An employer that had a sexual harassment policy, but that failed to train its employees on the policy AND failed to insist that managers who received complaints forward those complaints to the human resources department, will face a jury trial in an Ohio federal court.

Nicole Graham was hired in January 2017 by Phillips Feed Service, Inc., a national distributor of pet food and pet supplies, as a territory sales manager. On her first day of employment, Graham received a copy of the company’s Harassment and Discrimination Avoidance Policy. The policy defined sexual and other forms of harassing or discriminatory conduct, provided for a reporting mechanism, and explicitly prohibited retaliation against an employee who reported harassment or discriminatory conduct.

Sexual assault and harassment never reported to HR

Shortly after she was hired, Graham was to meet with her boss, regional sales manager Jeff Durgan, so that they could travel together to visit with customers in her new territory. Graham agreed to meet Durgan in his hotel room the day before so that they could discuss plans for the “ride along” the next day, and it was in that room that Graham alleges Durgan sexually assaulted her.

On the same day of the alleged sexual assault, Graham reported the incident to Stacy Casey, another territory sales manager. Casey advised Graham to “keep her head down” and, like Graham, never reported the incident to Phillips’ Human Resources department. The next day, Durgan apologized to Graham, and again invited her to his hotel room. After she declined, Graham claimed Durgan became rude and hostile towards her. She also said Durgan’s inappropriate conduct and sexual advances towards her continued.

Two and a half months later, Graham told another management-level employee, Kyle Wessel, that Durgan was treating her unfairly and that she believed it was because of the initial sexual assault. Wessel immediately reported the incident to the supervisor for territory managers, Lon Ziegler, but neither Ziegler nor Wessel reported the matter to HR as required by Phillips’ harassment policy.

HR fires harasser after initiating its own investigation

Six months later, when the salesforce of the company went through a reorganization, Graham contacted her supervisor and advised that she could not be on Durgan’s team. In response to Graham’s concern, the company’s vice president of HR launched an investigation. After it was concluded, Durgan was terminated for a “violation of our values and our harassment policy.”

In April 2018, the company hired a new vice president of sales and determined there was a need for a reduction in force. Graham and 26 others were selected for the RIF. Graham contended she was let go in retaliation for reporting the alleged January 2017 sexual assault.

Retaliation lawsuit to proceed to jury trial

To prove her case, Graham needed to show: 1) she was a member of a protected class (female); 2) she was subjected to unwelcome sexual harassment; 3) the harassment was based on sex; 4) the harassment unreasonably interfered with her work performance by creating a hostile or abusive work environment; and 5) there is a basis for employer liability.

The court noted: “unwelcome sexual harassment” included “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature” that creates “an intimidating, hostile or offensive working environment.” To determine whether a person’s work environment is hostile or abusive, a court would look to all of the circumstances, including the frequency, the severity, whether it was physically threatening or humiliating or a mere offensive utterance, and whether it unreasonably interfered with an employee’s performance. The conduct must be so bad that a reasonable person would find it hostile or abusive and the person complaining also finds it so.

The company argued that it exercised reasonable care to promptly prevent and correct any sexually harassing behavior, but that Graham had unreasonably failed to take advantage of corrective opportunities provided by the employer. Phillips also argued that Casey (the first person to whom Graham reported the harassment) was not a management-level employee and, therefore, the company did not have notice of the harassment. The court found a jury would need to decide this issue.

Several factors contribute to the complexity of this particular case: the company did not provide training on its policy, the territory sales manager who first learned of the complaint did not report it to HR, two other management-level employees also did not report the incident to HR, and it was eight months after the incident before HR launched an investigation.

Best practices for employers

The bottom line is that just having a written policy prohibiting harassment and discrimination isn’t enough. The policy must:

• Require employees to report known or suspected instances of harassment;
• Permit informal and formal complaints;
• Allow reporting to various individuals – including other supervisors, Human Resources, ethics officer, general counsel, or in-house attorney – so an employee can bypass the harassing supervisor; and
• Prohibit retaliation against any employee who reports in good faith known or suspected instances of harassment.

Additionally, employers should train all their employees on the policy, to include what types of behaviors are prohibited and how such behaviors should be reported, as well as to clearly communicate that it is the responsibility of all employees to report known or suspected instances of harassment or discrimination. Supervisors must also understand that a report to them is a report to the company.

Graham v. Phillips Feed Services, Inc., 4:20:CV-20 (N.D. Ohio 12/27/21)