Hostile Work Environment: Court Upholds $300K Damages Award

Workplace misconduct isn’t just a legal risk – it’s a financial one. A recent court case alleging a hostile work environment against a major airline highlights how poor handling of harassment complaints can lead to costly lawsuits, regulatory scrutiny and reputational damage.

Legal fees, compliance failures and mandated corrective actions can add up quickly, making it essential for finance professionals to recognize the financial impact of weak compliance and risk management.

Here’s what happened- and how you can avoid a similar mistake at your company.

Do Crude Remarks Prove Hostile Work Environment?

Sarah Budd worked for SkyWest Airlines at Dallas-Fort Worth International Airport. She was a female parts clerk in a mostly male department. 

According to the EEOC, several co-workers and at least one male manager made crude sexual comments to Budd that amounted to a hostile work environment.

How bad were these allegedly crude comments? According to Budd:

• A co-worker asked if she “liked whips and chains” on her first day.
• Co-workers suggested she could make money through prostitution.
• They asked her to perform sex acts.
• They made jokes and remarks about rape and rape victims, including saying that women who reported rape did so to get attention.

“They didn’t seem to care if I was uncomfortable,” Budd later told the jury. “In fact, it only spurred them on more. … It’s like they enjoyed my discomfort.”

Questions About Company’s Response

Budd said she reported the sexual harassment to her supervisor, but no response was taken to address the hostile work environment she endured.

She escalated the complaint to the employee relations department. But the employee relations manager didn’t interview several employees identified as witnesses to and participants in the harassment, Budd claimed. 

Nor did the manager “ask obvious follow-up questions.” In Budd’s view, the manager’s failure to ask the right follow-up questions meant the investigation didn’t uncover the full extent of the harassment and the hostile work environment she worked in.

The lawsuit alleged SkyWest promised to discipline participating co-workers and provide department-wide training, but it canceled the training after Budd left the company, deciding it was no longer necessary. 

SkyWest eventually conducted training three years later, and only in response to litigation, the EEOC asserted.

EEOC Sues Over Hostile Work Environment

In the EEOC’s view, the alleged conduct violated Title VII, which prohibits sex-based discrimination and harassment and also prohibits retaliation for reporting a hostile work environment. 

The agency filed a lawsuit on Budd’s behalf, and the case reached a jury.

The jury returned a unanimous verdict in Budd’s favor, finding SkyWest subjected Budd to a hostile work environment based on her sex and that the company knew or should have known of the harassment but failed to take prompt remedial action.

All told, the jury awarded $2.17 million to Budd – $2 million in punitive damages and $170,000 for emotional harm, the largest jury trial award ever obtained by the EEOC in the Northern District of Texas.

The award was reduced to $300,000 based on Title VII’s caps on damages.

“Ms. Budd had over a decade of experience at SkyWest and before the sexual harassment occurred and had intended to retire there,” said Alexa Lang, an EEOC trial attorney in Dallas. “All Ms. Budd wanted was to be heard and to stop this from happening to other women. The jury heard her. We hope the verdict sends a message to SkyWest and other employers that they must take responsibility for making sure their workplaces are free from sexually hostile conduct. Everyone deserves to feel safe at work.”

Employer Seeks New Trial

SkyWest filed a motion for judgment as a matter of law on the punitive damages and for a new trial.

The court found enough evidence for a reasonable jury to conclude that a male manager acted with malice or reckless indifference to Budd’s right to a workplace free from harassment and subjected her to a hostile work environment.

Moreover, SkyWest didn’t dispute that his inappropriate comments and gestures violated that right and subjected Budd to a hostile work environment, the court noted. It also determined that a jury could reasonably infer that the manager –  and, vicariously, SkyWest – knew such discrimination was illegal.

Further, the court found enough evidence for a jury to conclude that SkyWest did not make a good-faith effort to comply with Title VII. Specifically, the EEOC and Budd showed that the employee relations manager failed to interview key employees, conducted only limited questioning, skipped writing an investigative summary and gave minimal or no corrective action to those who violated SkyWest’s sexual harassment policy.

A jury could reasonably infer that SkyWest’s investigation was too weak to be considered a genuine attempt at compliance, the court held.

Court-Imposed Compliance Measures for SkyWest

As such, it denied SkyWest’s motions to set aside the jury’s verdict and its request for a new trial. The court ordered SkyWest to:

• Refrain from subjecting parts or maintenance department employees at the Dallas-Fort Worth International Airport (DFW) to a hostile work environment based on sex in the future. 
• Create and distribute a protocol for investigating complaints of harassment.
• Conduct annual training for employees at DFW and those who are responsible for employee relations at DFW.
• Post a notice in the DFW parts and maintenance department explaining the protections of Title VII.
• Notify the EEOC of any complaint of sexual harassment in that department at DFW.

“The robust injunctive relief gained through this EEOC suit protects current and future employees from experiencing the hostile work environment Ms. Budd endured,” Alexa Lang, a trial attorney in the EEOC’s Dallas District Office, said in a press release. “The EEOC will continue its fight for sexual harassment victims.” 

Next Step: Provide Training for Managers

One of the biggest financial risks companies face comes from manager mistakes, including the common problem of managers failing to take employee complaints seriously.

Ignoring or mishandling harassment reports can lead to costly lawsuits, government oversight and reputational damage. To mitigate these risks, companies must train managers on proper procedures for handling employee complaints of harassment and discrimination.

Specifically, managers should be trained to report the complaint to the point person tasked with dealing with complaints of harassment or discrimination. 

Once the situation has been referred to the appropriate person, HR can take the lead to ensure the complaint is properly handled, which includes:

• Determining whether immediate action, such as a leave of absence, is appropriate
• Conducting an investigation and interviewing the parties
• Making a determination, and if the complaint has merit, deciding on a course of action to prevent future harassment or discrimination, and
• Discussing the results of the investigation with the complainant and the accused.

A strong compliance process isn’t just about avoiding legal trouble – it’s about protecting the company’s financial health and long-term stability.

EEOC v. Skywest Airlines, Inc., No. 3:22-CV-1807-D, 2025 U.S. Dist. LEXIS 38265 (N.D. Tex. 3/4/25).