Meritor Savings Bank

Meritor is a landmark case because it set this standard about employer liability with regard to hostile environment harassment cases see below:

As to the bank’s liability, the Court of Appeals held that an employer is absolutely liable for sexual harassment practiced by supervisory personnel, whether or not the employer knew or should have known about the misconduct. The court relied chiefly on Title VII’s definition of “employer” to include “any agent of such a person,” 42 U. S. C. § 2000e(b), as well as on the EEOC Guidelines. The court held that a supervisor is an “agent” of his employer for Title VII purposes, even if he lacks authority to hire, fire, or promote, since “the mere existence — or even the appearance — of a significant degree of influence in vital job decisions gives any supervisor the opportunity to impose on employees.” 243 U. S. App. D. C., at 332, 753 F. 2d, at 150.

In accordance with the foregoing, the Court of Appeals reversed the judgment of the District Court and remanded the case for further proceedings. A subsequent suggestion for rehearing en banc was denied, with three judges dissenting. 245 U. S. App. D. C. 306, 760 F. 2d 1330 (1985). We granted certiorari, 474 U. S. 1047 (1985), and now affirm but for different reasons.

Amber’s Summary: so basically I think this case is important because it began to set a standard whereby employers can be liable for hostile working environment’s created by supervisors, even if upper management had no knowledge of this supervisor’s  actions that were creating the hostile environment AND it also explains what employers should do if they want to avoid liability with regard to these kinds of cases

(For example they need to have some kind of procedure in place whereby employees can complain about harassment, employees have to know about the procedure, and be able to use the procedure without fear of retaliation. This is why training is so important.) See what the Supreme Court says below about the employer’s liability in this case where sexual assault was at issue with regard to determining whether the environment was hostile and whether the employer was liable.

Short answer: yes the environment was hostile, because CP does not have to prove that she was actually sexually assaulted, just subjected to unwanted sexual advances and yes the employer is probably liable, because the employer did not have a real avenue by which the CP could complain about the harassment she was experiencing by her supervisor.

Although the District Court concluded that respondent had not proved a violation of Title VII, it nevertheless went on to consider the question of the bank’s liability. Finding that “the bank was without notice” of Taylor’s alleged conduct, and that notice to Taylor was not the equivalent of notice to the bank, the court concluded that the bank therefore could not be held liable for Taylor’s alleged actions. The Court of Appeals took the opposite view, holding that an employer is 70*70 strictly liable for a hostile environmentcreated by a supervisor’s sexual advances, even though the employer neither knew nor reasonably could have known of the alleged misconduct. The court held that a supervisor, whether or not he possesses the authority to hire, fire, or promote, is necessarily an “agent” of his employer for all Title VII purposes, since “even the appearance” of such authority may enable him to impose himself on his subordinates.

The parties and amici suggest several different standards for employer liability. Respondent, not surprisingly, defends the position of the Court of Appeals. Noting that Title VII’s definition of “employer” includes any “agent” of the employer, she also argues that “so long as the circumstance is work-related, the supervisor is the employer and the employer is the supervisor.” Brief for Respondent 27. Notice to Taylor that the advances were unwelcome, therefore, was notice to the bank.

Petitioner argues that respondent’s failure to use its established grievance procedure, or to otherwise put it on notice of the alleged misconduct, insulates petitioner from liability for Taylor’s wrongdoing. A contrary rule would be unfair, petitioner argues, since in ahostile environment harassment case the employer often will have no reason to know about, or opportunity to cure, the alleged wrongdoing.

The EEOC, in its brief as amicus curiae, contends that courts formulating employer liability rules should draw from traditional agency principles. Examination of those principles has led the EEOC to the view that where a supervisor exercises the authority actually delegated to him by his employer, by making or threatening to make decisions affecting the employment status of his subordinates, such actions are properly imputed to the employer whose delegation of authority empowered the supervisor to undertake them. Brief for United States and EEOC as Amici Curiae 22. Thus, the courts have consistently held employers liable for the discriminatory discharges of employees by supervisory personnel, 71*71 whether or not the employer knew, should have known, or approved of the supervisor’s actions. E. g., Anderson v. Methodist Evangelical Hospital, Inc., 464 F. 2d 723, 725 (CA6 1972).

The EEOC suggests that when a sexual harassment claim rests exclusively on a “hostile environment” theory, however, the usual basis for a finding of agency will often disappear. In that case, the EEOC believes, agency principles lead to

“a rule that asks whether a victim of sexual harassment had reasonably available an avenue of complaint regarding such harassment, and, if available and utilized, whether that procedure was reasonably responsive to the employee’s complaint. If the employer has an expressed policy against sexual harassment and has implemented a procedure specifically designed to resolve sexual harassment claims, and if the victim does not take advantage of that procedure, the employer should be shielded from liability absent actual knowledge of the sexually hostile environment(obtained, e. g., by the filing of a charge with the EEOC or a comparable state agency). In all other cases, the employer will be liable if it has actual knowledge of the harassment or if, considering all the facts of the case, the victim in question had no reasonably available avenue for making his or her complaint known to appropriate management officials.” Brief for United States and EEOC as Amici Curiae 26.

As respondent points out, this suggested rule is in some tension with the EEOC Guidelines, which hold an employer liable for the acts of its agents without regard to notice. 29 CFR § 1604.11(c) (1985). The Guidelines do require, however, an “examin[ation of] the circumstances of the particular employment relationship and the job [f]unctions performed by the individual in determining whether an individual acts in either a supervisory or agency capacity.” Ibid.

72*72 This debate over the appropriate standard for employer liability has a rather abstract quality about it given the state of the record in this case. We do not know at this stage whether Taylor made any sexual advances toward respondent at all, let alone whether those advances were unwelcome, whether they were sufficiently pervasive to constitute a condition of employment, or whether they were “so pervasive and so long continuing . . . that the employer must have become conscious of [them],” Taylor v. Jones, 653 F. 2d 1193, 1197-1199 (CA8 1981) (holding employer liable for racially hostile workingenvironment based on constructive knowledge).

We therefore decline the parties’ invitation to issue a definitive rule on employer liability, but we do agree with the EEOC that Congress wanted courts to look to agency principles for guidance in this area. While such common-law principles may not be transferable in all their particulars to Title VII, Congress’ decision to define “employer” to include any “agent” of an employer, 42 U. S. C. § 2000e(b), surely evinces an intent to place some limits on the acts of employees for which employers under Title VII are to be held responsible. For this reason, we hold that the Court of Appeals erred in concluding that employers are always automatically liable for sexual harassment by their supervisors. See generally Restatement (Second) of Agency §§ 219-237 (1958). For the same reason, absence of notice to an employer does not necessarily insulate that employer from liability. Ibid.

Finally, we reject petitioner’s view that the mere existence of a grievance procedure and a policy against discrimination, coupled with respondent’s failure to invoke that procedure, must insulate petitioner from liability. While those facts are plainly relevant, the situation before us demonstrates why they are not necessarily dispositive. Petitioner’s general nondiscrimination policy did not address sexual harassment in particular, and thus did not alert employees to their employer’s 73*73 interest in correcting that form of discrimination. App. 25. Moreover, the bank’s grievance procedure apparently required an employee to complain first to her supervisor, in this case Taylor. Since Taylor was the alleged perpetrator, it is not altogether surprising that respondent failed to invoke the procedure and report her grievance to him. Petitioner’s contention that respondent’s failure should insulate it from liability might be substantially stronger if its procedures were better calculated to encourage victims of harassment to come forward.

If your read below, you will see that this case also established that unwelcome sexual advances create a hostiel working environment event though the discrimination may not be economic, or have created a tangible economic loss, but rather psychological.

Respondent argues, and the Court of Appeals held, that unwelcome sexual advances that create an offensive or hostile working environment violate Title VII. Without question, when a supervisor sexually harasses a subordinate because of the subordinate’s sex, that supervisor “discriminate[s]” on the basis of sex. Petitioner apparently does not challenge this proposition. It contends instead that in prohibiting discrimination with respect to “compensation, terms, conditions, or privileges” of employment, Congress was concerned with what petitioner describes as “tangible loss” of “an economic character,” not “purely psychological aspects of the workplaceenvironment.” Brief for Petitioner 30-31, 34. In support of this claim petitioner observes that in both the legislative history of Title VII and this Court’s Title VII decisions, the focus has been on tangible, economic barriers erected by discrimination.

We reject petitioner’s view. First, the language of Title VII is not limited to “economic” or “tangible” discrimination. The phrase “terms, conditions, or privileges of employment” evinces a congressional intent ” `to strike at the entire spectrum of disparate treatment of men and women’ ” in employment. Los Angeles Dept. of Water and Power v. Manhart,435 U. S. 702, 707, n. 13 (1978), quoting Sprogis v. United Air Lines, Inc., 444 F. 2d 1194, 1198 (CA7 1971). Petitioner has pointed to nothing in the Act to suggest that Congress contemplated the limitation urged here.

65*65 Second, in 1980 the EEOC issued Guidelines specifying that “sexual harassment,” as there defined, is a form of sex discrimination prohibited by Title VII. As an “administrative interpretation of the Act by the enforcing agency,” Griggs v. Duke Power Co., 401 U. S. 424, 433-434 (1971), these Guidelines, ” `while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance,’ ” General Electric Co. v. Gilbert, 429 U. S. 125, 141-142 (1976), quoting Skidmore v. Swift & Co.,323 U. S. 134, 140 (1944). The EEOC Guidelines fully support the view that harassment leading to noneconomic injury can violate Title VII.

In defining “sexual harassment,” the Guidelines first describe the kinds of workplace conduct that may be actionable under Title VII. These include “[u]nwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.” 29 CFR § 1604.11(a) (1985). Relevant to the charges at issue in this case, the Guidelines provide that such sexual misconduct constitutes prohibited “sexual harassment,” whether or not it is directly linked to the grant or denial of an economic quid pro quo, where “such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.” § 1604.11(a)(3).

In concluding that so-called “hostile environment” (i. e., non quid pro quo) harassment violates Title VII, the EEOC drew upon a substantial body of judicial decisions and EEOC precedent holding that Title VII affords employees the right to work in anenvironment free from discriminatory intimidation, ridicule, and insult. See generally 45 Fed. Reg. 74676 (1980). Rogers v. EEOC, 454 F. 2d 234 (CA5 1971), cert. denied, 406 U. S. 957 (1972), was apparently the first case to recognize a cause of action based upon a discriminatory work environment. In Rogers, the Court of Appeals for the Fifth66*66 Circuit held that a Hispanic complainant could establish a Title VII violation by demonstrating that her employer created an offensive work environment for employees by giving discriminatory service to its Hispanic clientele. The court explained that an employee’s protections under Title VII extend beyond the economic aspects of employment:

“[T]he phrase `terms, conditions or privileges of employment’ in [Title VII] is an expansive concept which sweeps within its protective ambit the practice of creating a working environment heavily charged with ethnic or racial discrimination. . . . One can readily envision working environments so heavily polluted with discrimination as to destroy completely the emotional and psychological stability of minority group workers . . . .” 454 F. 2d, at 238.