Last week, the Texas Supreme Court reversed a $1 million award to a former San Antonio Water System (SAWS) employee, who claimed that she was terminated because she confronted a male vice president about his repeated lunch invitations to two female employees outside his department. The Supreme Court in San Antonio Water System v. Nicholas, held that “no reasonable person could have believed” that the lunch invitations constituted sexual harassment in this case.

Under the Texas Commission on Human Rights Act (TCHRA), an employer may not retaliate against an employee who opposes a discriminatory action (such as sexual harassment), makes or files a charge, files a complaint, or testifies, assists, or participates in an investigation, proceeding, or hearing. Tex. Lab. Code §§ 21.051, 055(1). However, the employee’s actions must be based on a good-faith reasonable belief that discrimination is taking place, even if a later investigation shows that no such discrimination actually occurred.

The question in this case was whether Nicholas’s belief that sexual harassment had occurred was a reasonable good-faith belief? If so, then firing her for complaining about the VP’s conduct would have been retaliation and would have violated the TCHRA. However, if her belief that the lunch invitations constituted sexual harassment was not reasonable, then she was not entitled to damages under the statute.

The Supreme Court concluded that Nicholas’s belief that the lunch invitations equaled sexual harassment was not reasonable:

“Flores’s lunch invitations may have been unwelcome, but no reasonable person could believe they constituted sexual harassment actionable under the law. We do not mean to say that lunch invitations can never be a component of a viable sexual-harassment claim, but under the facts of this case the lunch invitations were not so severe or pervasive as to alter the conditions of employment or create an abusive work environment.”

The Court then compared the facts of this case to other instances where offensive but isolated conduct by employees was found to be insufficient to form the basis of good-faith reasonable belief that the law had been violated, and noted that this case “paled in comparison” to the following claims of sexual harassment that the Court had previously rejected:

a single incident of male employee reading aloud sexual innuendo contained in a psychological evaluation, at which he and another male employee chuckled, could not reasonably been seen as violating the law;

a single instance of male employee entering women’s restroom and “gawking” at undressed women could not create objectively reasonable belief that claimants suffered illegal sexual harassment;

a female employee could not reasonably believe she had been sexually harassed when male supervisor commented on her underwear being visible under her uniform;

The Court concluded that because Nicholas could not have reasonably believed that Flores’s lunch invitations constituted an unlawful employment practice, her retaliation claim against SWAS failed.

TAKEAWAY FOR EMPLOYERS: Sexual harassment claims, even those that are baseless, can cause significant business disruption, lower morale, and cost a lot in attorney’s fees. Having the following at your workplace can significantly reduce such claims: (1) sexual harassment training; (2) having a process that allows employees to report their complaints; (3) documenting the complaints and subsequent investigation properly; and (4) reacting to those complaints that have merit.

The above case went all the way to the Texas Supreme Court because the three key persons involved in the investigation – the CEO, the general counsel, and Nicholas – had different memories about what the female employees told them about the lunch invitations. It is possible, that Nicholas’s claim could have been shut down much earlier if the investigation notes contained a uniform and consistent account of what occurred.

TAKEAWAY FOR EMPLOYEES: To make out a statutory sexual-harassment claim, an employee must prove more than that she found the harassment offensive. Sexual harassment is actionable only if it is so severe or pervasive as to alter the conditions of the victim’s employment and create an abusive working environment. Offhand comments and isolated incidents, unless extremely serious, typically will not amount to discriminatory changes in the “terms, conditions, or privileges of employment.”

Leiza Dolghih frequently advises employers on how to handle troublesome employees, assists with responding to EEOC charges and investigations, and litigates employment disputes. For more information, Ms. Dolghih for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.