concurring:
I agree with most of Judge Martin’s thorough analysis in this case. In my *639view, the question of Avco’s knowledge of Sanders’ propensity to harass female employees under his supervision is a very close call and particularly difficult under the circumstances. I remain doubtful that under traditional agency principles Avco should be held bound, since an employer is not automatically liable for untoward acts of a supervisor contrary to its announced and expressed policy against sex discrimination. See Meritor Sav. Bank, FSB v. Vinson, — U.S. —, 106 S.Ct. 2399, 2407-08, 91 L.Ed.2d 49 (1986). The EEOC regulations dealing with agency or respon-deat superior liability in this area are merely guidelines and are not deemed controlling. Avco’s established procedure about reporting sexual harassment was not vague; it was apparent that if an immediate superior were alleged to have violated the Avco policy, the aggrieved employee was to report the conduct to the next highest supervisor in the line of authority.
With the benefit of hindsight, perhaps Avco should not have unduly emphasized the privacy considerations of the complaining employee or employees, and the alleged supervisor perpetrator. At the same time, the sensitive nature and potentially serious adverse affects of such a sexual harassment charge, particularly if unfounded, is a peculiarly difficult problem for the concerned employer. On balance, I concur, but with some considerable reservations, and agree that the district court’s finding that Avco “knew, or upon reasonably diligent inquiry, should have known” of Sanders’ activity and propensity was not clearly erroneous. I have no “firm conviction” that a mistake has been made in this respect.
I agree that damages in this case are restricted to those of Mathis for the limited period based upon proof that her sick leave was caused by Sanders’ misconduct, and that none are due for claimed retaliation or claimed constructive discharge. I would find no basis for requiring administrative leave for either Mathis or Street so long as transfer was available to them during investigation of their charges.