While federal statutes like Title VII of the Civil Rights Act do not explicitly address third-party harassment, the Equal Employment Opportunity Commission and most federal courts apply a negligence-based framework. The focus is on what the employer knew and how it responded. Once an employee reports harassment, an employer’s defense weakens if it fails to act.
Courts have largely settled on a practical standard that if an employer knew or should have known about third-party harassment and failed to take prompt, appropriate action, it can be held liable for allowing a hostile work environment to persist. If the employer takes retaliatory action, it could be liable for retaliation as well.
Who counts as a third party?
In many industries, employees regularly interact with people outside the organization. Any of the following can become sources of harassment:
- Customers or clients
- Vendors or suppliers
- Independent contractors or consultants
- Temp workers or staffing agency personnel
- Building staff, such as security or maintenance crews
Employees in service-heavy sectors, like health care, hospitality, retail or field operations, are at the greatest risk of outside harassment.
What third-party harassment looks like
Third-party harassment is akin to harassment by a supervisor or coworker and must typically be tied to a protected characteristic such as race, sex, age, disability or religion to constitute a legal liability. Common examples include:
- Derogatory jokes, slurs or offensive comments
- Pressure for dates or sexual favors
- Verbal abuse, ridicule or name-calling
- Threats, intimidation or aggressive behavior
- Display of offensive images or materials
- Physical harassment or unwanted contact
In some cases, the harassment is tied to business leverage. For example, a client may imply that it will not sign a contract unless an employee tolerates inappropriate behavior.
Why employer response is critical
The key legal trigger is notice. If harassment is obvious or reported and the employer does nothing or takes weak, ineffective action, it may be viewed as tolerating the conduct.
Courts and regulators expect employers to take “reasonably calculated” steps to stop the harassment. That does not mean every incident creates liability, but inaction often does.
Employers also face risk if they appear to prioritize business relationships over employee safety, such as by excusing misconduct from a high-revenue client.
Steps employers should take
The following steps can reduce liability and protect workers:
- Extend anti-harassment policies to explicitly cover third parties.
- Train managers to recognize and escalate third-party misconduct.
- Provide employees with clear means of reporting harassment.
- Encourage prompt reporting without fear of retaliation.
- Investigate all complaints quickly and document findings.
- Include anti-harassment provisions in vendor and client contracts.
What to do when a complaint is made
When an employee reports third-party harassment, employers should act immediately:
- Acknowledge the complaint and ensure the employee feels safe.
- Conduct a prompt, impartial investigation.
- Limit or end employee contact with the offending individual.
- Reassign accounts or adjust job duties where appropriate.
- Follow up to confirm that the behavior has stopped. Document every step taken.
Depending on severity, appropriate action may range from asking a customer to stop to terminating a business relationship or involving security or law enforcement.
The bottom line
Employers cannot control every outsider’s behavior, but they are expected to control how their organization responds. Ignoring the problem is often what creates liability.
Organizations should consider purchasing employment practices liability insurance, which may cover legal fees, settlement and judgment costs in harassment cases. Give us a call to learn more about this important insurance.