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Employer not liable for shift leader’s bad acts

published in Oklahoma Employment Law Letter | October 1, 2013

By Charles S. Plumb

Harassment between coworkers poses some unique issues. Employers aren’t automatically liable for harassment committed by all employees. If the employer is aware of harassment occurring and doesn’t take steps to address and stop it, then the employer has some exposure. If the employer isn’t aware of the harassment, it may be liable if the harasser is considered a “supervisor” under the law. Some harassment lawsuits turn on whether the person who was doing the harassing should be treated as a supervisor.

A recent decision from the U.S. 10th Circuit Court of Appeals (whose rulings apply to all Oklahoma employers) sets some guidelines for which employees are considered supervisors for purposes of imposing potential harassment liability on employers.

The Cheyenne McDonald’s restaurant

Preiss Enterprises operated a McDonald’s restaurant in Cheyenne, Wyoming. Megan McCafferty began working as a crew member on February 15, 2007. Her shift leader was Jacob Peterson. Peterson participated in the restaurant’s “Manager-in-Training” program. He was also responsible for directing day-to-day activities of shift workers like McCafferty.

Peterson’s responsibilities included assigning duties, scheduling breaks, authorizing crew members to leave early or stay late, and writing up employees for misconduct. Everyone agreed that he didn’t have the authority to hire, fire, promote, demote, or transfer other employees.

McCafferty, a high-school student, agreed to cover another employee’s shift but explained to Peterson that she would need a ride from school. As promised, he picked her up from school and checked her out of class early. He told her she had been excused from her shift and asked her if she wanted to “hang out.”

When McCafferty accepted his invitation, Peterson offered her marijuana. They spent the next two days together, which involved alcohol, methamphetamines, and sex. Eventually, McCafferty’s sister spotted her, pulled her from Peterson’s car, and called the police. When McCafferty didn’t contact anyone at McDonald’s, the restaurant treated her as having resigned.

McCafferty filed a discrimination charge with the Equal Employment Opportunity Commission (EEOC) and later filed a lawsuit against the restaurant and Peterson. She claimed Peterson was a supervisor under Title VII of the Civil Rights Act of 1964 and that she had been sexually harassed. She also included a state-law claim accusing the restaurant of being negligent in hiring, supervising, and retaining Peterson.

Who is a ‘supervisor’?

Under Title VII, the restaurant could be liable for Peterson’s actions toward McCafferty if he was a “supervisor.” The enforcement guidance issued by the EEOC broadly interprets which employees should be considered “supervisors” under Title VII. According to the guidance, any individual with the ability to exercise significant direction over another’s daily work is a supervisor, and the employer would be liable for his acts.

The U.S. Supreme Court rejected the EEOC’s stance with the 2013 case of Vance v. Ball State University. If the employer is unaware of a coworker’s harassment, the Supreme Court decided it should be vicariously liable under Title VII only if it granted the harassing employee the power to take “tangible employment actions,” such as hiring, firing, failing to promote, significant reassignment, or making decisions causing significant changes to employees’ benefits.

Under the Supreme Court’s more narrow interpretation of who is a “supervisor,” the 10th Circuit decided the McDonald’s restaurant wasn’t liable for Peterson’s actions. Although Peterson had the power to direct day-to-day assignments of crew members such as McCafferty, his level of authority didn’t include hiring, firing, promoting, demoting, or transferring?responsibilities that would justify legally treating him as a “supervisor” for purposes of Title VII and holding the employer liable for his actions.

The court also found it significant that when Peterson worked as a shift leader, there were more senior restaurant employees on-site who did have truly supervisory duties. McCafferty’s Title VII harassment claim against the restaurant for Peterson’s bad acts was dismissed.

The court also dismissed McCafferty’s claim that the restaurant was negligent in hiring, supervising, and retaining Peterson. There was no evidence that when he was hired, the restaurant should have known he posed any risk to others?employees or customers. Indisputably, his sexual misconduct, which occurred after hours and off-site, was plainly outside the scope of his employment with the restaurant. McCafferty v. Preiss Enterprises, Inc., and Jacob Peterson, Case No. 12-8039 (10th Cir., 8/13/13).

What decision means for Oklahoma employers

Oklahoma employers remain potentially liable for misdeeds committed by managers and supervisors. These decisions from the Supreme Court and the 10th Circuit offer employers some clarity about which employees will be considered supervisors and thus be capable of creating harassment liability. Don’t forget that you still may be liable for a nonsupervisor’s harassment of a coworker if you know the harassment is occurring and don’t take adequate steps to stop it and address the situation.