Second Circuit Decision Clarifies Law on Vicarious Liability, Retaliation

A recent decision by the Second Circuit Court of Appeals clarifies an employee's protection from retaliation when participating in an internal investigation and an employer's immunity for acts of its principals.

In Townsend v. Benjamin Enterprises, Inc., a female employee alleged that the company's vice president and shareholder, who was also the husband of the company's president, sexually harassed her. After the HR director at the company conducted an internal investigation of the employee's allegations, the company fired her. The employee sued the company for sexual harassment, and the director sued the company alleging retaliation under Title VII, which protects participants in an EEOC investigation from termination. 

The court granted the employer's motion for summary judgment on the retaliation claim, and the director appealed the dismissal of the claim. The Second Circuit upheld the dismissal, holding that Title VII protects against retaliation for participating in an investigation only when the investigation involves an EEOC charge. Employees are not required to participate in in-house investigations before bringing a Title VII claim. The employee had not made an EEOC claim with respect to the allegations of sexual harassment, so Title VII did not protect the HR director from retaliatory termination.

A jury found in favor of the employee and awarded her $141,308.80 in attorney fees and costs. The company appealed, claiming that it properly investigated and took action on the employee's claim and was therefore entitled to the Faragher/Ellerth affirmative defense, which allows an employer that takes appropriate action in response to a complaint to avoid vicarious liability for an employee's discriminatory behavior.

The court found that the harasser — the company vice president — was the employer's proxy or alter ego, not a mere employee; therefore, the employer was not entitled to avoid liability under Faragher/Ellerth. In upholding the trial court's ruling, the Second Circuit followed available case law from other circuits and the EEOC's interpretation of the Faragher/Ellerth defense.

Although the decision implies that companies may, without recourse, terminate an employee who participates in an internal investigation if no EEOC claim has been filed, employees may still be entitled to protection under the "opposition clause" of Title VII, which prohibits retaliation against an employee who opposes an unlawful employment practice.

WeComply's Avoiding Retaliation course teaches managers and supervisors what retaliation is and how to avoid it while carrying out their day-to-day managerial responsibilities. 

Categories: Discrimination & Harassment Compliance
Tags: Preventing Discrimination and Harassment, Workplace Retaliation