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HB Legal: Employment Law 2014

(page 3 of 4)

Q: How are employers impacted by the recent Hawaii Supreme Court decision in  Lales v. Wholesale Motors Co., SCWC-28516 (Haw. Feb. 13, 2014)?

A: In February, the Hawaii Supreme Court issued a decision in  Lales v. Wholesale Motors Co. involving workplace harassment based on national origin and retaliation that will likely have significant consequences for supervisors and employers in Hawaii.  The ruling makes it more difficult for employees to bring claims directly against their supervisors for alleged discrimination and retaliation.  However, the ruling also makes it easier for employees to prevail against employers when the employee has been subjected to harassment by a supervisor.  

Q: Can Supervisors be sued for workplace harassment or discrimination?

A: The Hawaii Supreme Court ruled that supervisors cannot be held personally liable as “employers” for harassment or retaliation under Hawaii law.  Several federal appeals courts have reached the same conclusion with respect to harassment and retaliation claims brought under Title VII of the Civil Rights Act of 1664 (“Title VII”).  However, the Lales case is the first time the Hawaii Supreme Court has ruled on whether supervisors can be sued under Hawaii law.

This ruling is good news for supervisors, but does not entirely insulate individuals from lawsuits by employees.  The ruling does not prevent employees from bringing other types of claims against supervisors.  For example, if a supervisor assaulted or defamed an employee, the employee could bring claims for that type of conduct directly against the supervisor.  An employee might also be able to sue a supervisor directly if the supervisor aided, incited, compelled or coerced someone else in engaging in unlawful discriminatory conduct.  Lales had not made any of those types of allegations against Marxen, so the Hawaii Supreme Court did not consider what type of conduct might meet the definition of aiding, inciting, compelling or coercing discriminatory conduct.

Q: Why is the case not good for employers?

A: The Hawaii Supreme Court’s decision in the Lales case was not as favorable for employers.  The court said that employers are strictly liable to employees who are harassed by supervisors. This means that when a supervisor harasses an employee, the employer can be held liable even if the employer had a policy prohibiting harassment and the employer had no idea the harassment was occurring.  Under Title VII, an employer has a possible defense if (a) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise if the employer has a policy prohibiting harassment.

The Hawaii Supreme Court’s ruling did not address the question of who qualifies as a “supervisor” for purposes of imposing strict liability on the employer.  Last year, the United States Supreme Court ruled that under Title VII, an individual is not a supervisor unless he or she has the power to hire, fire, promote, demote or take some other tangible employment action.  The Hawaii Supreme Court did not decide whether that definition would apply to claims under Hawaii law.


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