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Why the Fourth Circuit Court's Recent Decision in a Harassment/Retaliation Case is a Potential "Game Changer" for Maryland Employers

Employment & Labor Legal Update

In a decision likely to have wide-ranging implications for employers, the U.S. Court of Appeals for the Fourth Circuit, in Reya Boyer-Liberto v. Fontainebleau Corp., held for the first time that (i) an isolated incident of harassment, if extremely serious, can create a hostile work environment and (ii) an employee is protected from retaliation when he or she reports an isolated incident of harassment physically threatening or humiliating, even if a hostile work environment is not created by that incident alone. In so ruling, the Fourth Circuit took the unusual step of overruling a decision it had issued nearly nine years earlier that addressed similar claims.

Factual Summary

In Liberto, an employee complained to her employer after a woman whom she regarded as her supervisor called her a “porch monkey” on at least one occasion. The employer terminated the employee shortly after she made her complaint. The U.S. District Court for the District of Maryland granted summary judgment in favor of the defendants. The court found that while the comments were offensive and extreme, because they were an isolated incident, they legally could not support a claim of hostile work environment harassment or a claim of retaliation.

However, the Fourth Circuit, in an en banc decision (a case heard before all of the judges of the court), reversed the district court’s decision and remanded the case for further proceedings. In arriving at its decision, the Fourth Circuit reviewed several cases that define when and under what circumstances an individual may pursue hostile work environment and retaliation claims. A hostile work environment exists when the workplace is permeated with discriminatory intimidation, ridicule, and insult sufficiently severe and pervasive to alter the conditions of the victim’s employment and to create an abusive working environment. To prevail on a Title VII claim that a workplace is racially hostile, a plaintiff must show there is (1) unwelcome conduct; (2) the unwelcome conduct is based on the plaintiff’s race; (3) the unwelcome conduct is sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and to create an abusive work environment; and (4) the employer is responsible for the unwelcome conduct. To state a prima facie case of retaliation in violation of Title VII, the plaintiff must prove (1) that she was engaged in protected activity; (2) that her employer took an adverse employment action against her; and (3) there was a causal link between the two.

The employer successfully argued in the district court that despite the extremely offensive nature of the comments, the plaintiff had no viable claim for hostile work environment harassment or retaliation because a single incident was not sufficiently severe or pervasive to create an abusive work environment. In addition, the court legally could not support a retaliation claim because no objectively reasonable person could have believed that the plaintiff’s work environment was, or would soon be, affected by severe, pervasive, racist, threatening, or humiliating harassment. In other words, the district court concluded that if no objectively reasonable juror could have found the presence of a hostile work environment, the plaintiff could not have had an objectively reasonable belief that a hostile work environment existed.

The Fourth Circuit’s Ruling Concerning Harassment

After canvassing the Supreme Court case law, the Fourth Circuit held that although most hostile work environment claims involved repeated conduct, an isolated incident of harassment can amount to discriminatory changes in the terms and conditions of employment if it is extremely serious. Interestingly, the Fourth Circuit, in a subsidiary finding, considered whether the offending woman’s comments could be attributable to the employer such that the employer would be legally responsible for such comments. The Fourth Circuit found that the co-worker was reasonably regarded by the plaintiff as her boss, even though there was some ambiguity whether the woman was technically a supervisor. Specifically, the court found that the woman qualified as a supervisor (rather than a co-worker) because she was seemingly empowered by the employer to take tangible employment actions against the plaintiff based on comments that she made to the plaintiff threatening that her job was at stake and that she had the ear of the owner of the company who would “rubber stamp” her decision.

The Fourth Circuit’s Ruling Concerning Retaliation

Regarding retaliation, the Fourth Circuit adopted a new standard – namely, an employee is protected from retaliation for opposing an isolated incident of harassment when he or she reasonably believes that a hostile work environment is in progress, with no requirement for additional evidence that a plan is in motion to create such an environment or that such an environment is likely to occur. The employee will have a reasonable belief that a hostile environment is occurring if the isolated incident is physically threatening or humiliating. The Fourth Circuit was not persuaded by the arguments of the dissenting judges who predicted that the standard the court established would generate widespread litigation over workplace comments and cause employers to become “speech police.”

The Fourth Circuit explained that it was entirely possible that when the case was remanded to the district court, a jury could simultaneously reject the plaintiff’s claim of hostile work environment, but award relief on the retaliation claims by finding that the employer’s conduct was severe enough to give the plaintiff a reasonable belief that a hostile environment, although not fully formed, was in progress. Certainly, it is possible that the case will be appealed to the Supreme Court particularly because the Fourth Circuit interpreted language in a prior Supreme Court decision.

Practical and Proactive Measures Employers Should Consider Taking in Light of Liberto

For a court long known to be employer friendly, the decision by the Fourth Circuit is alarming. Employers that have struggled for many years how best to respond to claims of retaliation and harassment that they perceive to be unfounded, now face even greater challenges. To what extent the Fourth Circuit decision will spark a new round of filings based on single incidents remains to be seen. What is clear is that the need for employers to take proactive steps has never been greater. The proactive measures that employers should take include:

  • Train managers. Train all managers and supervisors on how, when, and why claims for discrimination and retaliation claims are filed. More specifically, employers will need to train managers and supervisors that an isolated incident can constitute unlawful harassment if it is sufficiently severe.
  • Conduct harassment training for all employees. The Fourth Circuit’s decision in Liberto underscores the need for all employees to conduct regularly scheduled harassment training for all employees. The Supreme Court has clarified that the burden is on employers to create a workplace free from unlawful harassment. Personalized harassment training by an experienced professional educates employees on what constitutes unlawful harassment; outlines the procedures for handling complaints of harassment; and communicates the employer’s expectations for workplace behavior.
  • Document performance-related issues. Documentation of performance-related issues is critically important. Employees file retaliation claims because of their perception that their complaints about certain conduct resulted in an adverse employment action. Employers that (i) properly train supervisors on how to handle personnel issues, and (ii) properly and timely communicate – in writing – performance issues with employees substantially diminish the risks that retaliation claims will succeed.
  • Review job descriptions. It is important that employers review and revise job descriptions to make sure that they accurately reflect the responsibilities of employees and, in particular, supervisors.
  • Coordinate effectively. Managers and supervisors need to understand the importance of working effectively and collaboratively with human resource professionals to determine, among other things, (i) whether an incident is sufficiently severe to rise to the level of unlawful harassment, and (ii) when and under what circumstances adverse employment decisions should be made and implemented. A coordinated approach to performance-related issues is one of the smartest measures that employers can take to position themselves to prevent retaliation claims.
  • Select supervisors carefully. Because employers face significant liability for the actions and omissions of their supervisors, it is important that they are very careful in selecting individuals for promotion to supervisors. The fact that the individual has excelled in a certain “worker” capacity does not necessarily mean that the same individual has the skill set needed to be an effective supervisor.
  • Get insurance. Employers need to continue to explore the full scope of available insurance coverages for harassment and retaliation claims, such as Employment Practices Liability Insurance (EPLI) and other available insurances for individual executives and supervisors.

The Fourth Circuit’s decision in Liberto may very well usher in a new generation of harassment and retaliation claims based on single incidents. Whether these new claims will prove to be a “game changer” for employers will likely depend on whether they commit to taking proactive measures, including those outlined above.

Marc Engel is an employment attorney and litigator at Lerch, Early & Brewer who advises employers of all types on employment issues, and provides strategies for preventing, defending, and resolving harassment, discrimination, and wage and hour claims. For more information on avoiding and defending against retaliation claims, contact Marc at (301) 657-0184 or mrengel@lerchearly.com.

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