For years, the Fourth Circuit Court of Appeals (which includes North Carolina and South Carolina) set a high bar for plaintiffs suing for workplace harassment. The court rejected multiple claims involving obnoxious and crude behavior by concluding that they were not sufficient to create the objectively hostile and offensive working environment required under Title VII for a harassment claim to proceed to trial. In some cases, the conduct was not directed at the plaintiff, or involved sustained but less severe conduct. In others, the Fourth Circuit concluded that even egregious verbal behavior did not meet this standard if it only occurred on one or two occasions.

Last week, the full Fourth Circuit reversed years of its own precedents, finding that a manager’s use of racial slurs twice over the course of a few hours on one work day, was sufficient to constitute a hostile working environment under Title VII. In Boyer-Libereto v. Fontainbleau Corp., the plaintiff was an African-American cocktail waitress at a resort hotel. She claimed that during a single shift, a white manager twice called her a “porch monkey,” and threatened to fire her. The employer sought to dismiss the claim, relying on Fourth Circuit precedent to contend that these slurs were not legally sufficient to create a hostile and offensive working environment.

The district court’s dismissed the claim on summary judgment, and a three-judge panel of the Fourth Circuit affirmed this dismissal in a 2-1 decision that relied on the court’s prior cases. However, in an en banc decision, the full Fourth Circuit reversed the panel, reinstating the plaintiff’s claim. The Fourth Circuit also took the unusual step of explicitly reversing its prior decision in the Jordan case from 2006.

In its decision, the Fourth Circuit stated that even an isolated incidence of harassment, if serious enough, can create a hostile working environment. The court also reasoned that the subsequent threat to fire the employee exacerbated the racial slurs, giving them more impact on the plaintiff. The Fourth Circuit used the retaliation threat to answer the initial hostile environment question, separate and apart from the plaintiff’s retaliation claim.

The Fourth Circuit majority reached this decision despite the fact that the manager in question was not the plaintiff’s direct supervisor, and that the alleged conduct was purely verbal in nature. The Jordan case involved similar crude racial remarks made on a single occasion, but that panel concluded that this conduct was insufficient to create a hostile working environment. The majority decision in Boyer-Libereto stated that racial slurs, especially those made by someone with some level of supervisory authority, are so damaging to the recipient, that even one or two instances can create an objectively severe and hostile working environment.

The dissenting judges noted the incompatibility of this decision with Supreme Court opinions that typically require repeated incidences of verbally harassing behavior over time to create liability under Title VII. The dissent predicted that this decision will lead to widespread litigation over workplace insults overheard by employees on a daily basis, thereby converting Fourth Circuit judges to “speech police.”

This decision has major implications for employers in the Fourth Circuit. As new judges have joined the court in recent years, its reputation as reliably employer-friendly has disappeared. Employers must understand that one use by a manager of a racial, sexual or other slur, can in the right context, create major financial risks for the employer. Employers should review their harassment policies and training practices, and emphasize to managers and all employees, that such behavior is unacceptable, and will have severe employment consequences.