Employment Law: Employer Liability For Employee Acts

By: Donna Russo, Esq.

Can an employer be liable for discriminatory actions of its employee?  The answer is that it depends on the nature of the position held by the employee.  If the employee has supervisory duties, an employer can be liable for the supervisory employee acts even though the employer had no knowledge of the employee’s actions.

The key issue is the definition of “supervisor”.  The Third Circuit Court of Appeals (which  serves the areas of New Jersey, as well as Delaware, Pennsylvania and the Virgin Islands) , rendered a precedential opinion of September 6, 2017, Michelle Moody v. Atlantic City Board of Education, (Docket No. 16-4373).  In this opinion, the Third Circuit analyzed the facts to reach a determination of whether the employer empowered the supervisor to cause significant change in the employee’s working conditions.  The facts are as follows:

  1. The Plaintiff (employee) was a substitute custodian for the school system, Defendant Atlantic City Board of Education (employer) which was broken down into several districts;
  2. Each school had a custodial foreman who was delegated the authority to select which substitute custodians worked at the school;
  3. As a substitute custodian, Plaintiff was not guaranteed any work;
  4. An employee suggested that Plaintiff introduce herself to all the custodial foremen at the schools within the district;
  5. Plaintiff introduced herself to ten custodial foremen;
  6. Plaintiff was given assignments at one of the districts by Marshall (one district’s supervisory custodian);
  7. Plaintiff claims that Marshall began making sexual comments to her and told her that he would assign her more hours if she performed sexual favors for him and that he would be touch her breast or buttocks at the workplace;
  8. On one occasion, Plaintiff felt that her job had been threatened and reluctantly had sex with Moody on one occasion and then told Moody it would never happen again;
  9. Although she continued to receive assignments, Plaintiff felt that Marshall treated her differently after she rejected him;
  10. After the rejection, Marshall delayed in retrieving her paycheck until after he finished playing ping pong and Plaintiff noticed that a new female substitute custodian appeared to be receiving hours instead of her;
  11. Plaintiff believed that Marshall delayed retrieving her paycheck and reduced her hours because she had rejected his sexual advances;
  12. Marshall denied having sex with Plaintiff and accused Plaintiff of making a false accusation because she was angry that he delayed retrieving her check;
  13. Defendant conducted an investigation and did not reach a conclusion that Plaintiff was sexually harassed.  An outside investigation by a law firm reached the same finding but the Defendant ordered that Marshall and Plaintiff avoid any contact with each other;

The Third Circuit found that a jury could reasonably conclude that Plaintiff experienced severe harassment.  The lawsuit would be against Defendant (School Board) and employee (Marshall).  In order for the case to proceed against the Defendant, Marshall must be deemed to be a supervisory employee.  Absent same, the case could not proceed against the Defendant and an action against an employee individually is always difficult because more likely than not, the employee would be unable to pay any judgment against him.

The Court held that the facts support the conclusion that Marshall was Defendant’s employee because “(a) the Board empowered him as the custodial foreman to select from a lest of substitute custodians who could actually work [at the school]; (b) the Board conceded that while [Plaintiff] was on school premises, Marshall served in a supervisory role; (c) the record identifies no other person who was present full time or even sporadically on the school’s premises; or anywhere for that matter, who served as [Plaintiff’s] supervisor; and (d) since [Plaintiff’s] primary benefit from her employment was hourly compensation, and since Marshall controlled 70% of her hours, his decision to assign or withhold hours significantly affected her pay.

This case has an interesting dissent.  It accuses the majority of not following the U.S. Supreme Court’s decision, Vance v. Ball State University, 133 S. Ct. 2434 (2013).  The Vance  Court found that the tests being applied throughout the circuits were ambiguous and that there should be a streamlined test – whether the employee has the authority, empowered by the employer, to alter an employee’s status.  The criteria is to answer one of the following questions in the affirmative:  “Can that person hire or fire the employee?  Can that person promote or demote the employee?  Can that person reassign the employee with significantly different responsibilities or make a decision that causes a significant change in employee’s benefits?”  The dissent applied this test and found that the answers to these questions are all negative and therefore Marshall cannot be considered a supervisory employee.

The majority in Moody addressed this dissent stating that it did not ignore Vance but rather heeded its instructions.  The majority found that following Vance, the outcome would be the same because Marshall could make a decision that caused a significant change in Plaintiff’s benefits.  The majority further stated that it was not simply relying on the fact that Marshall could assign hours.  Rather, he was not a mere scheduler among those in a pool of employees and there is no record that anyone else was Plaintiff’s supervisor.

Will this be an open issue for future litigation?  Perhaps not in New Jersey District Courts because the Third Circuit opinion is controlling.  However, most cases in New Jersey are brought in state courts which have the option not to follow the Third Circuit opinion.