HATCHETT, Circuit Judge:
In this Title VII sexual harassment case, we affirm the district court’s ruling that the corporate employer is not liable for the unlawful actions of its supervisor. Nevertheless, we remand the case to the district court on attorneys’ fees issues.
I. FACTS
Offshore Shipbuilding, Inc. (OSI) builds and repairs offshore commercial vessels in Palatka, Florida. McCallister Brothers, Inc. (McCallister), a New York corporation, owns OSI. When building a vessel, OSI employs up to 350 people. Until 1984, these employees enjoyed a great deal of freedom. They entered and left the facility at their discretion and worked overtime without prior approval. In 1982, OSI hired Mary H. Steele, as an executive secretary. In January, 1984, OSI hired Barbara J. McCullough, as an emergency medical technician and safety person.
In August, 1984, OSI hired Anthony Bucknole, as its vice president and general manager. When it hired Bucknole, OSI employed 50 people. OSI instructed Buck-nole to reduce overhead costs and to improve its financial condition. Consequently, Bucknole managed strictly, combined job duties, and made employees account for their time. He required Steele to remain at her desk during business hours, and he assigned McCullough to the tool room and gave her responsibility for company insurance matters.
Despite his strict management style, Bucknole often engaged in sexually-oriented joking with employees. For example, Bucknole requested sexual favors from Steele and McCullough. He commented on their attire in a suggestive manner and asked them to visit him on the couch in his office. The district court found, however, that Bucknole never intended to carry out his suggestions.
Occasionally, Steele and McCullough also engaged in sexually-oriented joking with Bucknole. For example, in December, 1984, Steele and several other employees gave Bucknole a sexually-explicit gift. Nevertheless, Steele and McCullough kept detailed notes of Bucknole’s offensive comments.
In March, 1985, Steele and McCullough reported Bucknole to his superiors in New York for sexual harassment. McCallister’s Equal Employment Opportunity Officer, James Forbes, interviewed Steele and McCullough in Palatka and advised them that McCallister would take remedial measures against Bucknole. At that time, Bucknole was in Saudi Arabia. Forbes returned to New York and consulted with other McCallister officials. The McCallis-ter officials summoned Bucknole to New York from Saudi Arabia and verbally reprimanded him. The officials told Bucknole that his offensive conduct must stop immediately.
On March 27, 1985, Forbes and Bucknole returned to Palatka and met with Steele and McCullough. Forbes told Steele and McCullough that Bucknole would stop making offensive comments. He also assured Steele that her position at OSI was safe as long as she performed her duties properly. Bucknole did not harass Steele and McCullough after this meeting. On April 8,1985, however, Steele and McCullough quit, leav