Summary

Most lawyers and insurance carriers recommend that nonprofit organizations create an internal mechanism for resolving disputes. This internal mechanism (also known as a conflict management system) gives an aggrieved a place to register his/her complaint within the organization, and also insulates an employer from liability arising out of an employee lawsuit based on discrimination, sexual harassment or unlawful termination. Even the US Supreme Court has endorsed the value of a conflict management system. In the case of Beth Ann Faragher v. City of Boca Raton, the Supreme Court concluded that a conflict management system can provide an affirmative defense to an employer in a sexual harassment suit provided that the employee failed to make use of the conflict management system before suing.

The Background

To see how this affirmative defense might work in practice, let's look at the facts of the Faragher case. Beth Ann Faragher was a lifeguard with the City of Boca Raton, Florida. She decided to bring an action against the City and her imediate supervisors for creating and condoning a "sexually hostile atmosphere" at work. She alleged that her supervisors had repeatedly subjected her and other female lifeguards to "uninvited and offensive touching," by making lewd remarks, and by speaking of women in offensive terms. Faragher further alleged that she was never made aware by her employer that internal recourse was available to her, and so she instituted action.

The Solution

The matter was appealed in two lower courts before ending up in the Supreme Court. The Supreme Court held that an employer is liable to a victimized employee for a hostile environment created by a supervisor, but that an employer can raise an affirmative defense consisting of two necessary elements: (a) the employer exercised reasonable care to prevent and correct the situation, and (b) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.

Lessons Learned

In this case, the Court found that the City failed to exercise reasonable care because, although it had adopted a sexual harassment policy, it had not disseminated the policy to all of its supervisors and lifeguards. Furthermore, the policy did not include any assurance that the harassing supervisors could be bypassed in registering complaints. The finding of the Supreme Court in Faragher establishes that a conflict management system is not only important from an employee relations perspective, but is also an essential risk-management strategy for organizations wishing to minimize the prospects of costly and lengthy litigation.