The EEOC held that “[s]exual orientation discrimination is sex discrimination because it necessarily entails treating an employee less favorably because of the employee’s sex.”  The EEOC noted that sex-based considerations also encompassed gender-based considerations under Title VII. This ruling, if accepted by federal courts, would extend protection under Title VII to decisions made on the basis of sexual orientation. While only the Supreme Court can issue a final, definitive ruling on the interpretation of Title VII, EEOC decisions are given significant deference by federal courts.

Employers across the U.S. should anticipate that overt actions, practices, and harassment that could be construed as discriminatory on the basis of a worker’s sexual orientation will be challenged in federal court and subject employers to potential liability.

In a 5-4 decision the dissent termed “decidedly employer-friendly,” the Supreme Court held on June 24, 2013 that only employees who have been empowered by the employer to take tangible employment actions against a harassment victim constitute “supervisors” for the purpose of vicarious liability under Title VII.  Per the holding in Vance v. Ball State University, employees who merely direct the work activities of others, but who lack the authority to take tangible employment actions, will no longer be considered supervisors under Title VII. 

Under long-standing precedent (Faragher and Ellerth), whether an employer can be found vicariously liable for harassment perpetrated by its employees is dependent on whether the harasser is a supervisor or merely a co-worker of the victim:

• For co-worker harassment, the employer will only be found liable if it was negligent—that is, if it knew or should have known of the harassment and failed to take corrective action;
• For supervisor harassment where the supervisor takes a tangible employment action against the victim (such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits), the employer will be considered strictly liable; and
• For supervisor harassment where the supervisor does not take a tangible employment action against the victim, the employer may establish an affirmative defense to liability if it can prove that: (1) it exercised reasonable care to prevent and correct any harassing behavior; and (2) the victim unreasonably failed to take advantage of the preventive or corrective opportunities offered by the employer.

Despite this framework that is highly dependent on the status of the harasser, however, the Court had never definitively ruled on who constitutes a supervisor, until now.

In reaching this decision, the Court emphatically rejected the EEOC’s definition of supervisor, which had included both those who have the authority to take or recommend tangible employment actions and those who direct the daily work activities of others.  The Court noted that a significant advantage of its new definition is that supervisory status can now be readily determined early in the case, and will generally be capable of resolution on summary judgment.  Alternatively, if the issue should reach trial, the new definition will be easier for juries to apply.

While the new definition of supervisor should benefit employers, by leading to more cases being decided under the more lenient “negligence” standard, the Court’s opinion contained a few caveats.  While employees who merely direct the daily work activities of others will no longer be considered supervisors, the Court noted that the nature and degree of authority wielded by the harasser is an important factor to be considered in determining whether the employer was negligent in controlling workplace harassment.  Further, an employer who attempts to evade liability by concentrating all decision-making authority in a few individuals, who in turn rely upon the recommendations of others who actually work directly with the affected employees, may be found to have effectively delegated the power to take tangible employment actions to those employees on whose recommendations it relies.  Accordingly, while the new definition of supervisor has been distinctly narrowed, the Court has allowed some room for it to be expanded in particular cases, should the situation warrant.

In accordance with this decision, employers should ensure that their job descriptions clearly define which employees have the authority to take tangible employment actions against others, keeping in mind that employees who make recommendations regarding such employment actions may also be deemed supervisors in certain situations.