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The Employer Handbook Blog
When a False Harassment Accusation Gets Your Employee Fired, Can You Be Sued for Defamation? A Federal Appeals Court Says Maybe.
Here’s a scenario HR nightmares are made of: an employee allegedly invents a sexual harassment accusation to eliminate a rival for a coveted position. The rival gets fired. The employer gets sued for defamation.
TL;DR: The Fourth Circuit vacated the dismissal of a defamation claim against a biopharmaceutical employer after a co-worker allegedly fabricated a sexual harassment accusation to prevent a colleague from landing a coveted internal position. The court held that under Virginia law, the employer adequately stated a claim for vicarious liability at the pleading stage and that the case must proceed. The co-worker was dismissed on jurisdictional grounds.
A Preceptorship, a Conference, and a Plan
According to the complaint, the employee worked remotely for a biopharmaceutical company for over nine years. In 2023, he applied for an internal preceptorship program, a stepping-stone to a full-time position on the company’s Key Accounts Team, and was accepted in October. A co-worker served as a mentor for that program and, according to the employee, wanted different candidates in those slots.
Allegedly, a few weeks after his acceptance, the employee was called into an HR meeting where he learned the co-worker had accused him of making a sexually explicit comment to her at a work conference in Nashville earlier that summer. He denied it. He alleged she fabricated the accusation, told another colleague, and directed that colleague to report it to HR. The company fired him. He sued both the co-worker and the employer for defamation under Virginia law. A federal appeals court ruled the claims against the employer can go forward.
Why Virginia Law Made This Hard to Dismiss
The employer’s defense was straightforward: the employee did not allege how the co-worker’s alleged defamation was within the scope of her employment. Whatever was said, the company shouldn’t be responsible for it.
Virginia law made that argument harder than it looks. The state recognizes a rebuttable presumption of vicarious liability: once a complaint alleges an employee committed a harmful act while employed, the law presumes the employer can be held responsible. The employer can rebut that presumption later with evidence that the employee was acting outside the scope of her job. But at the pleading stage, the presumption operates in the plaintiff’s favor. The co-worker was a mentor in the very program the accused employee had joined, and the court found it plausible that influencing who got into that program was part of her role. That was enough to keep the employer in the lawsuit. How far that reasoning travels depends on the jurisdiction.
A dissenting judge pushed back hard, noting the employee’s own complaint repeatedly said the co-worker acted purely for personal reasons, not to benefit the company. That argument may still prevail on remand.
Employer Considerations When the Accuracy of a Harassment Report Is in Question
The facts here are still disputed. These practices apply regardless of how that dispute resolves.
Terminating a complainant for a false accusation is a landmine without proof they knew it was false
An employer can discipline or terminate an employee who files a fabricated harassment complaint, but the analysis is more complicated when the complaint involves conduct covered by Title VII or another anti-discrimination statute. Filing a harassment complaint is protected activity, which means terminating the complainant, even for lying, can look like retaliation. The complainant loses that protection only if they lacked a good faith belief that the conduct occurred, and proving that can require more than a credibility finding.
A harassment reporting system that employees bypass is a system that works against you
The co-worker didn’t go directly to HR. She allegedly routed the accusation through a colleague. When employees work around your reporting process, the employer often loses control of the investigation, the documentation, and the narrative. A reporting system only protects you if employees actually use it.
Documented job boundaries are your best argument against scope-of-employment liability
When a court asks whether an employee’s conduct fell within the scope of her job, contemporaneous job descriptions carry more weight than anything assembled after litigation begins. An employer who can point to a written role definition showing the conduct fell outside what the employee was hired to do is in a meaningfully better position than one who relies on job titles alone.
Unfortunately, the employment relationship may put employers in the middle of disputes they didn’t start and sometimes couldn’t have prevented. A false harassment accusation is one of the harder versions of that problem.