On June 25, the U.S. Supreme Court agreed to decide whether an employer is liable for a supervisor’s harassment if those supervisors are given the authority to direct and oversee their victim’s daily work, or only when the harassers have the power to “hire, fire, demote, promote, transfer, or discipline” their alleged victim. The Second, Fourth, and Ninth Circuits have held employers liability in the first instance, while the First, Seventh, and Eighth Circuits have limited the employer’s liability to the stricter supervisor liability standard.

Prior Supreme Court precedent has established that an employer may be held vicariously liability for discriminatory actions and harassment by its supervisors and employees under certain circumstances. In Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth, the Court established the following general principles: (a) an employer can be found strictly liable for a supervisor’s harassment of an employee if that harassment results in a tangible adverse employment action; (b) if no tangible action results from the harassment, and the harassment is perpetuated by a co-worker, an employer may be found liable, but only if the employer is aware of the harassment and is negligent in preventing/stopping such conduct; and (c) if the harassment is conducted by a supervisor yet results in no tangible adverse action, an employer can be found liable unless it can show that it exercised reasonable care to prevent and correct promptly any harassing behavior, and that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.

In the case to be considered by the Supreme Court, Vance v. Ball State University, the Seventh Circuit held that the employer was not liable for its supervisor’s harassment because the supervisor lacked the authority to take formal employment actions against the employee, even though she did have the authority to direct and oversee the employee’s daily work. As discussed in the petition for Supreme Court review, (pdf) the Court in Faragher and Ellerth “did not define ‘supervisor’ or explicitly instruct lower courts as to when vicarious liability is triggered.” Therefore, in deciding this case, the Court will resolve when a co-employee’s supervisory duties rise to a level that would impute harassment liability to the employer.

Vance involved a charge of racial harassment by an employee whom the employer designated a supervisor, and was authorized to direct the work of the alleged harassment victim. The plaintiff claims that other employees participated in the harassment as well, and filed a lawsuit asserting that the employer violated Title VII by creating a hostile work environment. The Seventh Circuit agreed with the lower court that the employee was able to establish that her work environment “(1) was both objectively and subjectively offensive; (2) that the harassment was based on her race; and (3) that the conduct was either severe or pervasive.” However, the appellate court rejected the basis for employer liability, as “circuit precedent limited that rule to harassment by supervisors with the authority . . . to hire, fire, demote, promote, transfer, or discipline” the employee.

As Vance states in her petition for review, “the lower courts are sharply divided as to when the Faragher/Ellerth vicarious liability rule applies,” and that “whether a harasser must have power over the formal employment status of the victim to be a supervisor is of large legal and practical significance.”