In a significant decision, the United States Court of Appeals for the Fourth Circuit reversed a lower court and held that false workplace rumors that a female employee had been promoted for having sex with her boss could serve as the basis for sexual harassment and retaliation claims against an employer. The case also serves as a warning to employers of the costs involved in not effectively addressing such situations.

In Parker v. Reema Consulting Servs., Inc. (4th Cir. Feb. 8, 2019), Evangeline Parker worked at her employer’s warehouse facility. While she began as a low-level clerk, she was promoted six times, ultimately rising to Assistant Operations Manager of the facility. However, she subsequently learned that a jealous subordinate, whom she had been promoted over, and a higher ranking manager at the warehouse, were actively spreading rumors that her success was the result of her having a sexual relationship with another company official. As alleged in the lawsuit she later filed, as the rumor spread, Parker “was treated with open resentment and disrespect” from many coworkers, including employees she was responsible for supervising. As she alleged, her “work environment became increasingly hostile.”

The manager who was spreading the rumor subsequently confronted Parker and blamed her for “bringing the situation to the workplace” and told her “he could no longer recommend her for promotions or higher-level tasks because of the rumor” and he “would not allow her to advance any further within the company.” When Parker subsequently sought to talk to the manager about the situation, the lawsuit alleges the manager lost his temper and began screaming at her. Parker subsequently filed a sexual harassment complaint against the manager and the subordinate with the company’s Human Resources Manager. Following the complaint, the manager in question issued written warnings against Parker and she was fired as a result.

Pursuant to Title VII of the Civil Rights Act of 1964 (Title VII), Parker filed a lawsuit alleging a hostile work environment claim based on discrimination because of her sex, as well as a retaliation claim. However, in January 2018, the federal District court granted the employer’s Motion to Dismiss. The District Court held she failed to state a sex discrimination claim because “the establishment and circulation of this rumor is not based upon her gender, but rather based upon her alleged conduct.” She subsequently appealed the decision to the United States Court of Appeals for the Fourth Circuit.

In reversing the District Court’s decision, the Fourth Circuit held that the lower court was wrong in deciding that the workplace rumor was not based on Parker’s sex:

As alleged, the rumor was that Parker, a female subordinate, had sex with her male superior to obtain promotion, implying that Parker used her womanhood, rather than her merit, to obtain from a man, so seduced, a promotion. She plausibly invokes a deeply rooted perception — one that unfortunately still persists — that generally women, not men, use sex to achieve success. And with this double standard, women, but not men, are susceptible to being labelled as “sluts” or worse, prostitutes selling their bodies for gain.

In short, because “traditional negative stereotypes regarding the relationship between the advancement of women in the workplace and their sexual behavior stubbornly persist in our society,” and “these stereotypes may cause superiors and coworkers to treat women in the workplace differently from men,” it is plausibly alleged that Parker suffered harassment because she was a woman.

In addition to reversing the lower court’s dismissal of Parker’s sex discrimination claim, the Fourth Circuit also reversed the dismissal of her retaliation claim, allowing both claims to proceed to a trial on the merits.

The lesson from this case is that workplace gossip and rumors are not harmless and can result in potential liability to employers when they involve protected classes under Title VII or other anti-discrimination statutes. Human Resources should take complaints about such rumors seriously and address them directly.