By Maggie McHugh

In a recent precendential case involving a workplace claim of sexual harassment, the Third Circuit confirmed proxy theory of liability in employment claims, holding that the Supreme Court “did not intend for the Faragher/Ellerth defense to be available where the supervisor responsible for [the alleged] harassment was a proxy for the organization-employer.” Where Faragher drew a distinction between vicarious lability and proxy lability, O’Brien validates arguments for proxy liability in Third Circuit litigation. This new development should have organizations examining areas of potential liability to ensure avoidance of legal exposure.

This decision presents liability concerns for organizations and employers that have a higher level of officials, as those officials could be treated as the organization’s proxy and liability in harassment cases would be automatically imputed to the organization-employer. However, in instances where proxy liability does not apply and where no tangible employment actions have been taken against an employee, the Faragher/Ellerth defense remains for employers where the employer (1) exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.

In O’Brien v. Middle East Forum, No. 21-2646 (January 5, 2023), the Third Circuit found that the District Court’s failure to instruct on proxy liability was an error as there was considerable evidence that the supervisor could reasonably be found to be a proxy for the employer. Instead, the District Court provided a Faragher/Ellerth instruction, which was ultimately superfluous as the jury determined there was no harassment. Without a finding of harassment, a clear essential element of plaintiff’s claim, there was no need for the jury to consider affirmative defenses. Thus, the lack of instruction was found to be a harmless error, and as such did not require a new trial.

Organizations-employers should review their structure and the authority given to management to consider potential liability following this decision. Moreover, while harassment policies are vital to a Faragher/Ellerth defense for harassment and hostile work environment claims, training on those policies to ensure appropriate handling of complaints is important for demonstrating that the employer exercises reasonable care to prevent harassment.

If you need to evaluate your potential proxy liability or review your harassment policy, complaint reporting procedure, and training strategies, Malamut & Associates can help. Contact our Government & Regulatory Affairs Department.

The content of this post should not be construed as legal advice. You should consult a lawyer concerning your specific situation and any specific legal question you may have.