Under Title VII, employers are only liable for an employee’s – as opposed to a supervisor’s – sexual harassment of a co-worker if it knew or should have known of such conduct. Last month in an unpublished decision, the Second Circuit Court of Appeals used a prior warning given by the employer to a harasser to conclude that it should have known the person was again engaging in such conduct.

In MacCluskey v. Univ. Of Conn. Health Ctr., the plaintiff was a dental assistant who was physically and verbally harassed from the outset of her employment by a dentist employed by the health center. The dentist had been the subject of a “last chance” disciplinary action for similar behavior more than a decade ago, but the employees’ supervisor was unaware of the prior warning. When she heard rumors of possible issues between the employees, the supervisor asked the plaintiff whether she was experiencing any problems. The plaintiff responded that there was a situation, but that she could handle it. After the dentist continued his harassing conduct, the plaintiff made a formal complaint and later sued her employer for tolerating the sexual harassment.

The Second Circuit affirmed a $125,000 jury verdict in favor of the plaintiff. On appeal, the employer argued that it was not aware of the ongoing harassment, and that when initially questioned, the plaintiff failed to place her supervisor on adequate notice of the conduct. The court noted the prior warning for sexual harassment and said that this previous conduct imputed knowledge of additional conduct to the employer, requiring ongoing review of his conduct. The fact that the supervisor was not aware of the warning did not excuse the employer from taking more decisive action once it learned of possible additional violations.

This case echoes advise we provide to employers deciding how to address issues involving workplace harassment. At first the employer may not consider lower level harassing conduct to merit termination of employment, and it may try to deal with the matter through a combination of disciplinary action and additional training. This decision shows that by retaining an employee found to have engaged in harassment, the employer essentially becomes an insurer for his good behavior going forward. While employers may be willing to accept this legal risk in some circumstances, perpetually attributing knowledge of old harassment allegations to supervisors going forward largely removes the employer’s ability to later claim that it was unaware that the employee had again engaged in such behavior.