March 1, 2002
Avoiding Lawsuits is a service of the employment law training and consulting firm of Counsel Consulting Group LLC and the law firm of Powell, Trachtman, Logan, Carrle & Lombardo, P.C.
FAILURE TO TRAIN MANAGEMENT TO PROPERLY
ADMINISTER SEXUAL HARASSMENT COMPLAINT PROCEDURE
LEADS TO $8 MILLION PUNITIVE DAMAGE AWARD
If you need any more convincing about the importance of having an appropriate sexual harassment complaint policy, and making certain that your management is trained on what it says and how to utilize it, consider this . . .
A female employee claimed that her immediate supervisor subjected her to vulgar jokes and sexually-explicit conversations, berated and intimidated her, and had even gone so far as to summon her to his home for a performance review - clear sexual harassment. Eventually, the employee told upper management. Upper management gave the employee some instructions on how to deal with the harassing supervisor, but did not tell the employee that the company had a complaint procedure that might help her, and took no other action. In fact, upper management told the employee that she would not want to have a complaint against her supervisor in her file because it could make it difficult for her to get a future promotion. Ultimately, the employee filed a complaint with the company, and the harassing supervisor then gave her the predictable poor rating. The company eventually fired the harassing supervisor as a result of the employee's complaint, but also fired the employee, in view of her unfavorable evaluation.
Standard procedure in any company must include the establishment of a complaint procedure that complies with the law, the distribution of that complaint procedure to employees so that they know how to take advantage of it, and professional training of management so that they know what to do when an employee invokes the complaint procedure. In this case, the employer - a major drug company - had a complaint procedure, but it only distributed it to its managers, and not its employees. If it had trained its managers on the proper way to respond to a sexual harassment claim, the training was obviously ineffectual.
The result in this case was a lawsuit by the employee based not only upon standard sexual harassment principles, but also claiming intentional infliction of emotional distress. The result: a jury verdict awarding over $800,000 in lost pay, $1 million for mental anguish, and $8 million in punitive damages. An appeals court in Texas recently affirmed the award. The court opined that when a company's management has not been trained to invoke and apply an appropriate complaint procedure in these kinds of situations and, instead, allows a harassing supervisor to evaluate the harassed employee's performance to the point where the employee is terminated, such an award is justified.
We know we have sent previous messages to readers of Avoiding Lawsuits dealing with the importance of training management in basic employment law principles, but we're only stressing what the courts are stressing. A few years ago, the Supreme Court changed the rules that relate to an employer's liability for the actions of its managers, and the lower courts are now beginning to lend definition to this new legal landscape. The upshot is good news and bad news: the good news is that if you regularly train management employees, and if you establish and consistently implement certain key employment policies, you can escape or minimize liabilities; the bad news is that if you don't, punitive, and not just compensatory damages, may be the result. Let us know if we can help.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
