Employers do not need to police employee communications around the clock.  However, employers can and should provide clear policies about employee conduct in the workplace and appropriate use of social media to mitigate the risk of being held responsible for an employee’s misconduct.  Employer concerns about employees making potentially defamatory statements were slightly curtailed in the Fourth Circuit’s recent decision on June 11, 2018 in Sade Garnett v. Remedi Seniorcare of Virginia, LLC, No. 17-1890 (June 11, 2018).  However, that holding certainly does not completely relieve employers from liability for rogue employee statements.

The Fourth Circuit’s decision provided further clarification as to when an employer can be held vicariously liable for an employee’s defamatory statements and, more specifically, when an employee is acting within the scope of their employment.  The plaintiff in that case sued her employer for defamation based on crude sexual comments that her supervisor made about the reasons she was out of work for surgery.  The plaintiff claimed that because the comments were made at work, the employer should be held liable.

Ultimately, the Fourth Circuit rejected this theory of liability holding that although the supervisor’s alleged defamatory statements were made at work, they were nonetheless outside the scope of employment.  The Court explained that it would be impossible for an employer to police its employees’ speech and prevent such misconduct.  The Court emphasized that “[l]iability will attach only if the employer (a) bears at least partial responsibility for the tortious conduct; or (b) has some ability to limit the likelihood that the employee would commit a tort.”

The Court relied on the Restatement (Third) of Agency Law which limits vicarious liability to situations in which the employee was either (a) performing work assigned by the employer; or (b) engaging in a course of conduct subject to the employer’s control. Employers are not liable when an employee acts independently or in a manner that does not serve any goal of the employer. The Court held that “[i]n other words, there must be a nexus between the employee’s workplace responsibilities and the offensive act.”

Thus, the court’s decision did not relieve employers of all liability for alleged defamatory statements made by rogue employees.  Employers can still be held liable for an employee’s conduct when the employer orders or endorses that conduct or where it occurs in the execution of an employee’s professional duties.  The Court provided specific examples of cases where employers were held liable because an employee facilitated a tort or crime through their position and the employer’s business, such as a bank teller using his position to facilitate a forgery scheme (i.e., Gina Chin & Assocs., Inc. v. First Union Bank, 260 Va. 533, 542 (2000)), or a psychologist engaging in sexual intercourse with a patient (i.e., Plummer v. Ctr. Psychiatrists, Ltd., 252 Va. 233, 237 (1996)).

There is no single mechanical test to determine when an employee is engaged in activities that fall within the scope of employment, but case law has yielded various formulations which are instructive.  Generally, an employer can be held liable for an employee’s defamatory statements if they are made at the direction of the employer, made in the interest of the employer, made during the discharge of a duty for the employer, or if the employee acts under the express or implied authority of the employer.  For example, in contrast to the facts and holding in Sade Gannet, in McLachlan v. Bell, 261 F.3d 908 (9th Cir.2001), the Ninth Circuit held that employees’ alleged defamatory statements about a co-worker concerning matters related to his work on aeronautical engineer projects for NASA were deemed within the scope of employment.  Ultimately, because the statements about the plaintiff took place in the workplace and were related to business activities, the court denied the defendants’ motion for summary judgment and found that the employer could be held liable.

Workplace disputes and personal issues between co-workers often result in negative communications which – depending on the circumstances – could lead to defamation claims against the employer.  The context in which a defamation claim may arise varies widely from statements made during investigations, disciplinary meetings, and reference checks to simple interoffice communications between employees.  Given the rise in the number of defamation claims, employers should implement clear policies about how employees are expected to behave, including policies addressing Standards of Conduct, Business Ethics, and employee communications and statements on Social Media.  Effectively communicating clear expectations about employees’ responsibilities, conduct, and the workplace will help mitigate the risk of defamation liability, though employers should also ensure these policies are conveyed and implemented in a manner that does not impact employees’ Section 7 rights under the National Labor Relations Act.  If an employer knows or has reason to know that an employee is not abiding by those policies, it should take immediate action regardless of whether the employee’s statements are considered defamatory under applicable state common law principles.

Some may be of the opinion one complaint of workplace harassment is not a big deal because it is not reflective of the entire workforce or the values of the company generally.  While this may be true in some cases, it is important to investigate any such complaints because the root of the problem may be broader, such as poor workplace culture, weak management, and/or ineffective workplace policies restricting harassing behavior.  The recent high-profile cases that have surfaced within just this last year – Uber and Fox News to name a few – serve as a reminder an employer’s workplace culture and actions in addressing complaints of workplace harassment can have a significant impact on employee perception and behavior, and reduce the potential for costly and damaging lawsuits.

Employers should be acutely aware that the modern-day workforce is becoming more diverse, which in turn requires greater tolerance, respect, and sensitivity when dealing with workplace issues, especially discrimination and harassment.  For example, the workplace behavior highlighted in AMC’s hit series “Mad Men” – a modern day TV series depicting American business in the 1960’s – must be viewed as far from the norm in 2017.  In fact, workplace decorum and culture today should be quite the opposite.

While managers and executives cannot be expected to know every single thing that occurs during the day-to-day operations of a company, it is critical that they hold employees accountable and maintain a professional workplace that is inclusive and respectful of all employees.  Employers should have robust policies and procedures in place that expressly prohibit discrimination and harassment, and ensure that they are reinforced through strong leadership and educating employees.  Such a workplace culture should limit the potential for a costly and damaging lawsuit as well as strengthen the company’s defenses against potential harassment claims, increase employee morale and productivity, and protect against unfavorable publicity that severely damages an employer’s reputation, or, in extreme cases, could force it to shut its doors.

Management, Leadership, and Workplace Culture

A company’s culture is the cornerstone to a positive workplace environment for all employees.  The more congenial and inclusive a company’s work environment, the more productive its employees.  In our experience, a positive workplace culture, is most effectively established through a top-down approach.

The behavior and actions of a company’s leadership should reflect the ideals of the company and serve as a guidepost that employees will ultimately follow.  Employers need to have strong leaders that can translate their influence into productivity and enable employees’ success.  Interactions between managers and their subordinates should reflect an employer’s values and commitment to providing a harassment-free work environment.  Management should be trained to immediately respond to complaints when they are received, and should be cautioned against any appearance of retaliatory behavior in response.

Employers should be vigilant when making hiring decisions, particularly in regards to management who will positioned as the voice of a company, and resist the rush to fill a position quickly.  To maintain a positive workplace culture, every single employee should be hired for reasons that are compatible with the company’s mission and values.  The benefits of taking your time in hiring the right employee outweighs the costs of high turnover or a lawsuit.

Implement Effective Workplace Policies

Workplace discrimination and harassment can cost employers millions of dollars every year through low employee morale and productivity, and expensive lawsuits. Creating a positive workplace culture that is led and staffed by like-minded individuals can be further reinforced by strong policies and employee training.

The content of discrimination and harassment policies should clearly explain the kinds of conduct that are prohibited, explicitly announcing that the company does not permit and will not tolerate harassment or discrimination based on sex, race, color, religion, national origin, age, disability, citizenship, familial status, pregnancy, veteran status, genetic information and/or any other legally protected status provided under applicable state law.  For example, the DC Human Rights Act makes discrimination and harassment illegal under 19 protected categories, including personal appearance, sexual orientation, and gender identity or expression.

Discrimination and harassment policies should also explain that they apply to acts committed by anyone in the workplace, including executives, managers, coworkers and non-employees, and that employees will not be retaliated against for reporting harassment.  To further explain how the policy operates, employers should include definitions and examples of harassment, an explanation of an employee’s right to a workplace free of discrimination and harassment, a clear statement that the company has zero tolerance for such conduct, and an anti-retaliation provision related to reports of discrimination or harassment.

Finally, these policies should also clearly explain the complaint procedure and an employee’s duty to report harassment to the appropriate supervisor, upper level management, or Human Resource Officer, who is responsible for handling employee complaints.  The reporting procedure should encourage employees to report complaints promptly, remove all potential obstacles from the reporting process by providing clear instruction on how to report alleged discrimination or harassment, provide several ways in which employees can make a report of harassment (i.e., if your harasser is your supervisor, contact Human Resources directly to complain), and reassure employees that the company will investigate the complaint diligently.

Harassment Training and Enforcing Harassment Policies

Placing a policy in a handbook is a necessary first step to disseminate anti-discrimination and harassment policies and limit the potential liability, however, policies are only effective to the extent that they are followed by employees and enforced by the employer.  Therefore, it is equally important to provide appropriate training to employees and supervisors on the company’s discrimination and harassment policies and the reporting procedures.

In addition to detailing the content of an anti-discrimination and harassment policy and emphasizing the company’s expectations and workplace culture, training should provide a comprehensive overview of the procedures to report complaints of discrimination or harassment.  Specific training on the roles and responsibilities of employees on how to report complaints of discrimination and harassment validates an employer’s commitment to enforcing its policy.

Similarly, as mentioned above, supervisors, Human Resource officers, and other company officers who handle and investigate employee complaints, should be trained on their responsibilities to enforce the policy.  Supervisors are important to the reporting procedure because they are typically the first line of defense, and their actions can be a major factor for liability purposes.  Therefore, training for supervisors and company officers responsible for handling employee complaints should emphasize their role in monitoring workplace behavior, upholding company values and workplace culture, and properly addressing employee complaints.

Training your workforce on your discrimination and harassment policy is also essential to defending harassment claims.  The Supreme Court holdings in Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998) generally require employers to create and implement zero tolerance policies to prevent, deter and remedy complaints of harassment.  Employers are automatically liable for a hostile work environment created by a supervisor if the harassment results in a tangible employment action, such as a demotion or termination.  An employer also is liable for a supervisor’s actionable harassment even if no tangible employment action occurs, unless the employer can establish the affirmative defense developed in the aforementioned case law.

To establish the affirmative defense, employers must demonstrate that they have satisfied two elements:

1. the employer exercised reasonable care to prevent and promptly correct harassment; and
2. the employee unreasonably failed to take advantage of any opportunities provided by the employer or to avoid harm otherwise.

However, even the best harassment policy and complaint procedure may not satisfy the affirmative defense if the employer fails to enforce its policy.  Employers must ensure that the policies and procedures set forth in the employee handbook are consistently enforced throughout the company.  This is, again, where comprehensive training plays an important role.  Additionally, documenting the investigation, outcome, and any corrective action is important to demonstrate that the policy is followed.  If the conclusion of the investigation is that harassing and/or discriminating conduct occurred, appropriate discipline should be applied to the offending party that aligns with the company policy.

Additionally, although Title VII does not specifically require that employers provide discrimination and harassment training, some states specifically require harassment training.  For example, in California (Cal. Gov. Code § 12950.1) and Connecticut (Conn. Gen. Stat. § 46a-54(15)(B)), employers with 50+ employees must provide two hours of sexual harassment training to all supervisory employees within 6 months of being hired.  Additionally, California law requires two hours of re-training on sexual harassment to supervisory employees every two years.  Employers should consult applicable state law and ensure that they are following any specific state or local requirements when it comes to harassment and training your employees.

Conclusion

Ultimately, sexual harassment is still a very real problem in the modern-day workplace.  Employers need to provide employees the appropriate channels to report harassment, free of retaliation, and make a commitment to upholding its zero-tolerance policy.  Although creating effective policies and conducting employee training can be expensive, the cost of taking preventative measures to avoid exposure for claims of discrimination and harassment pales in comparison to the costs of defending a lawsuit and the damages that could be assessed.  Finally, promoting and enforcing a workplace culture free of harassment will pay dividends in worker productivity.  Given the recent string of news stories highlighting workplace harassment at major companies throughout the United States, there is no better time for employers to evaluate their workplace culture, and take the appropriate steps to ensure that employees and management alike are committed to promoting and upholding a positive workplace free of harassment.