As a general rule, an employer will be liable to a victimized employee for a hostile environment created by a supervisor with immediate or higher authority over the employee. However, when the offending supervisor has not taken any tangible employment action, such as discharge or demotion, the employer may raise an affirmative defense to liability or damages. In situations where the harassment culminates in a tangible employment action, no affirmative defense is available. By taking heed of the key points in the recent Supreme Court decision on harassment, an employer may reduce the risk of sexual harassment claims and liability. Employer liability is the default position, so focus on prevention.
Employer liability is the general rule.
An employer may avoid liability under certain circumstances, but the factors that determine this are subjective and will undoubtedly give rise to dispute. Rather than becoming the next test case on any of these issues, a company should focus its efforts on preventing sexual harassment claims from arising in the first place. Any executive of a company that has experienced a sexual harassment claim knows they should be avoided. Settlements and judgments can be significant and are usually uninsured. An employer is far better off if it entirely avoids such claims.