Innocent horseplay or minor employee misconduct are common occurrences even in the most well run organizations. But how an organization deals with employee misconduct can mean the difference between a "tight ship" and a very expensive lawsuit.

Every manager has experienced some kind of employee misconduct in the office. Sometimes the conduct is unintended or misconstrued; sometimes it is harmless bantering; and sometimes the conduct can be more serious. The best way to protect your company is to make sure management addresses problematic situations in a timely and fair manner.

Investigating employee misconduct, however, is fraught with its own set of problems. How do you identify what misconduct should be investigated? How do you insure that a negative work environment is not created because "big brother" is watching? What if doing an investigation infringes on another employee’s rights?

The Duty To Investigate

Employers have a legal responsibility to investigate any complaint of wrongdoing, regardless of whether the employer believes the complaint is meritorious. An employer’s failure to investigate complaints of harassment can subject an employer to significant legal exposure and damages.

In cases where harassed employees suffer no job-related consequences, employers may defend themselves against liability by showing that they acted quickly to prevent and correct any harassing behavior and that the harassed employee unreasonably failed to utilize the employer’s protection. See Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998).

In the Burlington Industries, Inc. v. Ellerth case, the Supreme Court upheld the Seventh Circuit’s reversal of summary judgment to the employer where an employee who alleged sexual harassment by her supervisor in her complaint never complained of harassment to anyone at the company.

The supervisor repeatedly harassed and made inappropriate sexual comments to the plaintiff, a sales employee, including comments concerning her breasts and the fact that she was not "loose enough" to be considered for promotion. The supervisor also propositioned the plaintiff on several occasions and even indicated in substance that he "could make plaintiff’s life at work easy or hard."

The court found that the company could be held liable for the supervisor’s conduct, even though the plaintiff never suffered an adverse employment action (in fact, the plaintiff was actually promoted during her tenure with the company). Noting that an employer could always be held vicariously liable for harassment by a supervisor that is accompanied by a tangible job action, the court clarified that an employer could also be found vicariously liable, even if no tangible job action occurred, if the employer did not try to correct or prevent the problem.

The court remanded the case to determine whether the company exercised reasonable care to prevent and correct any harassing behavior, and whether the plaintiff unreasonably failed to avail herself of the company’s complaint procedures.

An employer’s failure to adequately train supervisory personnel in handling employee complaints and rectify unacceptable behavior can provide strong evidence for plaintiffs in a suit against the employer.

For example, in Manno v. B.J.’s Wholesale Club, 150 F. Supp. 2d 325 (D. Mass. 2001), the plaintiff complained to her supervisor that her co-worker subjected her to constant verbal harassment, propositioned her, sent her vulgar notes and in one instance, sent plaintiff a condom, which the plaintiff promptly showed her supervisor.

The supervisor responded by pulling out her own condom from her purse but she never disciplined the co-worker or reported the behavior to more senior levels of management. Once the employer learned of the co-worker’s behavior, it conducted an investigation and immediately terminated the co-worker’s employment.

The plaintiff then brought suit. The court denied the employer’s motion for summary judgment, finding that because the employee timely filed her complaint and her allegations of egregious and harassing conduct, she adequately stated a claim that could survive summary judgment. The employer’s only recourse was to assert its affirmative defenses at trial, including its argument that that plaintiff unreasonably failed to avail herself of her employer’s complaint reporting process because she notified the wrong person about her harassment claim.

Similarly, in Brunson v. Bayer Corp, 237 F. Supp. 2d 192, (D. Conn. 2002), the employer was denied summary judgment where several female employees complained to their supervisors about a male co-worker’s inappropriate sexual comments and inappropriate touching, including one instance where the co-worker rubbed a female employee’s posterior.

The supervisors failed to report the incidents to higher level of management. Although the ultimate issue of whether the employer would be held liable at trial for harassment was not decided, the employer was left to defend itself against a lawsuit that alleged that the employer did not completely follow up on complaints of harassment.

Tips From The Trenches

The first steps in protecting your company from liability are to carefully review and distribute employee policies concerning conduct in the workplace and complaint procedures.

The Ellerth and Faragher cases clearly reinforce an employer’s obligation to prepare and publicize a strongly worded and legally sufficient anti-harassment policy. Employers must train employees on harassment issues, including telling supervisors and managers of their responsibilities to follow up on potentially offending behavior and complaints.

Companies must provide employees with multiple ways to complain about harassing behavior. They must thoroughly investigate all complaints, take prompt corrective action if necessary, and notify the complainant, as appropriate, about the results of the investigation. These cases also instruct employers to notify employees of their right to follow an employer’s complaint procedure.

Employers should also carefully document all complaints (however minor they seem at the time) and provide good detail when describing the investigation process. Documentation should include when the complaint was received, who was interviewed in connection with the investigation, the date and time the investigation was conducted, and any remedial steps taken.

Care should be taken to conduct all investigations as confidentially as possible. An employer, however, should never promise absolute confidentiality since an investigation could require interviewing other employees, and even the alleged harasser, about the allegations.

Take-Home Message: Prompt Investigations

The important lesson to learn from this article is that prompt action in handling complaints of employee misconduct can go a long way to avoiding larger issues in the future. No matter how insignificant a complaint may seem, the employer should investigate immediately until it is satisfied that it has sufficiently addressed the situation. Employers should also conduct a careful review of its employment policies to ensure that employees understand complaint procedures and appropriate conduct at work.

Bret A. Cohen is a member at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC where he practices in the employment, labor and benefits section. His practice includes representing employers in labor and employment litigation, including wage and hour claims, discrimination claims, and state common law, breach of contract, wrongful termination and defamation claims. He also has extensive experience litigating non-competition, non-solicitation and executive compensation agreements, and providing general employment advice. Bret can be reached at [email protected].

Yvette Politis is a labor and employment associate at Seyfarth Shaw LLP. Her practice includes the representation of management in employment litigation matters before state and federal courts, as well as agencies, including the EEOC, MCAD and NLRB. Yvette can be reached at [email protected].