Why Employers Shouldn’t Dismiss Workplace Rumors and Gossip—Courts Aren’t

By Veronica Yu Welsh - Shawe Rosenthal LLP

June 3, 2021

A workplace rumor, especially a salacious one involving a high echelon employee, can take on a life of its own and reverberate throughout the workplace in unforeseen ways that can result in potential liability to an employer and result in expensive litigation. The Parker v. Reema Consulting Services, Inc. case provides guidance for employers on the issue of workplace rumors and gossip.

The Facts. After a female employee received several promotions in a short period of time, a rumor started that the employee was having sex with a high-ranking male manager, which insinuated that was the sole reason the employee was promoted.  The rumor quickly gained traction when the employee’s direct supervisor perpetuated the rumor and confronted the high-ranking manager with it.  Like a game of telephone, the rumor circulated among the other employees, including the employee who was at the center of the rumor.  Thereafter, the employee was publicly excluded from a staff meeting where the rumor was discussed.  In response, the employee filed a formal complaint with human resources.  Human resources then sent an email to several supervisors, and the employee, advising them to cease all discussions about the rumor.  Human resources held a subsequent meeting with the employee, the employee’s supervisor, and the high-ranking manager.  Despite these efforts, the employee’s supervisor excluded the employee from meetings and stopped replying to her emails.  Ultimately, the employee’s supervisor issued two warnings to employee, and she was subsequently terminated.

The Standard. In general, employees alleging sexual harassment based on a hostile work environment have an exacting standard to overcome.  The law is clear that Title VII is not a general civility code and claims coming within the scope of Title VII must allege conduct that constitutes discrimination “because of sex” and conduct that is sufficiently “severe or pervasive” to alter the conditions of employment and create an abusive working environment.  This standard creates a high bar for employees asserting sexual harassment claims and as such, the sufficiency of these claims is routinely raised by the defense.

The Rumor Constitutes Sex-Based Harassment. The employer argued that the rumor was not based on sex because the rumor did not explicitly say that the employee slept with the manager to obtain a promotion.  The Maryland federal court rejected this argument.  The court held that a “jury could conclude that the spreading of the rumor implicitly questioned whether [the employee] had used sex to attain career advancement[.]”  The court continued that this conclusion is “derived from a sex-based double standard under which women believed to have engaged in an office affair are treated differently than similarly situated men.”  The court pointed out that while the female employee was excluded from the staff meeting, the male manager was permitted to attend the meeting and kept his job.

The Rumor and Subsequent Events Were Severe and Pervasive. The court emphasized that the rumor, which suggested that the employee had obtained her position only through sex, “goes right to the core of somebody’s merit as a human being.”  The court also described that the subsequent events related to the consequences of the rumor resulted in the employee’s humiliation and reinforced the severity of the conduct.  The court also held that even though the employer’s human resources department took some action, there was a genuine dispute of fact as to whether the employer took reasonable care to correct the harassment promptly after the employee made an internal complaint.

Practical Takeaways for Employers. Employers can learn from the Parker case, which highlights employer missteps that could have been avoided by following these steps:

1.  Be Proactive: Update internal employment policies to prohibit workplace rumors and gossip, especially when it relates to a protected class, as well as conduct trainings for both supervisors and other employees regarding the harms of workplace rumors and gossip.
2.  Don’t Underestimate the Power of a Rumor: Promptly and thoroughly investigate internal employee complaints related to workplace rumors and gossip to prevent the domino effect of subsequent events that may exacerbate any harm to the employee.
3.  Consult with a Professional: All businesses and their employees are unique, which leads to an infinite combination of facts and circumstances.  If you are unsure on how to update your policies or conduct an internal investigation into an employee complaint, contact your trusted professional for advice and counsel.