In this case, the Supreme Court addressed the circumstances under which an employer could be held liable for sexual harassment where an employee refused unwelcome sexual advances from her supervisor, suffered no adverse job consequences, and where the employer was not negligent or otherwise at fault for the supervisor’s actions. The plaintiff alleged that her supervisor made repeated sexually offensive comments and had intimated that she would not do well at the company unless she submitted to his advances. Although the plaintiff did not submit, she was nonetheless promoted, and she resigned without ever attempting to invoke the company’s policies against sexual harassment.
The Court noted that under Title VII, an individual can claim sexual harassment based either upon a hostile work environment, or "quid pro quo" harassment. Because this case involved unfulfilled job threats, the Court accepted the trial court’s finding that it was a hostile work environment claim. The Court then turned to basic agency principles to formulate a rule to govern when employers may be held vicariously liable for hostile work environment sexual harassment.
The Court concluded that employers will be liable for actionable hostile environments created by any supervisor with immediate authority over the employee. In cases where no tangible employment action is taken, the defending employer may raise an affirmative defense to liability or damages, consisting of two elements: (1) that the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior; and (2) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. No affirmative defense is available if the supervisor’s harassment culminated in a tangible employment action.