Employers Beware: Workplace Gossip about Sex May Risk Liability under Title VII

Sexually explicit rumors, affairs to influence promotion, jealous male coworkers, sexist remarks by a high-ranking manager, and ultimate retaliation and termination—an episode of Mad Men? The plot of a new show on Netflix? No. Real sexual harassment—at least according to Evangeline Parker, who filed a claim alleging discrimination under Title VII against her former employer, Reema Consulting Services, Inc.

And with her allegations, we are reminded that employers must have heightened sensitivity to workplace gossip of sexual relationships, especially in this #MeToo era. Parker’s case was dismissed by the U.S. District Court of Maryland on the basis that the alleged harassing conduct was not gender-based, but the court’s decision was reversed, and her claims reinstated following appeal. Specifically, in Parker v. Reema Consulting Services, Inc., 915 F.3d 297 (4th Cir. 2019), the Fourth Circuit held that an allegedly false rumor that a female employee had slept with her supervisor to get a promotion can implicate Title VII liability “because of sex” where the employer is alleged to have participated in the circulation of the rumor and the employee is subjected to adverse employment action because of it.

This lawsuit is a cautionary tale for employers who need to understand the possible consequences of ignoring workplace gossip and the watercooler “rumor mill.” Regardless of the veracity of Parker’s allegations (which, if found to be true, are unsettling and reminiscent of pervasive sexual harassment of years past), Reema Consulting now faces a disruptive and expensive, but preventable, public lawsuit.

Parker alleged that, upon being promoted, “certain male employees were circulating within” the company “an unfounded, sexually-explicit rumor about her” that “falsely and maliciously portrayed her as having [had] a sexual relationship” with a higher-ranking manager in order to become Assistant Operations Manager. Id. She alleged that the rumor originated with a male coworker who had been hired at the same time and in the same position and who, because of Parker’s promotions, had become her subordinate. She contended that the male coworker was jealous and hostile to her achievement.

Parker further asserted that Reema Consulting’s highest-ranking manager at the facility also participated in fueling the rumor by publicly saying to another manager, “Hey, you sure your wife ain’t divorcing you because you’re f—king [Parker]?” Parker alleged that, as the rumor spread, she endured open disrespect and resentment from her coworkers, including subordinates. Ultimately, according to Parker, she was blamed for the rumor and “bringing the situation to the workplace,” and was told that she would not be eligible for any further promotions. After Parker complained, she stated that she faced retaliation again when managers interfered and mocked her with subordinates. Then she was written up and discharged.

In the action brought against her employer following her termination, Parker alleged harassment (hostile work environment), retaliatory discharge in violation of Title VII, and in the third count, discriminatory discharge contrary to Reema Consulting’s three-warning rule. The district court readily agreed that it would be offensive if others spread rumors that someone only received a promotion because of sexual favors or a sexual relationship. Nonetheless, the court granted Reema Consulting’s motion to dismiss. The court reasoned that the alleged harassing conduct was not because of Parker’s gender but instead because of alleged conduct, characterized by false sexual rumors. Specifically, the court explained that the allegations could be made in a variety of other contexts including employees of the same gender or different genders (female supervisor and male subordinate who received a promotion). The court also stated that the complained-of conduct was not “severe and pervasive” as defined by Harris v. Forklift Sys., Inc., 510 U.S. 17, 21 (1993).

The Fourth Circuit disagreed with Reema Consulting’s argument on appeal that the rumor was not “gender specific” but rather about Parker’s conduct. The court explained that Reema Consulting failed to take into consideration the sexual nature of Parker’s allegations (which must be viewed in her favor, as required by the federal rules in determining a motion to dismiss) as well as reasonable inferences from those allegations. Specifically, the Fourth Circuit held that Parker’s allegations that she was subjected to a false rumor claiming she used her gender to obtain promotion by seduction invoked “a deeply rooted perception—one that unfortunately still persists—that generally women, not men, use sex to achieve success.”

The Fourth Circuit also gave weight to the allegation that the rumors were started by male coworkers and perpetuated and encouraged by Reema Consulting’s own management team. Parker—and not the male supervisor who promoted her—was subject to adverse action because of the rumor. The Fourth Circuit found that Parker’s allegations that she suffered harassment because she was a woman, if true, support a cause of action under Title VII.

This is not the end of the issue, however. Since filing its answer upon remand, Reema Consulting has petitioned for Writ of Certiorari with the U.S. Supreme Court to resolve the circuit split on this issue. Still, the take-aways are clear. All employers must be proactive and should take quick and swift action to counter the poison of workplace rumors or gossip. Training of supervisors is crucial not only to prevent perpetuation and/or encouragement of workplace gossip but, more importantly, to report to Human Resources for prompt investigation. Every employee should hear and see the employer’s no-tolerance policy to deter verbal and physical misconduct. Whether true or not, such action may not keep “Mad Men”-like behavior out of the workplace, but it may help to minimize costly litigation by keeping these complaints out of the court system.