Last week in a 5-4 decision, the U.S. Supreme Court concluded that for purposes of vicarious liability under Title VII, a supervisor must have the authority to take certain tangible actions against subordinate employees. The case arose out of the Court's 1998 Faragher and Ellerth decisions, which made employers vicariously liable for harassment engaged in by supervisors. For harassment by co-workers or third parties, the employer is only liable if it knew or should have known about the activity and failed to take reasonable steps to stop it.

Faragher and Ellerth did not define the term supervisor. The EEOC took the position that supervisor meant any person who directed the day-to-day activities of other employees. This definition included working foremen and other quasi-management employees. Employers and several lower courts defined the term to include only those persons with the ability to take tangible action against the employee, such as hiring, firing, pay changes, etc.

In Vance v. Ball State Univ., the Supreme Court's majority opted for a more bright line rule that limits supervisors to those persons with clear and tangible authority. The broader definition would create ambiguity and uncertainty that would lead to additional litigation. Employees harassed by foremen or other employees excluded from this definition can still pursue harassment claims, but they will need to prove the higher negligence standard.