Rules Are Set for Some Harassment Cases
The Supreme Court has made an important ruling on the issue of "constructive discharge," which occurs when an employee has not been officially dismissed but has taken the reasonable step of resigning in the face of unendurable working conditions. The Court held that employers are not liable for working conditions that lead to a constructive discharge, as long as they can show that they had adequate procedures in place for reporting harassment but that the employee failed to use those procedures. However if the employer engaged in some "tangible employment action" such as a discharge or demotion, then the employer is strictly liable for sexual harassment.
See "Rules Are Set for Some Harassment Cases", Linda Greenhouse, The New York Times, June 14, 2004