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You probably know that employers can be liable for harassment by their employees.
But, did you know that they could be responsible for harassment by nonemployees and
customers, too? This case shows just how expensive that liability can be.
A lot has been written and said about an employer’s liability for sexual
harassment by its own employees. However, employers also can be liable when a nonemployee
harasses one of their employees. A recent decision by the Tenth Circuit Court of Appeals
demonstrates that an employer must prevent and respond to a hostile work environment
caused by nonemployees, such as customers, or face legal liability for it. In Lockard v.
Pizza Hut, Inc., et al., No. 97-7078 (12/14/98), the Tenth Circuit upheld a jury verdict
of $200,000 in compensatory damages against an Oklahoma Pizza Hut franchisee for allowing
a hostile work environment created by two customers who harassed a waitress.
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Situation Clearly Abusive
Prior to the incident that lead to the legal action, a waitress claimed that two male
customers had made sexually offensive comments to her on several occasions. She told her
supervisor she did not like waiting on them, but did not mention the nature of their
comments. When the men returned to the restaurant, she asked permission not to wait on
them. Her supervisor refused, despite her previous complaint. The men again made offensive
comments, and one grabbed her by the hair. She reported the incident to her supervisor and
asked to be relieved from waiting on the men, but was required to continue serving them.
When she returned to their table, one of the customers again pulled her hair, then grabbed
her breast and placed his mouth on it. In response, the waitress refused to continue
working, left the premises, and quit. She filed the harassment suit and claimed that her
emotional condition deteriorated to the point that she feared going out in public and
could not continue to work.
In her harassment suit, the waitress made a number of claims under both state and
federal law. Some of the claims were either thrown out at the district court level or
overturned by the Tenth Circuit (i.e., a finding of liability against the parent company).
However, the Tenth Circuit upheld the most important claim against the Pizza Hut
franchisee. It affirmed the jury’s determination that the franchisee was liable for
the hostile work environment, the abusive and sexually harassing actions of the customers,
and the $200,000 award.
Employer "Knew" About Harassment, Should Have Taken Action
In upholding the decision for the employee, the Tenth Circuit first addressed whether the
incidents complained of created a hostile work environment. The court relied on prior
Supreme Court decisions that provide guidance on the factors to be considered in
determining the existence of an illegal hostile work environment, including: the
conduct’s frequency, the conduct’s severity, any physical threat or humiliation
(as opposed to merely offensive remarks), and the conduct’s unreasonable interference
with the employee’s work performance. The Tenth Circuit found that the physical
contact by the customer was clearly threatening and humiliating and, while limited to one
incident, was severe enough to create an illegal hostile work environment.
Next, the court addressed whether an employer should be liable for the actions of
nonemployees. The court looked first to regulations issued by the Equal Employment
Opportunity Commission (EEOC) which state that employers are responsible for the harassing
conduct of nonemployees and have a duty to prevent and remedy it when they know or should
have known about the harassment. The Tenth Circuit adopted the EEOC’s position and
agreed with three other Circuit Courts of Appeals (the First, Eighth, and Ninth) when it
ruled that an employer is liable for a hostile environment regardless of whether it
"was created by a co-employee or a nonemployee." The court found that the
waitress’s supervisor clearly knew about the problems and had the means and authority
to avoid what was an abusive and potentially dangerous situation. According to the
employer’s policy, he could have directed a male waiter to serve the men, served them
himself, or asked them to leave the restaurant. When the supervisor did not take any
remedial action, the employer was then liable for the harassing conduct by the customers
because a management-level employee knew about the harassment and did nothing about it.
Supervisors Must Act or the Employer Pays
The Tenth Circuit’s decision in this case demonstrates the judicial trend towards
finding employers liable for hostile work environment misconduct by nonemployees, such as
customers. Dealing with harassing customers can be difficult, though, especially when you
feel as if you must choose between your employee and the source of your business in-come.
It is clear from this case, however, that you have an obligation to protect your employees
from harassment, even if it is not convenient or good for business.
Two points in the case drive home how easy it is to be liable for nonemployee
harassment. First, the employer was liable after only one incident, because the supervisor
did not take the appropriate action to stop the misconduct. Second, it was liable even
though it had a policy directing supervisors to either reassign an employee in this
situation or ask the abusive customers to leave. Where the employer failed, it appears, is
in making sure its supervisory employees followed its policy. Thus, employers should train
supervisors in their sexual harassment policies and reinforce the policies through
periodic reviews to ensure that supervisors understand their obligation to prevent all
forms of harassment.
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Personnel
Policy Service, Inc.
