There is a classic management article by Professor Steven Kerr entitled On the Folly of Rewarding A, While Hoping for B. Its thesis is simple: reward systems often are structured so that they discourage desired behavior and encourage unwanted behavior. The federal courts’ decisions on the affirmative defense in cases of sexual harassment by supervisors illustrate Kerr’s thesis.
In Burlington Industries v. Ellerth, and Faragher v. City of Boca Raton, the Supreme Court created a two-pronged affirmative defense to employer liability in certain cases of workplace harassment by supervisors. The Court did so in order to effectuate what it identified as Title VII’s “primary objective”-the prevention of illegal workplace discrimination, including sexual harassment. The affirmative defense requires an employer to prove both that (1) it exercised reasonable care to prevent and correct workplace harassment (“prong one”), and (2) the victim employee unreasonably failed to take advantage of the preventive and corrective mechanisms established by the employer (“prong two”). If an employer can satisfy the affirmative defense, it can limit or altogether avoid liability for the harassing conduct of its supervisors. By offering employers the possibility of limited or no liability for workplace harassment by supervisory personnel, the Court hoped to encourage employers to take steps to prevent and correct harassing behavior, for example, by adopting effective grievance procedures. Thus, in Ellerth and Faragher, the Court created a reward system which ties an employer’s liability to its efforts to reduce the incidence of workplace harassment.