September 2007Volume 3, Number 2
Table of Contents


by Allison Fetter-Harrott

Most people are familiar with Title VII of the Civil Rights Act of 1964 and its prohibition on sexual harassment that creates a hostile work environment. Several courts have also found that federal law prohibits workplace harassment based on race, religion, disability, and age. Although many of you are aware that you can be held liable for a supervisor's or even a coworker's harassment of an employee, you may not realize that under certain circumstances, you also can be held liable for a third party's harassment of an employee. That potential liability can create a trap for the unwary. Some recent federal court decisions provide helpful guidance on when employers may be liable for the harassing actions of third parties like independent contractors or customers.

General background

Under Title VII, you can be held responsible for a discriminatory "tangible employment action" like hiring, firing, or refusal to promote. You also may be held liable for any other discriminatory term or condition of employment that you failed to take reasonable care to prevent or redress. When a supervisor engages in inappropriate conduct, you can defend yourself by showing that you took reasonable care to stop it. Otherwise, the employee must show that you knew about the inappropriate conduct but failed to reasonably address it. Using those principles of employer liability, some federal courts have recently considered whether an employer can be held liable for the acts of nonemployees like independent contractors or other third parties.

Recent decisions

In one recent case, Lisa Dunn, who worked as a nurse at a hospital, claimed that the head of obstetric and emergency services subjected her to sex discrimination. The doctor wasn't a hospital employee but did have staff privileges that allowed him to provide direct medical services at the hospital. The district court dismissed Dunn's discrimination claim under Title VII, finding that the hospital couldn't be held liable for the physician's actions because he was an independent contractor rather than an employee. Dunn appealed that decision.

The Seventh Circuit reversed the district court's decision in favor of the hospital. The court explained that when it comes to liability for discrimination under Title VII, "it makes no difference . . . whether the person whose acts are complained of is an employee, an independent contractor, or for that matter a customer."

The court went so far as to hypothesize that an employer could be held liable for discriminatory conduct by a nonhuman source. For example, if a macaw kept in a patient's room attacks women but not men and the hospital does nothing to remedy the situation, it could be held liable for the unequal conditions caused by the macaw. According to the court, the hospital could be liable for the unequal treatment even though its source isn't an employee -- or even human.

Because an employer is responsible for providing employees with nondiscriminatory working conditions, it doesn't matter where the inequality comes from, said the court. What matters is how the employer handles the problem. In determining whether the employer is liable under Title VII, a court must examine whether it created or tolerated discriminatory working conditions for its employees.

Because Dunn alleged that the hospital knew the independent-contractor physician had "made life miserable" for female employees but failed to address the discriminatory working conditions, she had made a claim that could render it liable under Title VII. Dunn v. Wash. County Hosp., 429 F.3d 689 (7th Cir., 2005).

More recently, in a November 2006 decision, the Seventh Circuit affirmed a jury verdict in favor of an employee who filed a harassment claim against a prison where she had been sexually assaulted by a male inmate. Because the employee had complained about unsettling behavior by the inmate in the past and the employer failed to take any steps to remedy his behavior, there was a basis for holding it liable for his actions, said the court. Although the inmate wasn't a prison employee, the prison's knowledge of his behavior and failure to correct it warranted the jury finding in the employee's favor. Erickson v. Wisconsin Dep't of Corr., ___ F.3d ___, 2006 WL 3290202 (7th Cir., 2006).

A federal district court in Indiana also recently recognized in an unpublished opinion that an employer may be held liable for the discriminatory acts of nonemployees in a race discrimination case under Title VII and 42 U.S.C.) 1981. In determining whether the employer is liable, explained the court, a court will commonly look at its actions and consider whether it took steps that were reasonably calculated to end any discrimination. Fulmore v. Home Depot, U.S.A., Inc., 2006 WL 839459 (S.D. Ind., Mar. 30, 2006); Fulmore v. Home Depot, U.S.A., Inc., 2006 WL 839464 (S.D. Ind., Mar. 30, 2006).

Bottom line

As those court decisions demonstrate, you could be held liable if a customer, a client, an independent contractor, or another nonemployee subjects one of your employees to unlawful harassment in your workplace. The courts have made it clear that the source of the discriminatory treatment doesn't matter. What does matter is what you do to prevent or address the discriminatory treatment. Here are some important steps you can take to ensure that you're meeting your obligations to prevent third-party harassment:

/ Consider adding a provision to your discrimination or harassment policy that encourages employees to report inappropriate behavior from any source, including third parties.

/ Clearly communicate to your employees your discrimination and harassment policies and the corresponding complaint procedures. Make sure you encourage employees to come forward with complaints of harassment or other discriminatory behavior.

/ Consider whether the nature of your business operations makes it wise to communicate the expectations in your harassment or discrimination policy to third parties like independent contractors, clients, customers, students, or others.

/ Train your employees to recognize and deal appropriately with harassment and other discriminatory behavior, including misconduct by nonemployees. Appropriate responses will depend on the nature of the contact your employees have with third parties. For example, school employees might benefit from training on how to set appropriate boundaries for students. Sales representatives or cashiers might benefit from training that addresses how to recognize and respond to harassment or discrimination by customers. Managers and supervisors might need specific training on how to address employee complaints about discriminatory behavior by clients or customers. The cases discussed in this article demonstrate that those types of complaints shouldn't be ignored.

/ Once you become aware of harassing conduct by a third party, regardless of how you found out about it, you must undertake a proper investigation. The extent of the investigation will depend on the circumstances, of course. Reports that a regular client routinely behaves inappropriately toward employees he has contact with will warrant a more extensive investigation than a complaint about one-time customer who engages in similar conduct. Of course, if the investigation supports the allegations, you must take appropriate action to remedy the situation.

/ When determining what kind of action to take in response to harassing conduct, consider what you would reasonably expect to end the harassment. You may find that it's appropriate to let the third party know that the alleged harassment is inappropriate and then communicate your expectations for appropriate behavior. Under other circumstances, it may be better to simply alter the situation so the employee doesn't deal directly with a particular client or customer. It's imperative, however, that any corrective measures you take don't have an adverse effect on the victim.

Some of you might find it overwhelming to think that an employee could have a valid harassment claim based on the actions of a nonemployee. The most important thing to remember, however, is that your actions matter. Following the recommendations above will allow you to establish boundaries and provide your employees with the essential skills for preventing or ending unlawful harassment by third parties. They'll help you avoid liability for harassment claims as well.

Copyright © 2007 M. Lee Smith Publishers LLC; Allison Fetter-Harrott

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