500 Eagle Gate Tower
60 East South Temple
Salt Lake City, Utah 84111
Was it rape or an affair gone bad? Regardless of the correct answer, the employer in the following case ended up paying the price for firing an employee who complained that her former supervisor had sexually harassed her. Read on to find out what the employer did wrong.
Diane McInnis worked as an assistant to Steve Thull, the vice president of sales and operations at the Fairfield Resort in Pagosa Springs, Colorado. McInnis claimed that Thull began sexually harassing her and that he raped her on several occasions. Although the day-to-day harassment temporarily ended when Thull was transferred to Las Vegas, McInnis was instructed to contact Thull while on a business trip to Las Vegas where he allegedly raped her again.
When Thull telephoned McInnis to inform her that he was being transferred back to the office in Pagosa Springs, she told him that she couldn’t take his harassment any more and that she was going to tell someone at Fairfield. Thull became angry and threatened to fire her if she told anyone. He then enlisted the help of two other supervisors to retaliate against McInnis by interfering with her ability to perform her job and documenting alleged performance problems.
McInnis twice telephoned her new immediate supervisor, Mark Gray, to complain about the harassment and retaliation against her. Instead of following up on the complaint, Gray told her to report any past personnel issues to another supervisor because he didn’t want to get involved. Later he claimed that his reluctance to become involved stemmed from this belief that it sounded like “some kind of an affair.” He communicated with the other supervisors and joined in the retaliation against McInnis telling her that “every rock I turn over, I find something on you.”
McInnis sent a memo to Alex Fogel, Fairfield’s vice president of property management, reporting Gray’s retaliation and failure to respond to her complaint. Fogel immediately informed Gray by email of McInnis’ complaint. Gray then contacted McInnis by email telling her that he was aware of her memo and wanted to schedule a meeting with her the next day. At this meeting, Gray fired McInnis.
McInnis sued Fairfield for retaliation in violation of Title VII. A jury found Fairfield liable and awarded her $90,000 in back pay, $38,000 in compensatory damages, and $167,000 in punitive damages. The judge denied her requests for front pay and costs. Fairfield appealed the award of punitive damages and McInnis appealed the denial of front pay and costs.
The Tenth Circuit Court of Appeals, which covers Utah, upheld the award of punitive damages. To be entitled to punitive damages, an employee must show that the employer acted in the face of a “perceived risk” that its actions would violate federal law. Where harassment by a low-level employee is involved, the employee must show that management was guilty of more than negligently responding to the complaint of harassment to obtain punitive damages. However, management’s participation in the retaliation can support an award of punitive damages.
In this case the court found ample evidence of management’s participation in retaliatory actions against McInnis. The court noted that Gray participated in efforts to document alleged problems with McInnis’s job performance that had not previously existed prior to her complaint about the harassment. It further noted that Gray fired McInnis the day after he discovered that she had complained about his negative response to her complaints. Fairfield conducted mandatory training sessions on Title VII’s prohibitions. Therefore, the court reasoned, someone in management must have understood that employees have a right to complain formally or informally about sexual harassment without suffering retaliation. Based on this evidence, the court concluded that the jury could reasonably have found that Gray fired McInnis in retaliation for reporting sexual harassment in the face of a perceived risk that such actions would violate federal law.
An employer can avoid punitive damages by making certain good faith efforts to comply with Title VII. In particular, the employer must at least: (1) adopt antidiscrimination policies; (2) make a good faith effort to educate its employees about these policies and the statutory prohibitions; and (3) make good faith efforts to enforce an antidiscriminatory policy. Although Fairfield arguably met the first two requirements, its good faith argument was dashed by its failure to enforce its policies by properly responding to McInnis’s multiple complaints of sexual harassment.
The court also rejected Fairfield’s argument that it was absolved from paying punitive damages because McInnis failed to follow known procedures to report harassment or retaliation. The court reasoned that this argument was applicable to certain defenses, but not to the question of punitive damages. The court refused to adopt a new rule requiring employees to follow the employer’s policies regarding reporting harassment or retaliation to receive punitive damages.
As if things weren’t bad enough for Fairfield, the court reversed the lower court’s denial of front pay and costs. “Front pay” is the money awarded for lost compensation during the period between judgment and reinstatement or “in lieu of reinstatement.” The factors for determining front pay are work life expectancy, salary and benefits at the time of termination, any potential increase in salary through regular promotions and costs of living adjustment, the reasonable availability of other work opportunities, the period within which the employee may become re-employed with reasonable efforts, and methods to discount any award to net present value. The lower court ignored these factors and denied front pay simply because she “got a job where she’s comfortable and doing well and . . . that would be much better for her than reinstatement.” It also denied without explanation McInnis’ costs associated with the litigation that are typically awarded to the prevailing party. McInnis v. Fairfield Communities, Inc., 2006 WL 2338056, *4 (10th Cir., August 14, 2006).
This case illustrates the following lessons about actions employers should take to avoid paying hefty damages, including punitive damages, for retaliation. First, managers must always take an objective approach to handling complaints of sexual harassment and retaliation. Even if the manager suspects that the employee is trying to lash back at another employee for a consensual affair turned sour, the employee has the right to make such complaints without fear of retaliation. Certainly, actions taken by management such as lodging new complaints about the employee’s job performance or firing the employee appear highly suspicious under the circumstances and could result in a jury award of punitive damages.
As far as protecting against liability for punitive damages, an antidiscriminatory policy is only worth the paper it is printed on if it is not enforced by properly addressing and investigating complaints. In the words of the court, “even if an employer adduces evidence showing it maintains on paper a strong non-discrimination policy and makes good faith efforts to educate its employees about the policy and Title VII, a[n employee] may still recover punitive damages if she demonstrates the employer failed to adequately address Title VII violations of which it was aware.”