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An Employer Can Be Liable for "Third Party" Sexual Harassment (Committed by Clients, Customers, and Others Who Are Not Company Employees)

October 2014

By: Nancy E. Joerg, Esq.

THIRD PARTY HARASSMENT IS JUST AS SERIOUS!: The Equal Employment Opportunity Commission (EEOC), a federal government agency, filed detailed regulations over 10 years ago that said a company can be liable for the actions of non-employees with respect to the harassment of its own employees. Liability begins if an employer knows (or should have known) of the harassment and ignored it. If you, the employer, have notice of it or should have notice of harassment, you need to take prompt action and correct it.

Most employers know what to do when one of their own employees makes unwelcome sexual advances toward an employee. But third-party sexual harassment may not be treated as seriously or dealt with as swiftly. Yet it's just as wrong.

Employers have a legal obligation to make sure their employees aren't subjected to an environment filled with unlawful harassment, even if it comes from third parties.

Companies shouldn't limit their handbook policies or workplace training to harassment by employees against other employees. Companies should also cover harassment by non-employees in their handbooks and training. Publish the policy and have some supervisory training sessions to review the concepts in detail. And, if you're sending an employee to a client site, train that employee to complain about any harassment. Train your employees to understand there's a sexual harassment policy that covers not only harassment by employees but by non-employees, and give them avenues for reporting harassment.

WHAT SHOULD THE EMPLOYER DO WHEN THIRD-PARTY SEXUAL HARASSMENT ARISES?: If an employee complains that a client is harassing her/him, the company should immediately investigate the situation. If it finds that inappropriate conduct took place, the company must act. For example, the company could place another employee on that client account and inform the client (or top management at the client) that the client's behavior must stop. Of course, the company doesn't have the same control over third parties as it has over its own employees. If the client or other third party won't change his/her behavior, this might leave the company with no alternative but to end the business relationship with the client.

Employers must be careful not to punish the employee who has complained. For example, if a client is sexually harassing an employee, but that client represents the company's biggest account, the employee may not want to be removed from the account because of the financial loss to the employee. Similarly, if the company decided to relocate the employee so the employee wouldn't have to interact with a vendor who was sexually harassing the employee, that relocation may be deemed retaliation against the employee. These types of actions - that punish the employee who complains - amount to illegal retaliation. Bring the complaining employee into the decision-making process when considering your options.

Here are some ideas for employers dealing with third party sexual harassment:

  • Train supervisors to respond appropriately to harassment complaints (by either investigating the alleged harassment themselves or notifying a designated company official).
  • Review harassment policies to ensure that harassment by third parties such as customers and salespeople is prohibited and that specific multiple avenues to complain are made available to employees.
  • Train your employees to recognize and deal appropriately with harassment by nonemployees. Appropriate responses will depend on the nature of the contact your employees have with third parties. For example, sales representatives or cashiers might benefit from training that addresses how to recognize and respond to harassment by customers. Managers and supervisors might need specific training on how to address employee complaints about harassment by clients or customers.
  • Make sure direct supervisors are alert for harassment among their subordinates, even if no one actually makes a complaint.
  • If and when an employee complains about an outsider, try to conduct an investigation that is as thorough and serious as you would with an insider complaint. Seek witnesses, if any. Your investigation may be more difficult with outsiders, since you can't compel them to cooperate; you have much less power over them than over your employees. Gather as much information as possible and draw a reasonable conclusion.
  • Act promptly based on your conclusion, in a way designed to resolve the problem. You'll usually need to consult with the customer, patient, contractor, or whoever the offender was. If you've decided the outsider truly harassed your employee, you'll need to send him/her away-for example, a sales rep replaced with another, a customer barred from your store or restaurant, a contractor replaced with a different one.
  • Tell the complainant what steps you took, and encourage the complainant to report any further misconduct. Then periodically check in with the complainant to see if there's been any recurrence.

For assistance with sexual harassment issues of all types, contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.