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Litigation News

Litigation News | 2021

Employers Must Address Customer Harassment of Employees

Nhan Ho


  • Employers may be held liable for failing to protect employees from harassment by customers, vendors, or other third parties.
  • The conflict was caused by a bank customer who repeatedly sexually harassed an employee. The harassment continued for approximately one year.
  • Despite the supervisors’ assurance, the bank did nothing until the employee, in writing, requested the bank to take action against the customer.
Employers Must Address Customer Harassment of Employees
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With great power over the workplace comes great responsibilities. In Christian v. Umpqua Bank, a federal appellate court held that employers’ responsibilities include protecting employees from sexual harassment by customers. ABA Litigation Section leaders agree with the holding in Christian and note its important practical implications for employers.

Bank’s Response to Customer Harassment of Employee Is Too Little, Too Late

The plaintiff was an employee of the defendant bank. Beginning in late 2013 and continuing for approximately one year, a customer repeatedly commented about the employee’s looks, asked her on dates, lefts notes for her, badgered her coworkers about dating her, and stared at her during work and work-sponsored charity events. On multiple occasions, the employee asked her supervisors to prohibit the customer from coming into the bank or to obtain a no-trespassing order against him.

Despite the supervisors’ assurance, the bank did nothing until the employee, in writing, requested the bank to take action against the customer and to transfer her to a different location. The employee specified that she was willing accept the financial burden associated with working fewer hours in the position to which she wished to be transferred because she needed a safe working environment, and the bank had given her no other option. She also expressed her feeling that she was being punished for the mistakes of others. The bank ultimately closed the customer’s account and transferred the employee. The employee resigned shortly thereafter, citing her doctor’s opinion that it would be a detriment to her health to continue working for the bank. The employee subsequently sued the bank for violation of state and federal antidiscrimination laws. After the trial court granted summary judgment in favor of the bank, the plaintiff appealed.

The U.S. Court of Appeals for the Ninth Circuit found that that the district court erred in failing to consider all of the customer’s actions in evaluating whether his conduct created a hostile work environment for the employee, including the incidents when the employee did not have direct interactions with the customer. Concluding that a trier of fact could find the customer’s harassment sufficiently severe or pervasive to alter the employee’s working conditions, the Ninth Circuit held that the bank could be held liable for the actions of its customer. A reasonable jury could see that, for failing to take immediate and sufficient corrective actions to stop the harassment, the bank ratified or acquiesced in it. Accordingly, the court reversed the trial court’s grant of summary judgment.

Liability Is Based on Bank’s Failure to Protect Employee, Not on Customer’s Conduct

Litigation Section leaders agree with the Ninth Circuit’s holding in Christian that employers should be held liable for their failure to address harassment in the workplace“When an employer has knowledge that one of its employees has been subjected to inappropriate conduct in the workplace, it is reasonable to expect the employer to take measures to effectively address the situation, or risk being found liable for failing to do so,” asserts Jerry Cutler, New York, NY, cochair of the Section’s Employment & Labor Relations Committee.

“The issue in Christian was not about whether the bank was liable to its employee for the actions of the customer, but whether the bank was liable based upon how the bank responded (or, from the perspective of the employee, failed to respond) to the actions of the customer,” observes Christopher S. Hennessy, Chicago, IL, cochair of the Section’s Employment & Labor Relations Committee. He specifies that the “focus is on the actions and conduct of the employer as it relates to its employees,” and the source of the harassment that adversely impacted the employee’s rights in her workplace based on her gender “did not matter.”

Important Lessons for Employers

“Employers should immediately begin an investigation upon learning of the alleged harassing conduct,” advises Cutler. “This includes meeting with the employee, interviewing witnesses, and gathering any relevant evidence. The investigation should also include a written investigative report that contains factual findings and conclusions pertaining to the alleged conduct,” he explains. “Where the investigation substantiates the allegations, employers should take prompt and effective measures to ensure that the complained-of conduct is not repeated,” he concludes.

“The emphasis to the employer should be the experiences of its employees and how those experiences can be adversely impacted by the actions of the employer, by coworkers, and by third parties like customers, vendors, or others in the workplace,” adds Hennessy. “The employer should view the harassment from the perspective of the employee irrespective of the source,” he remarks.

“These are topics that can be addressed in workplace training,” suggests Hennessy. Some jurisdictions specifically require employers to provide sexual harassment training, including how to address harassing conduct by third parties such as customers. “For example, effective January 1, 2020, Illinois passed the Workplace Transparency Act that requires, among other things, to provide sexual harassment training” and “the model training program issued by the Illinois Department of Human Rights specifically addresses ‘Customer/Patrons and Third Parties as Perpetuators of Sexual Harassment,’” illustrates Hennessy.

Along the same vein, “employers should distribute a written policy to employees explaining that harassment is prohibited, outlining the mechanism for reporting instances of such conduct, describing the investigative process, and ensuring that the employer will take prompt and effective action when it is determined that such conduct has occurred,” advises Cutler.