United States: Wild After-Hours Halloween Party Leads To Sexual Harassment Lawsuit

Like Title VII to the Civil Rights Act of 1964, the Tennessee Human Rights Act ("THRA") forbids workplace harassment and other forms of discrimination on the basis of sex.  Recently, the Tennessee Court of Appeals considered an issue of first impression: May an employee bring suit under the THRA if the sexual harassment technically did not occur at work and did not occur during work hours?  Reversing the trial court, the Court of Appeals found that the answer is "yes." The court's decision serves as an important warning to employers about potential liability for incidents occurring during after-work events.      

FACTS:

Kelly Phelps worked as a server for a restaurant operated by the State of Tennessee at Paris Landing State Park.  In 2017, the restaurant hosted a Halloween party open to the public in which alcoholic drinks were served in abundance (including Jell-O shots) and park employees were encouraged to wear costumes.  Once the party ended, a park employee invited Plaintiff and several other co-workers to an after-party at his residence on park property.  Phelps claimed that, at this after-party, John Walsh, the assistant park manager who was second in command of the park, was intoxicated and acted inappropriately, including pressing himself up against her, and he continued to do so after she told him to stop.

Walsh and three other female employees complained to the State about Walsh's behavior that night.  The park manager, Joan Williams, did not immediately remove Walsh from his duties, but instead, suggested that the women were to blame and allowed Walsh to continue to be around them.  In fact, Phelps received written discipline for wearing a Halloween costume that was deemed inappropriate.  According to Phelps, after she complained, Walsh would "stare at me, smirk at me and smile at me in an intimidating, harassing, hostile manner."  She also claimed that he would drive by her home.  Phelps alleged that, after she reported this conduct, nothing was done to Walsh but that the State retaliated against her by reducing her work hours and placing her on unfavorable shifts.

Eventually, Walsh was placed on a 10-day suspension without pay in February 2018, he was demoted upon his return, and he resigned in April 2018.  Phelps, nevertheless, brought suit against the state alleging that she was subjected to sexual harassment and retaliation in violation of the THRA.  The trial court dismissed Phelps' lawsuit, finding that the THRA only prohibits sexual harassment "in the workplace," that Walsh's conduct toward Phelps did not occur in the workplace, but instead, on private party at a voluntary "social gathering unconnected to work."

HOLDING:

The Tennessee Court of Appeals reversed the trial court and reinstated Phelps's claims.  The court noted that this appeared to be the first occasion in which a Tennessee state court considered "the circumstances under which an employer might be liable for sexually harassing conduct by a supervisor or co-worker that occurred off-premises and/or after work hours."  Guided by federal court decisions interpreting Title VII, however, the court found that it would be inappropriate to create a "bright-line principle that would disallow a court from considering harassing conduct that occurs away from the physical premises owned or controlled by an employer, or after traditional work hours."  The court noted that harassment outside of the traditional workplace, "can and often does spill over and affect the victim's workplace experiences," and that the following factors should be considered: "(1) the proximity in time and space to the "traditional workplace"; (2) the relationship of the event to the employees' work duties; (3) the extent to which the employer planned, promoted, or sponsored the event; (4) the degree to which employees were pressured or encouraged to attend the event and the number of employees in attendance; (5) the employer's knowledge of any pattern of similar harassment by the offending employee under prior similar circumstances; (6) the extent to which the off-premises harassment impacted the victim's workplace experience after it was reported to the employer, including whether the victim was forced to continue working with the harasser; and (7) any other circumstances pertinent to the inquiry."

Applying these factors to the case at hand, the court concluded that a reasonable jury could conclude that Phelps was entitled to a remedy under the THRA.  The initial Halloween party occurred in the workplace, employees were pressured to attend, most of the attendees were park employees, and alcoholic beverages were encouraged.  The after-party took place immediately thereafter, was located only 1½ blocks away, and was treated as a "continuation" of the initial event.  Further, after Phelps complained about Walsh's behavior, he was allowed to engage in conduct that made her feel uncomfortable in the workplace.  In fact, Williams wrote correspondence acknowledging that Walsh's behavior "have impacted the workplace."  Further, there was evidence that, before the party, the State was on notice of evidence that Walsh had sexually abused other women.  The court also found that a reasonable jury could conclude that the State retaliated against Phelps for complaining, including altering her work schedule.  Phelps v. State of Tenn., No. M202)—00570-COA-R3-CV (Tenn. Ct. App. March 10, 2021).

BOTTOM LINE:

An employer should not put its head in the sand and assume that it no longer has any responsibilities for the behavior of its employees that occurs after hours and away from the worksite.  This case demonstrates that, under certain circumstances, there may be a nexus between the workplace and after-work activities that could create liability.

This case also illustrates the problems that may occur when too much alcohol is served.  An increasing number of employers across the country seem to be foregoing holiday parties for fear that they will get out of hand and bad behavior will ensue.  This case certainly would provide ammunition to an employee who complains about mistreatment during an after-work event.  Employers who choose to sponsor such after-work events should take measures to ensure that their employees are not over-served and that they behave appropriately.

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