In October 2008, we reported on the case of Chaloult v. Interstate Brands Corporation, in which the United States Court of Appeals for the First Circuit held that an employer could not be vicariously liable for sexual harassment where the plaintiff’s co-worker who witnessed the incidents failed to report them as required under the employer’s policy. In short, the Chaloult court found that the employer could successfully defend against an employee’s claim for sexual harassment under Title VII using the so-called Faragher-Ellerth defense, which may shield a company from liability where (i) its own actions to prevent harassment were reasonable, and (ii) the employee’s actions in seeking to avoid harm were not.

Recently, the First Circuit had the opportunity to revisit the Faragher-Ellerth defense, in Monteagudo v. AEELA.1 This time, however, the court found the defense did not shield the employer from liability. These are the relevant facts of the case. Michelle Monteagudo was subjected to unwelcome touching and propositioning by her supervisor. The director of human resources, who was a good friend of the supervisor, was aware of, and participated in, the harassment. An AEELA policy required employees to report instances of sexual harassment to the human resources department or, if the alleged harasser was within or close to the department, to the company’s Executive Director. Ms. Monteagudo did not report the harassment as required under the policy because the harasser was close to the director of human resources and, she believed, to the Executive Director.

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