Tennessee Supreme Court Addresses Employer Liability for Supervisor Sexual Harassment and Retaliation

On December 4, 2007, the Tennessee Supreme Court issued an opinion in Allen v. McPhee which provides guidance for employers in avoiding liability for hostile environment sexual harassment by a supervisor. This highly-publicized case involved allegations of sexual harassment by MTSU President Sidney McPhee brought by his former administrative assistant, Tammie Allen.

The Facts

Ms. Allen alleged that, from August 2002 through October 2003, Dr. McPhee repeatedly touched her in a sexual manner, made numerous sexual comments, and suggested the two have a sexual relationship. MTSU has a sexual harassment policy which, among other things, defines sexual harassment, subjects those who engage in harassing behavior to discipline, and outlines the complaint and investigation procedures to be followed. The final step in the investigation process requires the MTSU president to review the investigator's report and make the final determination of the appropriate resolution of the complaint. Ms. Allen claimed that using MTSU's complaint procedure would have been futile in her case, because the ultimate decision-maker would have been her alleged harasser, Dr. McPhee. Ms. Allen therefore submitted a complaint to the Tennessee Board of Regents (TBR), instead of using MTSU's complaint procedure.

Ms. Allen's complaint was investigated by the TBR, and as a result of the investigation Dr. McPhee was suspended for 20 days, subjected to a $10,000 decrease in salary for one year, and required to participate in eight hours of sexual harassment training. Ms. Allen was transferred from her position as administrative assistant to the president to the position of Coordinator in MTSU's Development Office. Ms. Allen's new position had the same classification, rank and pay as her previous position. MTSU stated it decided to reassign Ms. Allen in order to protect her from having to interact closely with her harasser, Dr. McPhee.

Ms. Allen subsequently sued Dr. McPhee, MTSU, the TBR, the Chancellor for the TBR and the State of Tennessee, asserting claims for sex harassment and retaliation (based on Ms. Allen's reassignment to the Development Office). The trial court granted the defendants' summary judgment motion and dismissed the case, the Court of Appeals affirmed, and Ms. Allen appealed the case to the Tennessee Supreme Court. The Supreme Court affirmed the granting of summary judgment on the retaliation claim, but reversed on the sexual harassment claim. The court's reasoning provides guidance for employers in combating hostile environment sexual harassment claims alleged against supervisors.

MTSU asserted a Faragher/Ellerth defense in the case. Under the United States Supreme Court's 1998 decisions in the Faragher and Ellerth cases, an employer can avoid liability for hostile environment sexual harassment committed by a supervisor by proving that (1) it took reasonable measures to prevent and correct discriminatory conduct; and (2) the employee unreasonably failed to take advantage of these preventative and corrective measures. In Allen v. McPhee, the Tennessee Supreme Court found that MTSU failed to establish the first prong, in that it did not take reasonable preventative measures. This is because MTSU's sexual harassment policy did not provide an avenue to remove Dr. McPhee from the decision-making process in situations where he was the alleged harasser. The court therefore found that a reasonable jury could conclude that the policy and procedures were unreasonable as applied to Allen, and that she was justified in not using them.

The court also applied the United States Supreme Court's decision in Burlington Northern & Santa Fe Railway Co. v. White in reviewing Ms. Allen's retaliation claim. The court found that reassigning Ms. Allen to the Development Office was a "materially adverse" action which established a prima facie case of retaliation. The court, however, went on to conclude that MTSU's reason for reassigning Ms. White was reasonable under the circumstances, and was clearly superior to the alternative of Ms. Allen's remaining in her previous position where she would be forced to interact closely with Dr. McPhee. The court therefore upheld summary judgment for the employer on the retaliation claim.

Lessons to be learned from Allen v. McPhee are: (1) Sexual harassment policies and procedures will be scrutinized by the courts when employers assert the Faragher/Ellerth defense. Anti-harassment policies must provide, among other things, an avenue to remove the alleged harasser from the process, even if the harasser is the president of the company. (2) Although a good anti-harassment policy should designate specific alternative persons to whom sexual harassment complaints should be reported, supervisors must be trained to act on all complaints of harassment, even if the complainant is not a direct report. (3) Reassignment provides a viable basis for a retaliation claim, even though the reassignment does not result in any decrease in rank or pay. Therefore, employers must ensure that there are reasonable and defensible reasons for reassigning an employee who has lodged a harassment complaint.