Employer Liability for Third Party Harassment

March 25, 2016

Employers are generally familiar with the fact that the law that protects employees from being harassed. However, workplace harassment is commonly associated with situations in which the employee is being harassed by a fellow co-worker or by a supervisor. Employers may be unaware that they can potentially be held liable if an employee is harassed by an outside party, such as a vendor or client.

Managers are often trained to remind employees that the customer comes first. Although this is an ideal philosophy in the business atmosphere, lines must be drawn and policies must be written to maintain clients and customers only to the extent that they do not infringe on the rights of employees.

Appellate courts in several federal circuits have already held that Title VII of the Civil Rights Act of 1964 extends protection to employees from harassment by a third party. The federal Equal Employment Opportunity Commission (EEOC), which is the agency responsible for enforcing anti-discrimination and harassment laws concerning the workplace, has adopted the third-party harassment doctrine.

While each circuit court varies in its legal test to find an employer liable for third-party action, all tests require that the employer was negligent in stopping the harassment. This means that generally, if an employee is determined to have been harassed by an outside party, the employer may be liable if:

  1. the employee makes an effort to inform the employer of a problem;
  1. the employer knew or should have known that the harassment was taking place; and
  1. the employer failed to take prompt and appropriate corrective action that is reasonably likely to prevent the recurrence of harassment.

In a recent leading case, EEOC v. Cromer Food Services, Inc., Case No. 10-1476 (4th Cir. 2011), an employee, Homer Howard, was hired to deliver food items to a hospital vending machine in accordance with the employer’s contract. Employees of the hospital regularly accused Howard of being homosexual, despite Howard’s insistence that such comments cease.

The behavior escalated to a point at which hospital employees would await Howard’s arrival just to humiliate him with homosexual jokes. Howard reported the behavior to several direct supervisors, expressed his discomfort by the harassment, and requested that his route be changed. The employer refused to change Howard’s route at first, but after several months of continued complaints, Howard was offered a route that was both undesirable and inconvenient.

The Court of Appeals for the Fourth Circuit held that Howard’s employer knew about the continued harassment, and the remedial measures offered were inadequate. The employer made no effort to address the hospital employees or otherwise attempt to correct the problem. The employer was therefore liable for the sexual harassment of Howard.

Any time an employee makes a complaint that he or she is uncomfortable in a way that may violate anti-discrimination law, the employer has a duty to immediately take action to fix the issue. However, due to anti-retaliation laws, it would not be lawful for an employer to take any kind of action that may negatively impact the harassed employee. Moving the employee to a less desirable position or department, as in Homer Howard’s case, would be unlawful retaliation. Sometimes, the most appropriate solution to the employee’s issue can result in the temporary or permanent removal of a customer or vendor.

Although the loss of a customer or client can equate to a loss in revenue, the morale of employees, the expenses of litigation, and the potential award of remedies to an aggrieved victim may easily outweigh that loss.


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