Thursday, August 31, 2017

7th Circuit Relied On Employee Handbook To Determine Constructive Notice In Sexual Harassment Case

The recent ruling by the 7th Circuit Court of Appeals in Nishchan v. Stratosphere Quality, LLC, reminds employers that their policies may provide “constructive notice” to them of harassment incidents.

Stratosphere Quality, LLC (Stratosphere), provides third party inspections and quality control services to car manufacturers. Plaintiff worked her way up the ranks of Stratosphere, eventually becoming a project supervisor. Defendant was a liaison for Chrysler, one of Stratosphere’s clients, working to oversee some of the Stratosphere’s inspection procedure.

The plaintiff alleged the employee of her employer’s client sexually harassed her “relentlessly” by making lewd comments and rubbing himself against her. The alleged harasser was not considered a supervisor of the plaintiff, but rather a coworker. The defendant argued correctly that the company was not liable for coworker’s actions if the victim never reported it.  Here, it is undisputed plaintiff made no complaints until after the relevant period of time.

But, the 7th Circuit Appeals Court explained that the employer is “not off the hook yet.” Another way for the employer to be held liable is when the employer knew or should have known of the harassment and failed to take reasonable corrective measures.

Plaintiff alleged that a fellow project supervisor and an operations manager were present during an incident of harassment. The fellow project supervisor corroborated this through affidavit, but neither of these supervisors reported the misconduct. The employee handbook, though, clearly stated that “[a]ny employee with managerial or supervisory responsibility who witnesses or is otherwise aware of possible harassment…must report the conduct immediately…”

The 7th Circuit Appeals Court found that because of the employer’s own rules on reporting harassment set the standard, the employer should have known of the conduct. The decision opines on this by saying Stratosphere “is accountable to the standard of care it created for itself.” The employer’s rules “required [the fellow project supervisor] to report the sexual harassment that she observed, Stratosphere had constructive notice of the harassment.”

The decision is a reminder how policies can imply knowledge with both the employer and the employee.  It is also an important reminder that supervisors should receive regular training on their duties and obligations as supervisors when or if they witness misconduct in the workplace.