We Did Not Mean To: A Potentially New Standard of Liability for Third-Party Sexual Harassment

Sexual harassment claims continue to be in the headlines. We hear of claims being asserted in all three branches of the federal government. Claims arise in the sports coaching ranks, some claims come from Hollywood, and some probably come from your hometown.

One of the recent developments that has arisen is the legal standard that applies to a certain type of these claims, specifically so-called third-party claims. What is a third-party claim? Think of harassment by someone who is not a coworker of the victim. Maybe when a hospital is sued for a patient groping a nurse. Maybe when a golf course is sued for a golfer making inappropriate comments to the refreshment cart attendant. Or, maybe, as in the recent case discussed below, when a motel supply company is sued because a motel customer locks one of the supply company’s sales reps in a room and propositions her.

The Employer Standard

Before reviewing the applicable employer and third-party standards for sexual harassment, it is helpful to remember that sexual harassment historically has fallen into two categories. The first is called quid pro quo harassment. This is a situation in which the victim is invited — or forced — into a sexual situation in return for some sort of work-related benefit: “If you will meet me for a drink, you are going to get that new job.” These claims obviously are brought against those with the power to fulfill the promises or threats, such as supervisors and managers. The other type of sexual harassment is called hostile work environment harassment. Examples would be exposure to sexual jokes, dirty text messages, indecent exposure, or groping. Another example might be that men are pulling down women’s pants on a jobsite and pouring water on their backsides (yes, that is a true example). These types of claims typically are brought due to co-employee behavior rather than supervisor behavior. Also, as discussed below, these claims can be brought because of third-party behavior such as by patients, customers, or the general public.

So, what is the historical employer standard for employee harassment? There actually are two standards because it depends on which category the harassment falls into. If the harassment is of the quid pro quo variety, the standard is fairly simple — there is going to be an almost automatic “respondeat superior” type of liability on the employer. This is because the guilty manager would have been acting on behalf of the employer when certain employment decisions were made, such as the denial of a promotion or the implementation of a discharge. If the harassment is of the other variety, the hostile work environment type, the standard is not automatic at all. In these cases, if the employer can show that it has an established non-harassment policy with a clear procedure for reporting harassment, and the victim does not report the harassment, the employer will not be responsible for the hostile work environment. The main exception that comes up in the defense of these cases is those instances when a supervisor has observed firsthand the sexual harassment, and the company therefore is deemed to have known about it, even though the victim did not actually report it through the proper procedures. Again, there is almost automatic liability for quid pro quo harassment, but liability for hostile environment harassment arises only when the harassment is reported and not corrected.

The Long-Standing Third-Party Standard

The long-standing standard for third-party harassment — that is, harassment by someone who is not a coworker — is similar to the employer hostile work environment standard discussed above. As an initial matter, the automatic standard for quid pro quo harassment logically does not apply because a third party cannot provide or restrict employee benefits like a promotion or a raise. So, what is the standard? The EEOC’s historical guidance for third-party harassment is as follows in the Code of Federal Regulations:

An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing these cases the Commission will consider the extent of the employer’s control and any other legal responsibility which the employer may have with respect to the conduct of such non-employees.

This is the so-called negligence standard for third-party harassment. Not only is it the EEOC’s standard, but it also is the standard in almost every federal court in the country. For example, the Eleventh Circuit Court of Appeals, which has jurisdiction over Alabama, Florida, and Georgia, states the standard as this: “An employer may be found liable for harassing conduct of its customers if the employer fails to take immediate and appropriate corrective action in response to a hostile work environment of which the employer knew or reasonable should have known.” This negligence standard has been discussed at employment law seminars for decades.

The New Sixth Circuit Third-Party Standard

In the recent case of Bivens v. Zep, Inc., the plaintiff, a former employee of Zep, alleged that a customer, a manager of a motel, locked her in a room and propositioned her while she was on a sales call. After the harassment was reported, Zep re-assigned the sales rep to a different sales team, but she was soon terminated in a reduction in force. She then filed suit in federal court in Michigan alleging that Zep did not meet its legal obligations to have prevented the harassment by the customer. The trial court granted a summary dismissal of plaintiff’s claim. She appealed.

The Sixth Circuit Court of Appeals affirmed the dismissal of the lawsuit. A key element of the Sixth Circuit’s ruling was that the negligence standard was not going to apply in that circuit, the circuit that covers Kentucky, Michigan, Ohio, and Tennessee. Rather the standard of liability for third-party sexual harassment in the Sixth Circuit would be an intentional standard. The Bivens court articulated the standard as this:

[F]or Bivens to hold her employer liable for hostile-work-environment harassment by a customer (or any other non-agent), she must show that Zep “intend[ed]” for the relevant unlawful “consequence” — here, her harassment — to occur. She can do so by providing evidence that Zep either “desire[d] to cause” her harassment or was “substantially certain” that it would “result from” its actions.

As easily can be seen from this quote, this intentional standard is a dramatically higher bar for a plaintiff than the negligent standard in place elsewhere in the country.

Of note, a trial court in Pennsylvania recently applied the Sixth Circuit’s standard in a case there, and, as a result, dismissed that case brought by a teacher due to alleged sexual harassment by a student. That decision is on appeal now.

The Supreme Court’s Recent Action

Somewhat surprisingly, the United States Supreme Court on April 20 denied the petition for appeal of the Sixth Circuit’s opinion. Many times, the Supreme Court will accept appeals when there is a “split in the circuits,” in other words conflicting law in different locations, on a particular issue. The Supreme Court did not do so here. This means that the Sixth Circuit’s decision will stand, will not be reversed, and the standard for third-party harassment in Kentucky, Michigan, Ohio, and Tennessee will be different than the standard elsewhere in the country.

Conclusion

Developments continue in the sexual harassment law arena. Sexual harassment claims no longer can be subject to mandatory arbitration. Sexual harassment can include misgendering and misuse of preferred pronouns (although transgender protections are being scaled back somewhat under the current administration). And now the standard of employer liability for third-party harassment seems to be evolving.

In terms of best practices, private and public employers still need to be vigilant as ever. With many messaging platforms and apps, social media, and remote work away from the controlled workplace environment, sexual harassment can arise in an instant. Irrespective of this recent development, the negligence standard still is going to apply in most instances. The negligence standard definitely still will apply for state-law tort claims like negligent hiring, training, or retention. Employers need to do all that reasonably can be done to prevent harassment, to investigate it when it is reported, and to stop it when it becomes known.