New England Biz Law Update
In a recent decision, the 6th U.S. Circuit Court of Appeals broke from the Equal Employment Opportunity Commission (EEOC) and most other federal circuits on the question of when an employer can be held responsible for harassment committed by a client or customer.
A sales representative for a cleaning products manufacturer alleged she was sexually harassed while visiting a client’s motel.
The motel manager locked her in an office and asked if they could date. She refused, left the office and reported the incident to her supervisor. The company reassigned the client to another sales team so she would not have to return.
Around the same time, the employer implemented a reduction in force, citing revenue declines. The sales representative’s position was eliminated, along with more than 20 others. She sued, alleging sexual harassment, retaliation and race discrimination under Title VII and Michigan law.
The Sixth Circuit affirmed the dismissal of all claims. On the hostile work environment issue, the court focused on whether the employer could be liable for harassment by a non-employee.
“Sexual harassment under Title VII presupposes intentional conduct,” the court wrote. For a plaintiff to hold their employer liable for hostile-work-environment harassment by a customer (or any other non-agent), the plaintiff must show that the employer intended the unlawful activity to occur, the court held.
This standard departs from the EEOC’s guidance and the approach of most other circuits, which apply a negligence theory – holding employers responsible if they knew or should have known about customer harassment and failed to act.
The Sixth Circuit rejected that approach, citing the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which emphasized that courts should interpret statutes directly rather than deferring to agency guidance.
The court acknowledged that it was standing “nearly alone” in requiring proof of intent but defended its approach as truer to Title VII’s design. As the opinion explained, “Having interpreted Title VII ourselves, we conclude, unlike the EEOC, that it imposes liability for non-employee harassment only where the employer intends for the harassment to occur.”
Retaliation and discrimination claims
The sales representative here claimed that she was fired in retaliation for reporting harassment, but the court found no evidence that the decisionmakers in the reduction-in-force even knew about her complaint.
“[She] failed to produce any direct or circumstantial evidence from which a reasonable jury could infer that [company leadership] knew or was aware of her protected activity,” the court concluded.
Her race discrimination claim likewise fell short. Most of the employees terminated in the reduction were white, and the company provided consistent, non-discriminatory business reasons for the layoffs.
Tougher standard
This decision sets a tougher standard for plaintiffs in the Sixth Circuit who face harassment from customers, vendors or other third parties. Unless they can show that the employer intended for the harassment to occur or was substantially certain it would happen the company cannot be held liable.
Most other federal appeals courts (and the EEOC) continue to recognize negligence-based liability for client harassment. Employers operating in multiple jurisdictions must take reasonable steps to prevent and respond to harassment by non-employees.
