It is well established now under federal Title VII law that an employer is liable for actionable sexual harassment caused by a supervisor with “immediate (or successively higher) authority over the employee.” However, in cases where the employee does not suffer a “tangible employment action,” such as discharge, demotion, or an unfavorable reassignment, there is an affirmative defense that an employer may raise to avoid Title VII liability and damages.Under such affirmative defense whether an employer has an anti-harassment policy is relevant evidence. Also important is effective supervisory training and training of employees on the harassment policy and complaint procedure.Training and educational programs for all employees take on an even higher degree of importance under Hawaii state law, HRS Chapter 378. State law currently is interpreted by the Hawaii Civil Rights Commission (“HCRC”) as mandating strict liability for sexual harassment committed by supervisors.While the Hawaii Supreme Court has not addressed the HCRC’s interpretation of HRS Chapter 378 a recent Illinois Supreme Court decision upheld a Illinois Human Rights Commission ruling addressing a regulation similar to the HCRC’s–that an employer was strictly liable for a supervisor’s harassing conduct under Illinois state law even though the supervisor did not even have direct supervisory authority over the Complainant.The April 16, 2009 Illinois decision will certainly be persuasive authority to a Hawaii Supreme Court faced with interpreting the HCRC’s regulation. Accordingly, it is critical that Hawaii employers understand the importance of having an effective policy and company-wide training program on not only a defense to a sexual harassment claim, but prevention.I. The Importance of Having an Effective Harassment PolicyA. The Faragher/Ellerth DefenseHaving an effective sexual harassment policy and training program will greatly increase the chance of avoiding liability under the affirmative defense for sexual harassment claims recognized by the U.S. Supreme Court.Where alleged harassment by a supervisor does not culminate in an adverse (“tangible”) employment decision, the employer may avoid liability by showing that: (1) the employer exercised reasonable care to prevent and promptly correct any harassing behavior; and (2) the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer to avoid harm. “A tangible employment action constitutes a significant change in employment status such as hiring, firing, failing to promote, reassignment with significantly different responsibilities or a decision causing a significant change in benefits.”The importance of the affirmative defense was significantly increased by a U.S. Supreme Court’s decision in which the Court held that the defense is available in constructive discharge cases unless the plaintiff quits in a reasonable response to an employer-sanctioned adverse action of an official nature, such as a demotion or a cut in pay.A zero-tolerance harassment policy must fit the environment and employees:While proof that an employer had promulgated an antiharassment policy with complaint procedure is not necessary in every instance as a matter of law, the need for a stated policy suitable to the employment circumstances may appropriately be addressed in any case when litigating the first element of the defense. The policy should be written in plain English, so that all employees regardless of their educational level or background can understand it … [a] policy should include a clear and precise definition of unlawful harassment so that employees know what type of conduct is prohibited by the policy and will be able to recognize that conduct should it occur.Accordingly, if the alleged harasser has supervisory authority over the victim, the employer will be held automatically liable for any harassment committed by the supervisor unless the employer is able to successfully raise the affirmative defense.B. Tips On Drafting a Zero-Tolerance Policy and Complaint Procedure.(1) Write in simple English.(2) Include a clear definition and examples of prohibited conduct and make it broad enough to prohibit all forms of harassment.(3) State the company’s “zero-tolerance” philosophy in the policy regarding all forms of harassment,(4) Designate at least two specially trained managers who will be responsible for investigating harassment complaints for the company.(5) Determine the complaint procedure that will be used to investigate complaints of harassment by supervisory employees, co-workers and outsiders.(6) Provide a “clear chain of communication,” allowing employees to step outside of the normal hierarchy in the event the supervisor is the harasser and consider having a toll-free number employees can call.(7) State that employees who report prohibited conduct will be protected from retaliation.(8) State that the employer will promptly investigate the matter in an objective and discrete manner.(9) Provide the form of disciplinary action to which offenders can expect to be subjected.(10) State that the employer will also take remedial action.(11) Train your management employees and line employees on the policy and procedure.(12) Have each employee sign an acknowledgment form that they have received a copy of the policy and procedure, and that they have received training on the harassment policy.C. The Faragher/Ellerth Defense and Hawaii LawLike Title VII, the Hawaii Employment Practices Act prohibits discriminating against individuals in virtually all aspects of employment. However, it remains an open question whether an employer, under Hawaii state law, can assert the Faragher/Ellerth affirmative defense.Currently, under regulations promulgated by the HCRC, the state agency charged with the enforcing and interpreting Hawaii’s Employment Practices Act, strict liability would apply to a supervisor’s harassment of a subordinate regardless of whether tangible action is taken:§12-46-109 Sexual harassment.(a) Harassment on the basis of sex is a violation of chapter 378, HRS. Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct or visual forms of harassment of a sexual nature constitute sexual harassment when:(1) Submission to that conduct is made either explicitly or implicitly a term or condition of an individual’s employment; or(2) Submission to or rejection of that conduct by an individual is used as the basis for employment decisions affecting that individual; or(3) That conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.(b) In determining whether alleged conduct constitutes sexual harassment, the commission will look at the record as a whole and at the totality of the circumstances, such as the nature of the sexual advances and the context in which the alleged incidents occurred. The determination of the legality of a particular action will be made from the facts, on a case by case basis.(c) An employer shall be responsible for its acts and those of its agents and supervisory employees with respect to sexual harassment regardless of whether the specific acts complained of were authorized or even forbidden, and regardless of whether the employer or other covered entity knew or should have known of their occurrence. The commission will examine the circumstances of the particular employment relationship and the job functions performed by the individual in determining whether an individual acted in either a supervisory or agency capacity.(d) With respect to conduct between employees, an employer shall be responsible for acts of sexual harassment in the workplace where the employer or its agents or supervisory employees knows or should have known of the conduct and fails to take immediate and appropriate corrective action. An employee who has been sexually harassed on the job by a co-worker should inform the employer, its agent, or supervisory employee of the harassment; however, an employee’s failure to give such notice may not be an affirmative defense.D. Problem Areas for Employers1. Failure to disseminate policy2. Inadequate complaint procedure3. Employer on notice of harassment4. Failure to promptly investigate5. Failure to take appropriate disciplinary action6. Failure to apply it even-handedly7. Failure to review and revise when necessary8. Failure to provide trainingE. Illinois Supreme Court Decision a Foreshadowing of Hawaii Law?In a recent decision, the Illinois Supreme Court gave the HCRC direct support of the HCRC’s own interpretation of HRS Chapter 378.The decision holds Illinois employers strictly liable for sexual harassment by any of their management or supervisory personnel, and, as noted by the dissent, “imposes a standard of liability which appears to be without precedent in any jurisdiction of the United States.”The basis of the decision was the plain and ordinary meaning of the statute, which states that “an employer shall be responsible for sexual harassment of the employer’s employees by nonemployees or nonmanagerial and nonsupervisory employees only if the employer becomes aware of the conduct and fails to take reasonable corrective measures.”According to the Court, the statute is unambiguous” and only excludes “nonemployees” and “nonmanagerial or nonsupervisory employees” from its strict liability standard. As such, the Court found “[t]here is no language in the Act that limits the employer’s liability based on the harasser’s relationship to the victim.” The Court rejected the employer’s argument that federal case law should apply to the case.II. The Importance of Conducting EEO TrainingOf course, in Hawaii the HCRC has merely interpreted HRS Chapter 378′s statutory language to impose strict liability for supervisory harassment. Unlike the Illinois statute interpreted by the Illinois Supreme Court it is reasonable to argue that Hawaii statutory law is ambiguous and not straightforward.Nevertheless, the HCRC is charged with the interpretation and enforcement of HRS Chapter 378 and it does not bode well for Hawaii employers that another state’s high court is willing to impose what some would consider harsh penalties on the employer defendant. Accordingly, employers in Hawaii should redouble its efforts to train supervisors AND employees regularly on preventing discrimination and harassment in the workplace. Training should include the consequences of violating company policy.Training employees reduces the likelihood that inappropriate conduct will be engaged in or tolerated at a level that can create a hostile environment.Second, in the event that inappropriate conduct takes place, employees who are offended will be substantially more likely to use the employer’s complaint procedure, thereby permitting the employer to remedy the situation and avoid having a lawsuit filed against it.Lastly, training is a tool for prevention and reducing the potential of supervisory harassment.A. Training as a Tool for PreventionThe EEOC’s Policy Guidance on Sexual Harassment states:An employer should ensure that its supervisors and managers understand their responsibilities under the organization’s anti-harassment policy and complaint procedure. Periodic training of those individuals can help achieve that result. Such training should explain the types of conduct that violate the employer’s anti-harassment policy; the seriousness of the policy; the responsibilities of supervisors and managers when they learn of alleged harassment; and the prohibition against retaliation.The HCRC regulations state that “prevention is the best tool for the elimination of sexual harassment. Employers should affirmatively raise the subject, express strong disapproval, develop appropriate sanctions, inform employees of their right to raise and how to raise the issue of sexual harassment, and take any other steps necessary to prevent sexual harassment from occurring.” §12-46-109(g).As part of its settlements against employers, the EEOC and HCRC have chosen mandatory training as one of its primary responses through the use of consent decrees requiring organizations to conduct training and ensure policy compliance.In 2004, the California Legislature passed Assembly Bill 1825, requiring all employers with fifty or more employees to conduct compulsory sexual harassment training for all of its supervisory employees by January of 2006, thus supporting the EEOC and HCRC’s position that training and education is the best tool for prevention. Under the California law, the training must re-occur every two years, and all new supervisors brought in after the original round of training must go through the program within six months of their arrival.Managers who are aware of the implications of sexual harassment may be less likely to take official action they realize will create vicarious liability for the organization – this may preserve the employer’s right to the Faragher/Ellerth affirmative defense in a case of constructive discharge. Further, managers who are aware of how to proceed with complaints from employees about harassment are more likely to intervene with an appropriate employer response thus making a stronger showing under the first prong of the Faragher/Ellerth affirmative defense.Finally, as noted throughout this article training can be an effective tool to combat inappropriate behavior by supervisors and to reduce risks under state law-especially to the extent it is interpreted similar to the Illinois Supreme Court’s decision.B. Training and the Faragher/Ellerth DefenseConducting training will greatly increase the chance of avoiding liability under the Faragher/Ellerth affirmative defense. The importance of this defense was significantly increased by the Suders decision, which held that the defense is available in constructive discharge cases unless the plaintiff quits in a reasonable response to an employer-sanctioned adverse action of an official nature, such as a demotion or a cut in pay.The training of rank and file employees should be documented and if it is to be conducted on a regular basis, can include a certification by the employee that he or she has not been subject to any policy violations since the last training.C. Training and Damages Issues Under Hawaii LawGenerally, individuals cannot be found liable for violations under federal law. Under Hawaii law, however, courts may award unlimited punitive and compensatory damages.Significantly, unlike under Title VII individuals can be held liable for violations of Hawaii’s Employment Practices Act. See HRS §378-1 (defining “employer” to include “any person”) and §378-2 (3) (making it unlawful for any “person” to “aid, abet, incite, compel, or coerce the doing of any of the discriminatory practices forbidden by this part, or to attempt to do so.”).Thus, training employees may alert them to the financial risks they take when they engage in behaviors prohibited by Hawaii law.D. Training to Reduce Exposure to Punitive DamagesThe U.S. Supreme has Court held that “in the punitive damages context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer’s ‘good-faith efforts to comply with Title VII.’” Accordingly, compliance efforts are both necessary and sufficient to avoid liability for punitive damages.