September 10, 2004

Supreme Court Limits Employer Liability to Workers Who Quit But Claim "Constructive Discharge"

Holland & Knight Newsletter
William B. deMeza Jr.

The United States Supreme Court recently held that employers are entitled to assert an important defense to employees’ claims that they were forced to quit their jobs because of supervisors’ sexual harassment. The Court’s opinion in Pennsylvania State Police v. Suders recognized that an employer could be liable to a worker who resigned yet later proved that she was forced off the job because of sexual harassment. The Court also held, however, that unless the resignation was triggered by official adverse action by the employer, it can avoid liability for “constructive discharge” by proving that it had policies to prevent and investigate claims of harassment but the employee/plaintiff failed to use them.

Harassment Drives Employee to Quit

Nancy Suders was employed by the Pennsylvania State Police Department (PSP) and believed that her supervisors repeatedly subjected her to sexual remarks, gestures and intimidating behavior. She contacted PSP’s equal employment opportunity officer to report that she “might need some help,” but Suders did not follow up on that conversation. Several months later, Suders again contacted the EEO officer to report that she was being harassed and was afraid; the EEO officer simply told Suders to file a formal complaint, but did not give her the necessary document. Two days later, PSP arrested Suders for allegedly stealing papers from the office, interrogated her and gave her Miranda warnings. Suders then resigned her employment but later sued PSP in federal court alleging sexual harassment and “constructive discharge” in violation of Title VII of the Civil Rights Act of 1964, claiming that PSP’s sexual harassment was so severe that she was forced to quit.

Lower Court Proceedings

The district court dismissed Suders’ case. Although it did not address her “constructive discharge” claim, it held that PSP could not be liable for its supervisors’ misconduct because Suders had not used PSP’s complaint procedures and she had not given it an opportunity to address her concerns. The district court relied on the Supreme Court’s 1998 decisions in Faragher v. Boca Raton and Burlington Industries v. Ellerth. In those cases, the Court distinguished supervisor harassment unaccompanied by an adverse official act and supervisor harassment accompanied by “tangible employment action.” The Court held that employers were strictly liable for harassment connected with tangible employment action (such as discharge or demotion) because the decision-making supervisor was using authority delegated by the employer to accomplish the harassment. In contrast, if there was no tangible adverse action associated with the harassment, the employer could prevail by proving that it had exercised reasonable care to prevent and correct any misbehavior and the employee unreasonably had failed to take advantage of such corrective opportunities.

The district court’s ruling against Suders was overturned by the United States Court of Appeals for the Third Circuit. The appeals court focused on her “constructive discharge” claim. It recognized that “constructive discharge” is a legal fiction: although the employee formally resigned, the law treats the “resignation” as a discharge if it is proven that the employee was forced off the job, that is, if the employee proves that the working conditions were so intolerable that a reasonable person would have felt compelled to quit. The Third Circuit held in Suders that, essentially all constructive discharges arising from sexual harassment involve “tangible employer action” for which employers are strictly liable and against which they cannot use the Faragher/Ellerth “employee inaction” defense.

Supreme Court Rules Constructive Discharge Is Actionable, But Does Not Bar Ellerth-Faragher Defense

The Supreme Court, in an 8-1 decision in Suders, held that Title VII did encompass claims that an employee was forced off the job by supervisor sexual harassment and that a successful “constructive discharge” plaintiff was entitled to the full spectrum of Title VII relief (i.e., back pay, punitive damages, attorneys’ fees, costs and, possibly, front pay). However, the Supreme Court declined to hold that every “constructive discharge” was an adverse action for which the employer automatically would be liable. Rather, the Court held that, unless the employee’s resignation was triggered by official company action, such as a demotion, transfer to a substantially less-desirable position, or significant reduction in pay, the employer could prevail by using the Faragher/Ellerth defense and proving that it had implemented an effective and well-known sexual harassment policy but the former employee failed to take advantage of it.

What Does Suders Mean to You?

The Suders decision is a generally positive development for employers for several reasons.

Suders clarifies the law of “constructive discharge” in Title VII matters, eliminating any doubt that workers can sue and can recover the usual Title VII remedies if they can prove that they were forced off the job because of sexual harassment. That, however, does not create significant new liability for employers, as the Courts of Appeals had recognized the “constructive discharge” concept for years. Fortunately, the Court confirmed that any constructive discharge claim must be proven with evidence that the employee’s resignation was a reasonable reaction under the circumstances (but, sadly, the Suders opinion did not provide guidance in deciding what workplace conduct is so “intolerable” as to justify resignation).

Suders also provides employers with the Faragher/Ellerth defense in “constructive discharge” cases, a defense that would have been eliminated if the Supreme Court had affirmed the Third Circuit’s ruling. The Suders majority adopted the Faragher/Ellerth distinctions: if the employee’s resignation was prompted by formal employer actions such as demotion, transfer or reduction in pay, the resignation involved “tangible action” for which the employer was strictly liable but, if the resignation was caused by hostile environment unrelated to a change in status or pay, the employer could prevail if it proved that the former employee had not used the company’s harassment prevention/investigation policies.

Finally, Suders makes it plain that, in the great majority of cases, employees unhappy about their working conditions are expected to remain on the job and use the employers’ procedures for addressing such situations. In other words, Suders should deter workers from simply quitting and then filing suit claiming “constructive discharge” without having exhausted the employers’ complaint mechanisms.

There appear to be two practical consequences of Suders. First, employers must ensure that they have adopted and implemented effective policies and procedures for prohibiting and investigating claims of sexual harassment. They also must train employees about their rights and responsibilities and train supervisors about how to respond to harassment and reports of harassment. Second, Suders suggests that employers must carefully investigate unexpected and/or unexplained changes to employees’ status or compensation ordered by supervisors to determine whether such changes were motivated by improper motives. Similarly, employers should investigate unexplained employee resignations to determine whether they were truly voluntary or were motivated by supervisor misconduct. Such investigations of adverse actions and resignations, and investigation of any supervisor misbehavior that is uncovered, can be used by the employer in defending any subsequent claims of “constructive discharge.”

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