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By Karen Gentry | MiBiz
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WEST MICHIGAN — An employee with a good record commits a crime against a co-worker. A supervisor with past complaints of inappropriate sexual comments assaults an employee. A supervisor uses his authority and intimidates and harasses a subordinate.

These are the kinds of cases affected by a recent Michigan Supreme Court ruling in the case of Hamed v. Wayne County, a decision that reversed a decades-old ruling holding companies liable for criminal acts by supervisors. The ruling overturns the court’s Champion v. Nation Wide Security decision in 1996.

In the past, if supervisors engaged in certain types of criminal conduct, the employer had no defense. The new ruling provides an employer with a defense and removes this automatic liability, according to Keith Brodie, partner with Barnes & Thornburg LLP. He said the earlier ruling was not consistent with the strict reading of the language of the Michigan Elliott-Larsen Civil Rights Act.

In the 1996 case, the court found the employer liable for the sexual assault of a subordinate by a supervisor, according to Richard Seryak, who represents employers as senior principal with Miller Canfield PLC. He said the Hamed case involved a jail inmate who was sexually assaulted by a deputy. The plaintiff brought the claim under Michigan’s Civil Rights Act, alleging Wayne County was liable for the deputy’s sexual assault because he used his authority to take advantage of her.

Critical to any case is whether the conduct was unforeseeable. Seryak said if there were prior complaints about an employee, if a background check reveals past crimes, or if the person had a criminal record, then the employer might be liable. For example, if a number of women have made complaints of sexual harassment against a particular individual, this is evidence the individual could engage in an unlawful act.

Seryak said there would not be automatic liability for an employee with a good work record who suddenly commits an unlawful act against a co-worker.

Sexual harassment, employee criminal acts and employer liability underscores the need for policies, procedures and supervisor training. Seryak encourages employers to have internal complaint procedures in place and to investigate any complaints against employees.

“If an employer receives a complaint about an employee from a co-worker (for) conduct that may violate the employer’s policy of civil rights law, they all should be investigated and checked out,” Seryak said.

Brodie advised employers to make sure they train supervisors and implement proactive measures to address workplace harassment of all forms. Supervisors and managers need to be trained on the definition of sexual harassment,

the employer’s policy, what’s expected of them from a behavior standpoint and the consequences that would result if a supervisor fails to comply.

Bob Sikkel, a partner with Barnes & Thornburg with Brodie, said the policy oftentimes is included in an employee handbook or a separate policy manual or is published on a company’s intranet.

The courts expect the employer to have invested in supervisory and managerial training. But if there’s no policy or a poorly prepared policy, an employer might not be able to take advantage of the defense, Sikkel said. The employer has to establish they have taken reasonable care to prevent sexual harassment in order to take advantage of the affirmative defense, which proves there’s evidence this care has taken place.

Under Title 7 of the Civil Rights Act of 1964, employers with 15 or more employees must also comply with federal law. Brodie said the definition of sexual harassment is nearly identical in state and federal law, but there are nuances from a liability standpoint.

“At the federal level, if the supervisor engages in sexual harassment and causes what’s called tangible employment action, then the employer is responsible for the acts of his or her supervisors,” Brodie said.

Examples of tangible employment actions include when an employee rejects sexual advances of a supervisor and then is terminated, demoted, transferred or reassigned. It might also apply if the employee quits because of the harassment, Brodie said.

“The fact that federal law can also apply oversimplifies the analysis,” Brodie said.

Seryak said employers are automatically liable in cases of quid pro quo sexual harassment committed within the scope of employment. An example is an offer of a promotion in return for a date or sexual favors.

Besides issues of sexual harassment or criminal physical assault, employers need to protect against defrauding customers, embezzling or misappropriating funds.

Seryak noted although there is more screening and background checks of potential employees, sometimes “strange things happen,” including when employees with no prior problems go “postal.”

“But sometimes there have been warning signs. You [need] to be sort of alert to what can be a problem,” Seryak said.

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• barnes & thornburg
• bob sikkel
• hamed v. wayne county
• keith brodie
• miller canfield
• west michigan