Hunton Employment & Labor Perspectives

If an employee told you that a regular customer had a habit of making inappropriate sexual comments to her, would you think that your company could be liable to your employee for the customer’s conduct?  The answer is “yes,” your company could be liable.  A recent lawsuit filed by the U.S. Equal Employment Opportunity Commission (“EEOC”) serves as a reminder that employers may be liable for the harassing conduct of not only their employees, but also, non-employees such as customers, delivery people, copier repair personnel, and independent contractors.

On September 27, 2010, the EEOC filed a sexual harassment lawsuit against Beacon Hill Investments Corp., which does business as Synergy Home Care, on behalf of a group of female employees assigned to care for one of the employer’s home bound male clients.  The female employees’ duties included sleeping at the client’s home overnight.  The client allegedly fondled the female employees, made suggestive comments to them, and accosted them in their sleep.  The employees allegedly complained to several managers and requested to be transferred.  The employer is accused of ignoring their complaints and failing to take any remedial action.  The female workers then quit, allegedly because of the employer’s inaction.

The EEOC claims that, by failing to take prompt remedial action in response to the female employees’ complaints, Synergy Home Care subjected them to a sexually hostile work environment and constructively discharged them.  The EEOC seeks permanent injunctions against Synergy Home Care to prevent future discrimination, harassment, and retaliation, and an order that Synergy Home Care institute policies and programs to provide equal employment opportunities for women which eradicate the effect of the alleged discrimination.  The EEOC also seeks damages for the female employees, including: backpay; frontpay; out-of-pocket losses, such as job search expenses; pain and suffering; loss of enjoyment of life; and punitive damages.

Many employers and managers may not realize that, as the above-mentioned lawsuit urges, an employer may be “responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace.” 29 C.F.R. § 1604.11(e).  For an employer to be liable for non-employee harassment, the employee must show that: (i) he or she was subjected to unlawful harassment on the basis of his or her sex; (ii) the harassment was unwelcome; (iii) the harassment was severe or pervasive enough to affect a term, condition, or privilege of his or her employment, and (iv) the employer knew or reasonably should have known about the harassment by the third-party and failed to take prompt remedial action.

The inquiry in most non-employee harassment cases focuses on the employer’s knowledge of and response to the alleged harassment.  An employer may avoid liability by showing that, upon learning of the harassment by a third party, it took prompt, appropriate action to prevent and correct the harassment.  Whether the response was “appropriate” depends on the amount of authority and control the employer had over the non-employee.  29 C.F.R. § 1604.11(e).

What can employers do to avoid the type of lawsuit described above?

• Create a no-harassment policy and avenues for employee complaints, such as an “open door” policy or an employee hotline.
• Educate employees about how they can report harassment and that the no-harassment policy can apply equally to inappropriate conduct by third parties.
• When a report of harassment is received, respond promptly, even if the alleged harasser is not an employee.