained  about harassment before it became severe or pervasive, remedial measures  undertaken by the employer might fail to stop the harassment before it reaches  an actionable level, even if those measures are reasonably calculated to halt  it. In these circumstances, the employer  will be liable because the defense requires proof that it exercised reasonable  legal care *and* that the employee unreasonably failed to avoid the  harm. While a notice-based negligence  standard would absolve the employer of liability, the standard set forth in *Ellerth* and *Faragher* does not. As the  Court explained, vicarious liability sets a “more stringent standard” for the  employer than the “minimum standard” of negligence theory.48

While  this result may seem harsh to a law abiding employer, it is consistent with  liability standards under the anti-discrimination statutes which generally make  employers responsible for the discriminatory acts of their supervisors.49 If, for example, a supervisor rejects a  candidate for promotion because of national origin-based bias, the employer  will be liable regardless of whether the employee complained to higher  management and regardless of whether higher management had any knowledge about  the supervisor’s motivation.50 Harassment is the only type of discrimination  carried out by a supervisor for which an employer can avoid liability, and that  limitation must be construed narrowly.  The employer will be shielded from liability for harassment by a  supervisor only if it proves that it exercised reasonable care in preventing  and correcting the harassment *and* that the employee unreasonably failed  to avoid all of the harm. If both  parties exercise reasonable care, the defense will fail.

In  some cases, an employer will be unable to avoid liability completely, but may  be able to  establish  the affirmative defense as a means to limit damages.51 The defense only limits damages where the  employee reasonably could have avoided some but not all of the harm from the  harassment. In the example above, in  which the supervisor used frequent, egregious racial epithets, an unreasonable  delay by the employee in complaining could limit damages but not eliminate  liability entirely. This is because a reasonably prompt complaint would have  reduced, but not eliminated, the actionable harm.52

### C.  First Prong  of Affirmative Defense: Employer’s Duty to Exercise Reasonable Care

The  first prong of the affirmative defense requires a showing by the employer that  it undertook reasonable care to prevent and promptly correct harassment. Such reasonable care generally requires an  employer to establish, disseminate, and enforce an anti-harassment policy and  complaint procedure and to take other reasonable steps to prevent and correct  harassment. The steps described below  are not mandatory requirements - - whether or not an employer can prove that it  exercised reasonable care depends on the particular factual circumstances and,  in some cases, the nature of the employer’s workforce. Small employers may be able to effectively  prevent and correct harassment through informal means, while larger employers  may have to institute more formal mechanisms.53

There  are no “safe harbors” for employers based on the written content of policies  and procedures. Even the best policy and  complaint procedure will not alone satisfy the burden of proving reasonable  care if, in the particular circumstances of a claim, the employer failed to  implement its process effectively.54 If, for example, the  employer has an adequate policy and complaint  procedure and properly responded to an employee’s complaint of harassment, but  management ignored previous complaints by other employees about the same  harasser, then the employer has not exercised reasonable care in preventing the  harassment.55 Similarly, if the  employer has an adequate policy and complaint procedure but an official failed  to carry out his or her responsibility to conduct an effective investigation of  a harassment complaint, the employer has not discharged its duty to exercise  reasonable care. Alternatively, lack of  a formal policy and complaint procedure will not defeat the defense if the  employer exercised sufficient care through other means.

#### 1.  Policy  and Complaint Procedure  

It  generally is necessary for employers to establish, publicize, and enforce  anti-harassment policies and complaint procedures. As the Supreme Court stated, “Title VII is  designed to encourage the creation of anti-harassment policies and effective  grievance mechanisms.” *Ellerth*,  118 S. Ct. at 2270. While the Court  noted that this “is not necessary in every instance as a matter of law,”56 failure to do so will make it difficult for an employer to prove that it  exercised reasonable care to prevent and correct harassment.57 (See section V(C)(3), below, for discussion  of preventive and corrective  measures by small businesses.)

An employer should provide every employee with a copy of the policy and  complaint procedure, and redistribute it periodically. The policy and complaint procedure should be  written in a way that will be understood by all employees in the employer’s  workforce. Other measures to ensure  effective dissemination of the policy and complaint procedure include posting  them in central locations and incorporating them into employee handbooks. If feasible, the employer should provide  training to all employees to ensure that they understand their rights and  responsibilities.

An  anti-harassment policy and complaint procedure should contain, at a minimum,  the following elements:

- A clear explanation of prohibited conduct;
- Assurance that employees who make complaints of harassment or provide  information related to such complaints will be protected against retaliation;
- A clearly described complaint process that provides accessible avenues  of complaint;
- Assurance that the employer will protect the confidentiality of  harassment complaints to the extent possible; 
- A complaint process that provides a prompt, thorough, and impartial  investigation; and
- Assurance that the employer will take immediate and appropriate  corrective action when it determines that harassment has occurred.

The  above elements are explained in the following subsections.

**Prohibition Against Harassment**

An  employer’s policy should make clear that it will not tolerate harassment based  on sex (with or without sexual conduct), race, color, religion, national  origin, age, disability, and protected activity (*i.e.*, opposition to  prohibited discrimination or participation in the statutory complaint process).  This prohibition should cover harassment by *anyone* in the workplace –  supervisors, co-workers or  non-employees.58  Management should convey the seriousness of the prohibition. One way to do that is for the mandate to  “come from the top,” *i.e.*, from upper management.

The  policy should encourage employees to report harassment *before* it becomes  severe or pervasive. While isolated  incidents of harassment generally do not violate federal law, a pattern of such  incidents may be unlawful. Therefore, to  discharge its duty of preventive care, the employer must make clear to  employees that it will stop harassment before it rises to the level of a  violation of federal law.

**Protection Against Retaliation**

An  employer should make clear that it will not tolerate adverse treatment of  employees because they report harassment or provide information related to such  complaints. An anti-harassment policy  and complaint procedure will not be  effective without such an assurance.59

Management should undertake whatever measures are necessary to ensure  that retaliation does not occur. For  example, when management investigates a complaint of harassment, the official  who interviews the parties and witnesses should remind these individuals about the  prohibition against retaliation. Management  also should scrutinize employment decisions affecting the complainant and  witnesses during and after the investigation to ensure that such decisions are  not based on retaliatory motives.

******Effective Complaint Process**

****An employer’s harassment complaint procedure should be designed to  encourage victims to come forward. To  that end, it should clearly explain the process and ensure that there are no  unreasonable obstacles to complaints. A  complaint procedure should not be rigid, since that could defeat the goal of  preventing and correcting harassment.  When an employee complains to management about alleged harassment, the  employer is obligated to investigate the allegation regardless of whether it  conforms to a particular format or is made in writing. 

The complaint procedure should provide accessible points of contact for  the initial complaint.60 A complaint process is not effective if  employees are always required to complain first to their supervisors about  alleged harassment, since the supervisor may be a harasser.61 Moreover, reasonable care in preventing and  correcting harassment requires an employer to instruct all supervisors to  report complaints of harassment to appropriate officials.62

It  is advisable for an employer to designate at least one official outside an  employee’s chain of command to take complaints of harassment. For example, if the employer has an office of  human resources, one or more officials in that office could be authorized to  take complaints. Allowing an employee to  bypass his or her chain of command provides additional assurance that the  complaint will be handled in an impartial manner, since an employee who reports  harassment by his or her supervisor may feel that officials within the chain of  command will more readily believe the supervisor’s version of events. 

It also is important for an employer’s anti-harassment policy and  complaint procedure to contain information about the time frames for filing  charges of unlawful harassment with the EEOC or state fair employment practice agencies and to explain that the  deadline runs from the last date of unlawful harassment, not from the date that  the complaint to the employer is resolved.63 While a prompt complaint process should make  it feasible for an employee to delay deciding whether to file a charge until  the complaint to the employer is resolved, he or she is not required to do so.64

**Confidentiality**

An employer should make clear to employees that it will protect the  confidentiality of harassment allegations to the extent possible. An employer  cannot guarantee complete confidentiality, since it cannot conduct an effective  investigation without revealing certain information to the alleged harasser and  potential witnesses. However,  information about the allegation of harassment should be shared only with those  who need to know about it. Records  relating to harassment complaints should be kept confidential on the same  basis.65

A conflict between an employee’s desire for confidentiality and the  employer’s duty to investigate may arise if an employee informs a supervisor  about alleged harassment, but asks him or her to keep the matter confidential  and take no action. Inaction by the  supervisor in such circumstances could lead to employer liability. While it may seem reasonable to let the  employee determine whether to pursue a complaint, the employer must discharge  its duty to prevent and correct harassment.66 One mechanism to  help avoid such conflicts would be for the  employer to set up an informational phone line which employees can use to discuss questions or  concerns about harassment on an anonymous basis.67

**Effective Investigative Process**

An employer should set up a mechanism for a prompt,  thorough, and impartial investigation into alleged harassment. As soon as management learns about alleged  harassment, it should determine whether a detailed fact-finding investigation  is necessary. For example, if the alleged  harasser does not deny the accusation, there would be no need to interview  witnesses, and the employer could immediately determine appropriate corrective  action.

 If a fact-finding  investigation is necessary, it should be launched immediately. The amount of time that it will take to  complete the investigation will depend on the particular circumstances.68 If, for example, multiple individuals were allegedly harassed, then it will  take longer to interview the parties and witnesses.

It may be necessary to undertake intermediate  measures before completing the investigation to ensure that further harassment  does not occur. Examples of such  measures are making scheduling changes so as to avoid contact between the  parties; transferring the alleged harasser; or placing the alleged harasser on non-disciplinary leave with pay  pending the conclusion of the investigation.  The complainant should not be involuntarily transferred or otherwise  burdened, since such measures could constitute unlawful retaliation.

 The  employer should ensure that the individual who conducts the investigation will  objectively gather and consider the relevant facts. The alleged harasser should not have  supervisory authority over the individual who conducts the investigation and should  not have any direct or indirect control over the investigation. Whoever conducts the investigation should be  well-trained in the skills that are required for interviewing witnesses and  evaluating credibility.

**Questions to Ask Parties and Witnesses**

When detailed fact-finding is necessary, the  investigator should interview the complainant, the alleged harasser, and third  parties who could reasonably be expected to have relevant information. Information relating to the personal lives of  the parties outside the workplace would be relevant only in unusual  circumstances. When interviewing the  parties and witnesses, the investigator should refrain from offering his or her  opinion.

 The following are  examples of questions that may be appropriate to ask the parties and potential  witnesses. Any actual investigation must  be tailored to the particular facts.

Questions to Ask the Complainant:

- Who,  what, when, where, and how:  Who  committed the alleged harassment?  What  exactly occurred or was said?  When  did it occur and is it still ongoing?  Where  did it occur?  How often  did it  occur?  How  did it affect you? 
- How  did you react? What response did you  make when the incident(s) occurred or afterwards? 
- How  did the harassment affect you? Has your  job been affected in any way? 
- Are  there any persons who have relevant information? Was anyone present when the alleged  harassment occurred? Did you tell anyone  about it? Did anyone see you immediately  after episodes of alleged harassment? 
- Did  the person who harassed you harass anyone else?  Do you know whether anyone complained about harassment by that person? 
- Are  there any notes, physical evidence, or other documentation regarding the  incident(s)? 
- How  would you like to see the situation resolved? 
- Do  you know of any other relevant information? 

Questions to Ask the Alleged Harasser:

- What  is your response to the allegations? 
- If  the harasser claims that the allegations are false, ask why the complainant  might lie. 
- Are  there any persons who have relevant information? 
- Are  there any notes, physical evidence, or other documentation regarding the  incident(s)? 
- Do  you know of any other relevant information? 

Questions to Ask Third Parties:

- What  did you see or hear? When did this  occur? Describe the alleged harasser’s  behavior toward the complainant and toward others in the workplace. 
- What  did the complainant tell you? When did  s/he tell you this? 
- Do  you know of any other relevant information? 
- Are  there other persons who have relevant information? 

Credibility Determinations 

If  there are conflicting versions of relevant events, the employer will have to  weigh each party’s credibility.  Credibility assessments can be critical in determining whether the  alleged harassment in fact occurred.  Factors to consider include: 

- Inherent  plausibility : Is the testimony believable on its face? Does it make sense? 
- Demeanor:  Did the person seem to be telling the truth or lying? 
- Motive  to falsify:  Did the person have a reason to lie? 
- Corroboration:  Is there  witness testimony  (such as testimony by eye-witnesses, people  who saw the person soon after the alleged incidents, or people who discussed  the incidents with him or her at around the time that they occurred) or  physical  evidence  (such as written documentation) that corroborates the party’s  testimony? 
- Past  record:  Did the alleged harasser have a history of similar behavior in the  past? 

None  of the above factors are determinative as to credibility. For example, the fact that there are no  eye-witnesses to the alleged harassment by no means necessarily defeats the  complainant’s credibility, since harassment often occurs behind closed doors. Furthermore, the fact that the alleged harasser  engaged in similar behavior in the past does not necessarily mean that he or  she did so again. 

Reaching a Determination 

Once  all of the evidence is in, interviews are finalized, and credibility issues are  resolved, management should make a determination as to whether harassment  occurred. That determination could be  made by the investigator, or by a management official who reviews the  investigator’s report. The parties  should be informed of the determination.

In some circumstances, it may be difficult for  management to reach a determination because of direct contradictions between  the parties and a lack of documentary or eye-witness corroboration. In such cases, a credibility assessment may  form the basis for a determination, based on factors such as those set forth  above.

 If no determination can be made  because the evidence is inconclusive, the employer should still undertake  further preventive measures, such as training and monitoring.

**Assurance of Immediate and Appropriate Corrective  Action**

An employer should make clear that it will undertake immediate and  appropriate corrective action, including discipline, whenever it determines that  harassment has occurred in violation of the employer’s policy. Management should inform both parties about  these measures.69

Remedial  measures should be designed to stop the harassment, correct its effects on the  employee, and ensure that the harassment does not recur. These remedial measures need not be those  that the employee requests or prefers, as long as they are effective. 

In determining disciplinary measures, management should keep in mind  that the employer could be found liable if the harassment does not stop. At the same time, management may have  concerns that overly punitive measures may subject the employer to claims such  as wrongful discharge, and may simply be  inappropriate.

 To balance the  competing concerns, disciplinary measures should be proportional to the  seriousness of the offense.70 If the harassment was minor, such as a  small number of “off-color” remarks by an individual with no prior history of  similar misconduct, then counseling and an oral warning might be all that is  necessary. On the other hand, if the  harassment was severe or persistent, then suspension or discharge may be  appropriate.71

 Remedial measures should not adversely  affect the complainant. Thus, for  example, if it is necessary to separate the parties, then the harasser should  be transferred (unless the complainant prefers otherwise).72 Remedial responses that penalize the  complainant could constitute unlawful retaliation and are not effective in  correcting the harassment.73

 Remedial measures also  should correct the effects of the harassment.  Such measures should be designed to put the employee in the position  s/he would have been in had the misconduct not occurred.

**Examples of Measures to Stop the Harassment and Ensure  that it Does Not Recur:**

- oral 74  or written warning or reprimand; 
- transfer  or reassignment; 
- demotion; 
- reduction  of wages; 
- suspension; 
- discharge; 
- training  or counseling of harasser to ensure that s/he understands why his or her  conduct violated the employer’s anti-harassment policy; and 
- monitoring  of harasser to ensure that harassment stops. 

**Examples of Measures to Correct the Effects of the  Harassment:**

- restoration  of leave taken because of the harassment; 
- expungement  of negative evaluation(s) in employee’s personnel file that arose from the  harassment; 
- reinstatement; 
- apology  by the harasser; 
- monitoring  treatment of employee to ensure that s/he is not subjected to retaliation by  the harasser or others in the work place because of the complaint; and 
- correction  of any other harm caused by the harassment ( e.g. , compensation for  losses). 

#### 2.  Other  Preventive and Corrective Measures

An  employer’s responsibility to exercise reasonable care to prevent and correct  harassment is not limited to implementing an anti-harassment policy and  complaint procedure. As the Supreme Court  stated, “the employer has a greater opportunity to guard against misconduct by  supervisors than by common workers; employers have greater opportunity and  incentive to screen them, train them, and monitor their performance.” *Faragher*, 118 S. Ct. at 2291. 

An  employer’s duty to exercise due care includes instructing all of its  supervisors and managers to address or report to appropriate officials  complaints of harassment regardless of whether they are officially designated to  take complaints75 and regardless of whether a complaint was  framed in a way that conforms to the organization’s particular complaint  procedures.76  For example, if an employee files an EEOC charge alleging unlawful  harassment, the employer should launch an internal investigation even if the  employee did not complain to management through its internal complaint  process. 

Furthermore,  due care requires management to correct harassment regardless of whether an  employee files an internal complaint, if the conduct is clearly unwelcome. For example, if there are areas in the  workplace with graffiti containing racial or sexual epithets, management should  eliminate the graffiti and not wait for an internal complaint.77An employer should ensure that its supervisors and managers understand  their responsibilities under the organization’s anti-harassment policy and  complaint procedure. Periodic training  of those individuals can help achieve that result. Such training should explain the types of  conduct that violate the employer’s anti-harassment policy; the seriousness of  the policy; the responsibilities of supervisors and managers when they learn of  alleged harassment; and the prohibition against retaliation.

 An employer should keep  track of its supervisors’ and managers’ conduct to make sure that they  carry out their responsibilities under the organization’s anti-harassment  program.78 For example, an  employer could include such compliance in formal evaluations. 

 Reasonable preventive measures include screening  applicants for supervisory jobs to see if any have a record of engaging in  harassment. If so, it may be necessary for the employer to reject a candidate  on that basis or to take additional steps to prevent harassment by that  individual.

 Finally, it is advisable for an employer to keep records  of all complaints of harassment. Without  such records, the employer could be unaware of a pattern of harassment by the  same individual. Such a pattern would be  relevant to credibility assessments and disciplinary measures.79

#### 3. Small Businesses

It may not be necessary for an employer of a small  workforce to implement the type of formal complaint process described  above. If it puts into place an  effective, informal mechanism to prevent and correct harassment, a small  employer could still satisfy the first prong of the affirmative defense to a  claim of harassment.80 As the Court recognized in *Faragher,* an employer of a small workforce might informally exercise sufficient care to  prevent harassment.81

 For example, such an  employer’s failure to disseminate a written policy against harassment on  protected bases would not undermine the affirmative defense if it effectively  communicated the prohibition and an effective complaint procedure to all  employees at staff meetings. An owner of  a small business who regularly meets with all of his or her employees might  tell them at monthly staff meetings that he or she will not tolerate harassment  and that anyone who experiences harassment should bring it “straight to the  top.” 

If  a complaint is made, the business, like any other employer, must conduct a  prompt, thorough, and impartial investigation and undertake swift and  appropriate corrective action where appropriate. The questions set forth in Section  V(C)(1)(e)(i), above, can help guide the inquiry and the factors set forth in  Section V(C)(1)(e)(ii) should be considered in evaluating the credibility of  each of the parties. 

### D. Second Prong of Affirmative Defense: Employee’s Duty  to Exercise Reasonable Care  

The second prong of the affirmative defense requires  a showing by the employer that the aggrieved employee “unreasonably failed to  take advantage of any preventive or corrective opportunities provided by the  employer or to avoid harm otherwise.” *Faragher*,  118 S. Ct. at 2293; *Ellerth*, 118 S. Ct. at 2270. 

 This element of the defense arises from the general  theory “that a victim has a duty ‘to use such means as are reasonable under the  circumstances to avoid or minimize the damages’ that result from violations of  the statute.” Faragher, 18 S. Ct. at  2292, quoting Ford Motor Co. v. EEOC, 458 U.S. 219, 231 n.15 (1982). Thus an employer who exercised reasonable  care as described in subsection V(C), above, is not liable for unlawful  harassment if the aggrieved employee could have avoided all of the actionable  harm. If some but not all of the harm  could have been avoided, then an award of damages will be mitigated  accordingly.82

 A complaint by an employee does not automatically defeat  the employer’s affirmative defense. If,  for example, the employee provided no information to support his or her  allegation, gave untruthful information, or otherwise failed to cooperate in  the investigation, the complaint would not qualify as an effort to avoid  harm. Furthermore, if the employee  unreasonably delayed complaining, and an earlier complaint could have reduced  the harm, then the affirmative defense could operate to reduce damages. 

Proof  that the employee unreasonably failed to use any complaint procedure provided  by the employer will normally satisfy the employer’s burden.83 However, it is important to emphasize that an employee who failed to complain  does not carry a burden of proving the reasonableness of that decision. Rather, the burden lies with the employer to  prove that the employee’s failure to complain was unreasonable.

#### 1. Failure to Complain

A determination as to whether an employee unreasonably failed to  complain or otherwise avoid harm depends on the particular circumstances and  information available to the employee *at that time*.84 An employee should not necessarily be  expected to complain to management immediately after the first or second  incident of relatively minor harassment.  Workplaces need not become battlegrounds where every minor, unwelcome  remark based on race, sex, or another protected category triggers a complaint  and investigation. An employee might  reasonably ignore a small number of incidents, hoping that the harassment will  stop without resort to the complaint process.85 The employee may directly say to the harasser  that s/he wants the misconduct to stop, and then wait to see if that is  effective in ending the harassment before complaining to management. If the harassment persists, however, then  further delay in complaining might be found unreasonable. 

There might be other reasonable explanations for an employee’s delay in  complaining or entire failure to utilize the employer’s complaint process. For example, the employee might have  had reason to believe that:86

- using  the complaint mechanism entailed a risk of retaliation; 
- there  were obstacles to complaints; and 
- the  complaint mechanism was not effective. 

To  establish the second prong of the affirmative defense, the employer must prove  that the belief or perception underlying the employee’s failure to complain was  unreasonable.

**Risk of Retaliation**

An  employer cannot establish that an employee unreasonably failed to use its  complaint procedure if that employee reasonably feared retaliation. Surveys have shown that employees who are  subjected to harassment frequently do not complain to management due to fear of  retaliation.87 To  assure employees that such a fear is unwarranted, the employer must clearly  communicate and enforce a policy that no employee will be retaliated against  for complaining of harassment. 

**Obstacles to Complaints**

An employee’s failure to use the employer’s complaint  procedure would be reasonable if that failure was based on unnecessary  obstacles to complaints. For example, if  the process entailed undue expense by the employee,88 inaccessible points  of contact for making complaints,89 or unnecessarily  intimidating or burdensome requirements, failure to invoke it on such a basis  would be reasonable.

 An employee’s failure  to participate in a mandatory mediation or other alternative dispute resolution  process also does not does not constitute unreasonable failure to avoid  harm. While an employee can be expected  to cooperate in the employer’s investigation by providing relevant information,  an employee can never be required to waive rights, either substantive or  procedural, as an element of his or her exercise of reasonable care.90 Nor must an employee have to try to resolve the matter with the harasser as an  element of exercising due care.

**Perception That Complaint Process Was Ineffective**

An  employer cannot establish the second prong of the defense based on the  employee’s failure to complain if that failure was based on a reasonable belief  that the process was ineffective. For  example, an employee would have a reasonable basis to believe that the  complaint process is ineffective if the procedure required the employee to  complain initially to the harassing supervisor.  Such a reasonable basis also would be found if he or she was aware of  instances in which co-workers’ complaints failed to stop harassment. One way to increase employees’ confidence in  the efficacy of the complaint process would be for the employer to release  general information to employees  about corrective and disciplinary measures undertaken to stop harassment.91

#### 2. Other Efforts to Avoid Harm

Generally, an employer can prove the second prong of  the affirmative defense if the employee unreasonably failed to utilize its  complaint process. However, such proof  will not establish the defense if the employee made other efforts to avoid  harm. 

 For example, a prompt complaint by the employee to the  EEOC or a state fair employment practices agency while the harassment is  ongoing could qualify as such an effort.  A union grievance could also qualify as an effort to avoid harm.92 Similarly, a staffing firm worker who is harassed at the client’s workplace  might report the harassment either to the staffing firm or to the client,  reasonably expecting that either would act to correct the problem.93 Thus the worker’s failure to complain to one of those entities would not bar  him or her from subsequently bringing a claim against it.

 With these and any other efforts to avoid harm, the  timing of the complaint could affect liability or damages. If the employee could have avoided some of  the harm by complaining earlier, then damages would be mitigated accordingly.

## VI.  Harassment  by “Alter Ego” of Employer  

### A.  Standard  of Liability

An employer is liable for unlawful harassment whenever the harasser is  of a sufficiently high rank to fall “within that class . . . who may be treated  as the organization’s proxy.” *Faragher*,  118 S. Ct. at 2284.94 In such circumstances, the official’s  unlawful harassment is imputed automatically to the employer.95 Thus the employer cannot raise the  affirmative defense, even if the harassment did not result in a tangible  employment action.

### B.  Officials  Who Qualify as “Alter Egos” or “Proxies” 

The  Court, in *Faragher*, cited the following examples of officials whose  harassment could be imputed automatically to the employer:

- president 96
- owner 97
- partner 98 
- corporate  officer 

*Faragher*,  118 S. Ct. at 2284. 

## VII.  Conclusion

The Supreme Court’s rulings in *Ellerth* and *Faragher* create  an incentive for employers to implement and enforce strong policies prohibiting  harassment and effective complaint procedures.  The rulings also create an incentive for employees to alert management  about harassment before it becomes severe and pervasive. If employers and employees undertake these  steps, unlawful harassment can often be prevented, thereby effectuating an  important goal of the anti-discrimination statutes. 

**FOOTNOTES**

*See, e.g.,*

2 *See* 1980  Guidelines at 29 C.F.R. § 1604.11(f) and Policy Guidance on Current Issues of  Sexual Harassment, Section E, 8 FEP Manual 405:6699 (Mar. 19, 1990), *quoted  in Faragher*, 118 S. Ct. at 2292. 

3 *Faragher*, 118 S.  Ct. at 2292.

4 *Oncale v. Sundowner  Offshore Services, Inc.*, 118 S. Ct. 998, 1002 (1998).

5 *Faragher*, 118 S.Ct. at  2283. However, when isolated incidents  that are not “extremely serious” come to the attention of management, appropriate  corrective action should still be taken so that they do not escalate. *See*Section V(C)(1)(a), below.

6 *Oncale*, 118 S. Ct. at 1003.

7 Some previous Commission documents  classified harassment as either “quid pro quo” or hostile environment. However, it is now more useful to distinguish  between harassment that results in a tangible employment action and harassment  that creates a hostile work environment, since that dichotomy determines  whether the employer can raise the affirmative defense to vicarious  liability. Guidance on the definition of  “tangible employment action” appears in section IV(B), below.

8 The guidance in this document applies  to federal sector employers, as well as all other employers covered by the  statutes enforced by the Commission.

9 29 C.F.R. § 1604.11(d).

10   The Commission will rescind Subsection 1604.11(c) of the 1980 Guidelines on  Sexual Harassment, 29 CFR § 1604.11(c).  In addition, the following Commission guidance is no longer in effect:  Subsection D of the 1990 Policy Statement on Current Issues in Sexual  Harassment(“Employer Liability for Harassment by Supervisors”), EEOC Compliance  Manual (BNA) N:4050-58 (3/19/90); and EEOC Compliance Manual Section 615.3(c)  (BNA) 6:15-0007 - 0008.

 The remaining portions of the 1980  Guidelines, the 1990 Policy Statement, and Section 615 of the Compliance Manual  remain in effect. Other Commission  guidance on harassment also remains in effect, including the Enforcement  Guidance on *Harris v. Forklift Sys., Inc.*, EEOC Compliance Manual (BNA)  N:4071 (3/8/94) and the Policy Guidance on Employer Liability for Sexual  Favoritism, EEOC Compliance Manual (BNA) N:5051 (3/19/90).

11 Harassment  that is targeted at an individual because of his or her sex violates Title VII  even if it does not involve sexual comments or conduct. Thus, for example, frequent, derogatory  remarks about women could constitute unlawful harassment even if the remarks  are not sexual in nature. *See* 1990 Policy Guidance on Current Issues of Sexual Harassment, subsection C(4)  (“sex-based harassment - that is, harassment not involving sexual activity or  language - may also give rise to Title VII liability . . . if it is  ‘sufficiently patterned or pervasive’ and directed at employees because of  their sex”).

12 “Protected  activity” means opposition to discrimination or participation in proceedings  covered by the anti-discrimination statutes. Harassment based on protected  activity can constitute unlawful retaliation.  S*ee* EEOC Compliance Manual Section 8 (“Retaliation”) (BNA)  614:001 (May 20, 1998).

13 For  cases applying *Ellerth* and *Faragher* to harassment on different  bases, *see Hafford v. Seidner*, 167 F.3d 1074, 1080 (6th Cir.  1999) (religion and race);*Breeding v. Arthur J. Gallagher and Co.*, 164  F.3d 1151, 1158 (8th Cir. 1999) (age); *Allen v. Michigan  Department of Corrections*, 165 F.3d 405, 411 (6th Cir. 1999)  (race) ; *Richmond-Hopes v. City of Cleveland*, No. 97-3595, 1998 WL  808222 at *9 (6th Cir. Nov. 16, 1998) (unpublished) (retaliation);*Wright-Simmons v. City of Oklahoma City*, 155 F.3d 1264, 1270 (10th  Cir. 1998) (*race*); *Gotfryd v. Book Covers, Inc.*, No. 97 C 7696,  1999 WL 20925 at *5 (N.D. Ill. Jan. 7, 1999) (national origin). *See also Wallin v. Minnesota Department of  Corrections*, 153 F.3d 681, 687 (8th Cir. 1998) (assuming without deciding that ADA hostile  environment claims are modeled after Title VII claims), *cert. denied*,  119 S. Ct. 1141 (1999).

14 The  majority’s analysis in both *Faragher* and *Ellerth* drew upon the  liability standards for harassment on other protected bases. It is therefore clear that the same standards  apply. *See Faragher*, 118 S. Ct.  at 2283 (in determining appropriate standard of liability for sexual harassment  by supervisors, Court “drew upon cases recognizing liability for discriminatory  harassment based on race and national origin”);*Ellerth*, 118 S. Ct. at  2268 (Court imported concept of “tangible employment action” in race, age and  national origin discrimination cases for resolution of vicarious liability in  sexual harassment cases). *See also*cases  cited in n.13, above.

15 *Ellerth*,  118 S. Ct. at 2270; *Faragher*, 118 S. Ct. at 2293.

16 Numerous  statutes contain the word "supervisor," and some contain definitions  of the term. *See, e.g.,* 12 U.S.C.  § 1813(r) (definition of "State bank supervisor" in legislation  regarding Federal Deposit Insurance Corporation); 29 U.S.C. § 152(11)  (definition of "supervisor" in National Labor Relations Act); 42  U.S.C.. § 8262(2) (definition of "facility energy supervisor" in  Federal Energy Initiative legislation).  The definitions vary depending on the purpose and structure of each  statute. The definition of the word  “supervisor” under other statutes does not control, and is not affected by, the  meaning of that term under the employment discrimination statutes.

17 *See*42 U.S.C. 2000e(a) (Title VII); 29 U.S.C. 630(b) (ADEA); and 42 U.S.C.  §12111(5)(A) (ADA) (all defining “employer” as including any agent of the  employer). 

18 *Meritor Savings Bank,  FSB v. Vinson*, 477 U.S. 57, 72 (1986); *Faragher,*118 S. Ct. at 2290  n.3;*Ellerth*, 118 S. Ct. at 2266. 

19 *See Faragher*, 118  S. Ct. at 2288 (analysis of vicarious liability “calls not for a mechanical  application of indefinite and malleable factors set forth in the Restatement .  . . but rather an inquiry into the reasons that would support a conclusion that  harassing behavior ought to be held within the scope of a supervisor’s  employment . . . ”) and at 2290 n.3 (agency concepts must be adapted to the  practical objectives of the anti-discrimination statutes).

20 *Faragher*, 118 S.  Ct. at 2290; *Ellerth*, 118 S. Ct. at 2269.

21 *Ellerth*, 118 S.  Ct. at 2269.

22 *Ellerth*, 118 S. Ct. at 2269.

23 *Faragher*,  118 S. Ct. at 2280. For a more  detailed discussion of the harassers’ job responsibilities, *see Faragher*,  864 F. Supp. 1552, 1563 (S.D. Fla. 1994).

24 *See Grozdanich v.  Leisure Hills Health Center*, 25 F. Supp.2d 953, 973 (D. Minn. 1998) (“it is  evident that the Supreme Court views the term ‘supervisor’ as more expansive  than as merely including those employees whose opinions are dispositive on  hiring, firing, and promotion”; thus, “charge nurse” who had authority to  control plaintiff’s daily activities and  recommend discipline qualified as “supervisor” and therefore rendered employer vicariously liable under Title VII  for his harassment of plaintiff, subject to affirmative defense). 

25 *See Ellerth*,  118 S. Ct. at 2268 (“If, in the unusual case, it is alleged there is a false  impression that the actor was a supervisor, when he in fact was not, the  victim’s mistaken conclusion must be a reasonable one.”);*Llampallas v.  Mini-Circuit Lab, Inc.*, 163 F.3d 1236, 1247 (11th Cir. 1998)  (“Although the employer may argue that the employee had no actual authority to  take the employment action against the plaintiff, apparent authority serves  just as well to impute liability to the employer for the employee's action.”).

26 Of course,  traditional principles of mitigation of damages apply in these cases, as well  as all other employment discrimination cases. *See generally Ford Motor Co. v. EEOC*, 458 U.S. 219 (1982).

27 *Ellerth,*118  S. Ct. at 2269; *Faragher*, 118 S. Ct. 2284-85. *See also Durham**Life Insurance Co.,  v. Evans*, 166 F.3d 139, 152 (3rd Cir. 1999) (“A supervisor can only take a  tangible adverse employment action because of the authority delegated by the  employer . . . and thus the employer is properly charged with the consequences  of that delegation.”).

28 *Ellerth*, 118 S.  Ct. at 2268.

29 All listed criteria are  set forth in *Ellerth*, 118 S. Ct. at 2269.

30 All listed examples are set  forth in *Ellerth* and/or *Faragher*. *See Ellerth*, 118 S. Ct. at 2268 and 2270; *Faragher*, 118 S.  Ct. at 2284, 2291, and 2293.

31 Other forms of formal  discipline would qualify as well, such as suspension. Any disciplinary action undertaken as part of  a program of progressive discipline is “tangible” because it brings the  employee one step closer to discharge.

32 The Commission disagrees  with the Fourth Circuit’s conclusion in *Reinhold v. Commonwealth of Virginia*,  151 F.3d 172 (4th Cir. 1998), that the plaintiff was not subjected  to a tangible employment action where the harassing supervisor “dramatically  increased her workload,” *Reinhold*, 947 F. Supp. 919, 923 (E.D Va. 1996),  denied her the opportunity to attend a professional conference, required her to  monitor and discipline a co-worker, and generally gave her undesirable  assignments. The Fourth Circuit ruled  that the plaintiff had not been subjected to a tangible employment action  because she had not “experienced a change in her employment status akin to a  demotion or a reassignment entailing significantly different job  responsibilities.” 151 F.3d at 175.  It is the Commission’s view that the Fourth Circuit misconstrued *Faragher* and *Ellerth.* While minor changes  in work assignments would not rise to the level of tangible job harm, the  actions of the supervisor in *Reinhold* were substantial enough to  significantly alter the plaintiff’s employment status.

33 *See  Durham*, 166 F.3d at 152-53 (assigning insurance salesperson heavy load of  inactive policies, which had a severe negative impact on her earnings, and  depriving her of her private office and secretary, were tangible employment  actions);*Bryson v. Chicago State University*, 96 F.3d 912, 917 (7th  Cir. 1996) (“Depriving someone of the building blocks for . . . a promotion . .  . is just as serious as depriving her of the job itself.”).

34 *See Flaherty v. Gas  Research Institute*, 31 F.3d 451, 457 (7th Cir. 1994) (change in  reporting relationship requiring plaintiff to report to former subordinate,  while maybe bruising plaintiff’s ego, did not affect his salary, benefits, and  level of responsibility and therefore could not be challenged in ADEA claim), *cited  in Ellerth*, 118 S. Ct. at 2269.

35 *See Crady v. Liberty  Nat. Bank & Trust Co. of Ind.*, 993 F.2d 132, 136 (7th Cir.  1993) (“A materially adverse change might be indicated by a termination of  employment, a demotion evidenced by a decrease in wage or salary, a less  distinguished title, a material loss of benefits, significantly diminished  material responsibilities, or other indices that might be unique to the  particular situation.”), *quoted in Ellerth*, 118 S. Ct. at 2268-69.

36 *See**Nichols v. Frank*, 42 F.3d 503, 512-13 (9th Cir. 1994)  (employer vicariously liable where its supervisor granted plaintiff’s leave  requests based on her submission to sexual conduct), *cited in**Faragher*,  118 S. Ct. at 2285. 

37 *See  Ellerth*, 118 S. Ct. at 2268 and *Faragher*, 118 S. Ct. at 2284 (listed  examples of tangible employment actions that included both positive and  negative job decisions: hiring *and*firing; promotion*and* failure  to promote). 

38 The  link could be established even if the harasser was not the ultimate decision  maker. *See, e.g., Shager v Upjohn Co.*,  913 F.2d 398, 405 (7th Cir. 1990) (noting that committee rather than  the supervisor fired plaintiff, but employer was still liable because committee  functioned as supervisor’s “cat’s paw”), *cited in Ellerth*, 118 S. Ct. at  2269.

39 *Llampallas*,  163 F.3d at 1247.

40 *Ellerth,*118 S. Ct. at 2270 (“[n]o affirmative defense is available . . . when the  supervisor’s harassment culminates in a tangible employment action . . .”); *Faragher*,  118 S. Ct. at 2293 (same). *See also  Durham*, 166 F.3d at 154 (“When harassment becomes adverse employment  action, the employer loses the affirmative defense, even if it might have been  available before.”); *Lissau v. Southern Food Services, Inc.*, 159 F.3d  177, 184 (4th Cir. 1998) (the affirmative defense “is not available  in a hostile work environment case when the supervisor takes a tangible employment  action against the employee as part of the harassment”) (Michael, J.,  concurring).

41 *Ellerth*,  118 S. Ct. at 2265. Even if the  preceding acts were not severe or pervasive, they still may be relevant  evidence in determining whether the tangible employment action was  discriminatory.

42 *See**Lissau v. Southern Food Service, Inc.*, 159 F.3d at 182 (if plaintiff  could not prove that her discharge resulted from her refusal to submit to her  supervisor’s sexual harassment, then the defendant could advance the  affirmative defense); *Newton v. Caldwell Laboratories*, 156 F.3d 880, 883  (8th Cir. 1998) (plaintiff failed to prove that her rejection of her  supervisor’s sexual advances was the reason that her request for a transfer was  denied and that she was discharged; her claim was therefore categorized as one  of hostile environment harassment);*Fierro v. Saks Fifth Avenue*, 13 F.  Supp.2d 481, 491 (S.D.N.Y. 1998) (plaintiff claimed that his discharge resulted  from national origin harassment but court found that he was discharged because  of embezzlement; thus, employer could raise affirmative defense as to the  harassment preceding the discharge).

43 *See  Faragher*, 118 S. Ct. at 2292 (“If the victim could have avoided harm, no  liability should be found against the employer who had taken reasonable  care.”).

44 *See,  e.g., EEOC v. SBS Transit, Inc.*, No. 97-4164, 1998 WL 903833 at *1 (6th  Cir. Dec. 18, 1998) (unpublished) (lower court erred when it reasoned that  employer liability for sexual harassment is negated if the employer responds  adequately and effectively once it has notice of the supervisor’s harassment;  that standard conflicts with affirmative defense which requires proof that  employer “took reasonable care to *prevent* and correct promptly any  sexually harassing behavior and that the plaintiff employee unreasonably failed  to take advantage of preventative or corrective opportunities provided by the  employer”).

45 *Ellerth*,  118 S. Ct. at 2270.

46 *See  Indest v. Freeman Decorating, Inc.*, 168 F.3d 795, 803 (5th Cir.  1999) (“when an employer satisfies the first element of the Supreme Court’s  affirmative defense, it will likely forestall its own vicarious liability for a  supervisor’s discriminatory conduct by nipping such behavior in the bud”)  (Wiener, J., concurring in *Indest*, 164 F.3d 258 (5th Cir.  1999)). The Commission agrees with Judge  Wiener’s concurrence in *Indest* that the court in that case dismissed the  plaintiff’s claims on an erroneous basis.  The plaintiff alleged that her supervisor made five crude sexual  comments or gestures to her during a week-long convention. She reported the incidents to appropriate  management officials who investigated the matter and meted out appropriate  discipline. No further incidents of  harassment occurred. The court noted that  it was “difficult to conclude” that the conduct to which the plaintiff was  briefly subjected created an unlawful hostile environment. Nevertheless, the court went on to consider  liability. It stated that *Ellerth* and *Faragher* do not apply where the plaintiff quickly resorted to the  employer’s grievance procedure and the employer took prompt remedial  action. In such a case, according to the  court, the employer’s quick response exempts it from liability. The Commission agrees with Judge Wiener that *Ellerth* and *Faragher* do control the analysis in such cases, and that an  employee’s prompt complaint to management forecloses the employer from proving  the affirmative defense. However, as  Judge Wiener pointed out, an employer’s quick remedial action will often thwart  the creation of an unlawful hostile environment, rendering any consideration of  employer liability unnecessary.

47 *See  Greene v. Dalton*, 164 F.3d 671, 674 (D.C. Cir. 1999) (in order for  defendant to avoid all liability for sexual harassment leading to rape of  plaintiff “it must show not merely that [the plaintiff] inexcusably delayed  reporting the alleged rape . . . but that, as a matter of law, a reasonable  person in [her] place would have come forward early enough to prevent [the]  harassment from becoming ‘severe or pervasive’”).

48 *Ellerth*,  118 S. Ct. at 2267.

49 Under  this same principle, it is the Commission’s position that an employer is liable  for punitive damages if its supervisor commits unlawful harassment or other  discriminatory conduct with malice or with reckless indifference to the  employee’s federally protected rights.  (The Supreme Court will determine the standard for awarding punitive  damages in *Kolstad v. American Dental Association*,119 S. Ct. 401 (1998)  (granting certiorari).) The test for  imposition of punitive damages is the mental state of the harasser, not of  higher-level officials. This approach  furthers the remedial and deterrent objectives of the anti-discrimination  statutes, and is consistent with the vicarious liability standard set forth in *Faragher* and *Ellerth*. 

50 Even  if higher management proves that evidence it discovered after-the-fact would  have justified the supervisor’s action, such evidence can only limit remedies,  not eliminate liability. *McKennon v.  Nashville Banner Publishing Co.*, 513 U.S. 352, 360-62 (1995).

51 *See  Faragher*, 118 S. Ct. at 2293, and *Ellerth*, 118 S. Ct. at 2270  (affirmative defense operates either to eliminate liability or limit damages).

52 *See  Faragher*, 118 S. Ct. at 2292 (“if damages could reasonably have been  mitigated no award against a liable employer should reward a plaintiff for what  her own efforts could have avoided”). 

54 *See Hurley v. Atlantic  City Police Dept.*, No. 96-5634, 96-5633, 96-5661, 96-5738, 1999 WL 150301  (3d Cir. March 18, 1999) (“*Ellerth* and *Faragher* do not, as the  defendants seem to assume, focus mechanically on the formal existence of a  sexual harassment policy, allowing an absolute defense to a hostile work  environment claim whenever the employer can point to an anti-harassment policy  of some sort”; defendant failed to prove  affirmative defense where it issued written policies without enforcing them,  painted over offensive graffiti every few months only to see it go up again in  minutes, and failed to investigate sexual harassment as it investigated and  punished other forms of misconduct.).

55 *See Dees v. Johnson  Controls World Services, Inc.*, 168 F.3d 417, 422 (11th Cir. 1999) (employer can be held liable despite  its immediate and appropriate corrective action in response to harassment  complaint if it had knowledge of the harassment prior to the complaint and took  no corrective action).

56 *Ellerth*, 118 S.  Ct. at 2270. 

57 A union grievance and  arbitration system does not fulfill this obligation. Decision making under such a system addresses  the collective interests of bargaining unit members, while decision making  under an internal harassment complaint process should focus on the individual  complainant’s rights under the employer’s anti-harassment policy. 

 An  arbitration, mediation, or other alternative dispute resolution process also  does not fulfill the employer’s duty of due care. The employer cannot discharge its  responsibility to investigate complaints of harassment and undertake corrective  measures by providing employees with a dispute resolution process. For further discussion of the impact of such  procedures on the affirmative defense, see Section V(D)(1)(b), below.

 Finally, a federal agency’s formal, internal  EEO complaint process does not, by itself, fulfill its obligation to exercise  reasonable care. That process only  addresses complaints of violations of the federal EEO laws, while the Court, in *Ellerth*, made clear that an employer should encourage employees “to  report harassing conduct before it becomes severe or pervasive.” *Ellerth*, 118 S. Ct. at 2270. Furthermore, the EEO process is designed to  assess whether the agency is liable for unlawful discrimination and does not  necessarily fulfill the agency’s  obligation to undertake immediate and appropriate corrective action. 

58 Although the affirmative defense does  not apply in cases of harassment by co-workers or non-employees, an employer  cannot claim lack of knowledge as a defense to such harassment if it did not  make clear to employees that they can bring such misconduct to the attention of  management and that such complaints will be addressed. *See Perry v. Ethan Allen*, 115 F.3d  143, 149 (2d Cir. 1997) (“When harassment is perpetrated by the plaintiff's  coworkers, an employer will be liable if the plaintiff demonstrates that ‘the  employer either provided no reasonable avenue for complaint or knew of the  harassment but did nothing about it’”), *cited in Faragher*, 118 S. Ct. at  2289. Furthermore, an employer is liable  for harassment by a co-worker or non-employer if management knew or should have  known of the misconduct, unless the employer can show that it took immediate and  appropriate corrective action. 29 C.F.R.  § 1604.11(d). Therefore, the employer  should have a mechanism for investigating such allegations and undertaking  corrective action, where appropriate. 

59 Surveys have shown that a  common reason for failure to report harassment to management is fear of  retaliation. *See, e.g.,*Louise F.  Fitzgerald & Suzanne Swan, “Why Didn’t She Just Report Him? The  Psychological and Legal Implications of Women’s Responses to Sexual  Harassment,” 51 *Journal of Social Issues* 117, 121-22 (1995) (citing studies). Surveys also have shown that a significant  proportion of harassment victims are worse off after complaining. *Id*. at 123-24; *see also*Patricia  A. Frazier, “Overview of Sexual Harassment From the Behavioral Science  Perspective,” paper presented at the American Bar Association National  Institute on Sexual Harassment at B-17 (1998) (reviewing studies that show  frequency of retaliation after victims confront their harasser or filed formal  complaints). 

60 *See Wilson v. Tulsa  Junior College*, 164 F.3d 534, 541 (10th Cir. 1998) (complaint  process deficient where it permitted employees to bypass the harassing  supervisor by complaining to director of personnel services, but the director  was inaccessible due to hours of duty and location in separate facility).

61 *Faragher,*118 S.  Ct. at 2293 (in holding as matter of law that City did not exercise reasonable  care to prevent the supervisors’ harassment, Court took note of fact that  City’s policy “did not include any assurance that the harassing supervisors could  be bypassed in registering complaints”); *Meritor Savings Bank, FSB v. Vinson*,  471 U.S. 57, 72 (1986). 

62 *See Wilson*, 164  F.3d at 541 (complaint procedure deficient because it only required supervisors  to report “formal” as opposed to “informal” complaints of harassment); *Varner  v. National Super Markets Inc.*, 94 F.3d 1209, 1213 (8th Cir.  1996), *cert denied*, 519 U.S. 1110 (1997) (complaint procedure is not  effective if it does not require supervisor with knowledge of harassment to  report the information to those in position to take appropriate action).

63 It is particularly  important for federal agencies to explain the statute of limitations for filing  formal EEO complaints, because the regulatory deadline is only 45 days and  employees may otherwise assume they can wait whatever length of time it takes  for management to complete its internal investigation.

64 If an employer actively  misleads an employee into missing the deadline for filing a charge by dragging  out its investigation and assuring the employee that the harassment will be  rectified, then the employer would be “equitably stopped” from challenging the  delay. *See Currier v. Radio Free  Europe/Radio Liberty, Inc.,*159 F.3d 1363, 1368 (D.C. Cir. 1998) (“an  employer’s affirmatively misleading statements that a grievance will be  resolved in the employee’s favor can establish an equitable estoppel”); *Miranda  v. B & B Cash Grocery Store, Inc.*, 975 F.2d 1518, 1531 (11th  Cir. 1992) (tolling is appropriate where plaintiff was led by defendant to  believe that the discriminatory treatment would be rectified); *Miller v.  Beneficial Management Corp.*, 977 F.2d 834, 845 (3d Cir. 1992) (equitable  tolling applies where employer’s own acts or omission has lulled the plaintiff  into foregoing prompt attempt to vindicate his rights).

65 The sharing of records  about a harassment complaint with prospective employers of the complainant  could constitute unlawful retaliation. *See* Compliance Manual Section 8 (“Retaliation), subsection II D (2), (BNA) 614:0005  (5/20/98).

66 One court has suggested  that it may be permissible to honor such a request, but that when the  harassment is severe, an employer cannot just stand by, even if requested to do  so. *Torres v. Pisano***,**116 F.3d 625 (2d Cir.), *cert. denied*,  118 S. Ct. 563(1997). 

67 Employers may hesitate to  set up such a phone line due to concern that it may create a duty to  investigate anonymous complaints, even if based on mere rumor. To avoid any confusion as to whether an  anonymous complaint through such a phone line triggers an investigation, the  employer should make clear that the person who takes the calls is not a  management official and can only answer questions and provide information. An investigation will proceed only if a  complaint is made through the internal complaint process or if management  otherwise learns about alleged harassment. 

68 *See, e.g.*, *Van  Zant v. KLM Royal Dutch Airlines*, 80 F.3d 708, 715 (2d Cir. 1996)  (employer’s response prompt where it began investigation on the day that  complaint was made, conducted interviews within two days, and fired the  harasser within ten days);*Steiner v. Showboat Operating Co.*, 25 F.3d  1459, 1464 (9th Cir. 1994) (employer’s response to complaints inadequate  despite eventual discharge of harasser where it did not seriously investigate  or strongly reprimand supervisor until  after plaintiff filed charge with state FEP agency), *cert. denied*, 513  U.S. 1082 (1995); *Saxton v. AT&T*,  10 F.3d 526, 535 (7th Cir 1993) (investigation prompt where it was  begun one day after complaint and a detailed report was completed two weeks  later); *Nash v. Electrospace Systems, Inc.* 9 F.3d 401, 404 (5th  Cir. 1993) (prompt investigation completed within one week); *Juarez v.  Ameritech Mobile Communications, Inc.*, 957 F.2d 317, 319 (7th  Cir. 1992) (adequate investigation completed within four days).

69 Management may be  reluctant to release information about specific disciplinary measures that it  undertakes against the harasser, due to concerns about potential defamation  claims by the harasser. However, many  courts have recognized that limited disclosures of such information are  privileged. For cases addressing  defenses to defamation claims arising out of alleged harassment, *see Duffy  v. Leading Edge Products*, 44 F.3d 308, 311 (5th Cir. 1995) (qualified  privilege applied to statements accusing plaintiff of harassment**)**;*Garziano v. E.I. DuPont de Nemours & Co.,* 818 F.2d 380 (5th  Cir. 1987) (qualified privilege protects employer’s statements in bulletin to  employees concerning dismissal of alleged harasser); *Stockley v. AT&T*,  687 F. Supp. 764 (F. Supp. 764 (E.D.N.Y. 1988) (statements made in course of investigation into sexual  harassment charges protected by qualified privilege). 

70 *Mockler  v Multnomah County*, 140 F.3d 808, 813 (9th Cir. 1998).

71 In  some cases, accused harassers who were subjected to discipline and subsequently  exonerated have claimed that the disciplinary action was discriminatory. No discrimination will be found if the  employer had a good faith belief that such action was warranted and there is no  evidence that it undertook less punitive measures against similarly situated  employees outside his or her protected class who were accused of  harassment. In such circumstances, the  Commission will not find pretext based solely on an after-the-fact conclusion  that the disciplinary action was inappropriate. *See Waggoner v. City of Garland Tex.*, 987 F.2d 1160, 1165 (5th  Cir. 1993) (where accused harasser claims that disciplinary action was  discriminatory, “[t]he real issue is whether the employer reasonably believed  the employee’s allegation [of harassment] and acted on it in good faith, or to  the contrary, the employer did not actually believe the co-employee’s  allegation but instead used it as a pretext for an otherwise discriminatory  dismissal”). 

72 *See  Steiner v. Showboat Operating Co.*, 25 F.3d 1459, 1464 (9th Cir.  1994) (employer remedial action for sexual harassment by supervisor inadequate  where it twice changed plaintiff’s shift  to get her away from supervisor rather than change his shift or work area), *cert.  denied*, 513 U.S. 1082 (1995).

73 *See  Guess v. Bethlehem Steel Corp.*, 913 F.2d 463, 465 (7th Cir.  1990) (“a remedial measure that makes the victim of sexual harassment worse off  is ineffective *per se*”)**.**

74 An  oral warning or reprimand would be appropriate only if the misconduct was  isolated and minor. If an employer  relies on oral warnings or reprimands to correct harassment, it will have  difficulty proving that it exercised reasonable care to prevent and correct  such misconduct. 

75 *See  Varner*, 94 F.3d at 1213 (complaint procedure is not effective if it does  not require supervisor with knowledge of harassment to report the information  to those in position to take appropriate action), *cert denied*, 117 S.  Ct. 946 (1997); *accord**Wilson v. Tulsa Junior College*, 164 F.3d  at 541. 

76 *See  Wilson,* 164 F.3d at 541 (complaint procedure deficient because it only  required supervisors to report “formal” as opposed to “informal” complaints of  harassment).

77 *See,  e.g., Splunge v. Shoney’s, Inc.*, 97 F.3d 488, 490 (11th Cir.  1996) (where harassment of plaintiffs was so pervasive that higher management  could be deemed to have constructive knowledge of it, employer was obligated to  undertake corrective action even though plaintiffs did not register  complaints); *Fall v. Indiana**Univ. Bd. of Trustees*, 12 F. Supp.2d 870,  882 (N.D. Ind. 1998) (employer has constructive knowledge of harassment  by supervisors where it “was so broad in scope and so permeated the workplace  that it must have come to the attention of someone authorized to do something  about it”).

78 In *Faragher*, the City lost the  opportunity to establish the affirmative defense in part because “its officials  made no attempt to keep track of the conduct of supervisors.” *Faragher*, 118 S. Ct. at 2293.

79 See subsections  V(C)(1)(e)(ii) and V(C)(2), above.

80 If the owner of the  business commits unlawful harassment, then the business will automatically be  found liable under the alter ego standard and no affirmative defense can be raised. *See* Section VI, below.

81 *Faragher*, 118 S.  Ct. at 2293.

82 Faragher,  118 S. Ct. at 2292 (“If the victim could have avoided harm, no liability should  be found against the employer who had taken reasonable care, and if damages  could reasonably have been mitigated no award against a liable employer should  reward a plaintiff for what her own efforts could have avoided.”).

83 *Ellerth*,  118 S. Ct. at 2270; *Faragher*, 118 S. Ct. at 2293. *See also Scrivner v. Socorro Independent  School District*, 169 F.3d 969, 971 (5th Cir., 1999) (employer  established second prong of defense where harassment began during summer,  plaintiff misled investigators inquiring into anonymous complaint by denying  that harassment occurred, and plaintiff did not complain about the harassment  until the following March).

84 The  employee is not required to have chosen “the course that events later show to  have been the best.” Restatement  (Second) of Torts § 918, comment c.

85 *See**Corcoran v. Shoney’s Colonial, Inc.*, 24 F. Supp.2d 601, 606 (W.D. Va.  1998) (“Though unwanted sexual remarks have no place in the work environment,  it is far from uncommon for those subjected to such remarks to ignore them when  they are first made.”). 

86 *See  Faragher*, 118 S. Ct. at 2292 (defense established if plaintiff unreasonably  failed to avail herself of “a proven, effective mechanism for reporting and  resolving complaints of sexual harassment, available to the employee without  undue risk or expense”). *See also*Restatement  (Second) of Torts § 918, comment c (tort victim “is not barred from full  recovery by the fact that it would have been reasonable for him to make  expenditures or subject himself to pain or risk; it is only when he is  unreasonable in refusing or failing to take action to prevent further loss that  his damages are curtailed”). 

87 *See* n.59, above.

88 *See  Faragher*, 118 S. Ct. at 2292 (employee should not recover for harm that  could have been avoided by utilizing a proven, effective complaint process that  was available “without undue risk or expense”).

89 *See  Wilson*, 164 F.3d at 541 (complaint process deficient where official who  could take complaint was inaccessible due to hours of duty and location in  separate facility). 

90 *See* Policy Statement on Mandatory Binding Arbitration of Employment Discrimination  Disputes as a Condition of Employment, EEOC Compliance Manual (BNA) N:3101  (7/10/97).

91 For  a discussion of defamation claims and the application of a qualified privilege  to an employer’s statements about instances of harassment, *see* n.69,  above.

92 *See  Watts v. Kroger Company*, 170 F.3d 505, 510 (5th Cir., 1999)  (plaintiff made effort “to avoid harm otherwise” where she filed a union  grievance and did not utilize the employer’s harassment complaint process; both  the employer and union procedures were corrective mechanisms designed to avoid  harm).

93 Both  the staffing firm and the client may be legally responsible, under the  anti-discrimination statutes, for undertaking corrective action. *See* Enforcement Guidance: Application  of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and  Other Staffing Firms, EEOC Compliance Manual (BNA) N:3317 (12/3/97).

94 *See  also Ellerth*, 118 S. Ct. at 2267(under agency principles an  employer is indirectly liable “where the agent’s high rank in the company makes  him or her the employer’s alter ego”);*Harrison v. Eddy Potash, Inc.*,  158 F.3d 1371, 1376 (10th Cir. 1998) (“the Supreme Court in  Burlington acknowledged an employer can be held vicariously liable under Title  VII if the harassing employee’s ‘high rank in the company makes him or her the  employer’s alter ego’”).

95 *Faragher*, 118 S. Ct. at  2284.

96 The  Court noted that the standards for employer liability were not at issue in the  case of *Harris v. Forklift Systems*, 510 U.S. 17 (1993), because the  harasser was the president of the company. *Faragher,*118 S. Ct. at 2284.

97 An  individual who has an ownership interest in an organization, receives  compensation based on its profits, and participates in managing the  organization would qualify as an “owner” or “partner.” *Serapion v. Martinez*, 119 F.3d 982,  990 (1st Cir. 1997), *cert. denied*, 118 S. Ct. 690 (1998).

98 *Id.*

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