Traditionally, employers have not always been held liable for the discriminatory behavior of employee supervisors. The chains of command at larger companies have leant themselves to some measure of protection. In certain cases, supervisors may actually have had discriminatory intent in recommending the termination of an employee, but it may have been a manager or director who ultimately fired the worker based on the evaluation completed by the supervisor.
The manager or director could then say truthfully that he or she had no discriminatory intent in dismissing the employee. Rather, he or she was simply following the advice of the supervisor. However, employers are increasingly being held liable in many situations for a supervisor's racial, religious or gender discrimination as well as a host of other illegal employment behavior through a relatively new theory referred to as Cat's Paw Liability.
This theory holds that employers may be held liable for the behavior of employee supervisors in exactly the kinds of situations mentioned above.
When managers, directors or other decision makers do not discriminate against employees but fire or otherwise retaliate against them due to the discriminatory behavior of direct supervisors, employers may generally be held liable for the discrimination that occurred under this chain of command, according to this theory.
The strange name of this theory derives from an old fable involving a cat, a fire, a monkey and some chestnuts. But the odd name is not what is important about this theory. What employees should understand is that even if judges in a given jurisdiction have not ruled in favor of employees in discrimination cases involving direct supervisory discrimination and dismissal by higher-ups, they may be inclined to do so now under Cat's Paw Liability theory.
Source: Jurist, "The Role of Supervisors in Employment Discrimination," Ian Hayes, Nov. 12, 2012