An employee tells you a customer just harassed them — what should you do? In Bivens v. Zep, Inc. the Sixth Circuit Court of Appeals charts its own course in addressing employer liability for third-party harassment.

What Do the EEOC and Many Courts Say About Non-Employee Harassment?

The Equal Employment Opportunity Commission and the majority of case law consistently hold that employers have a duty under federal laws to correct unlawful harassment by non-employees (e.g., independent contractors, customers, or clients) once they are aware of it. To illustrate this responsibility, the EEOC’s 2024 guidance provided the following example of how an employer should respond when a customer engages in inappropriate conduct:

While cleaning a guest room, Paloma, a housekeeper at a hotel, is cornered by a naked guest who propositions her for sex. Paloma immediately reports this conduct to her supervisor. Although the guest is not an employee of the hotel, because Paloma’s employer is aware of the sex-based harassment, it has a legal obligation to correct the harassment.

In other words, if an employer knows or should have known about harassing customer or client conduct, the employer must take immediate and appropriate corrective action.

What the Sixth Circuit Says

The Bivens case has some notable similarities to the Paloma hypothetical above. Dorothy Bivens was visiting a client motel. The motel manager with whom she was meeting locked the office door and asked if they could date. When she said no and asked to leave, the manager unlocked the door, and she left. Bivens described the event to her supervisor, who reassigned the client to someone else so she would not have to interact with the motel manager again. Around this same time, Zep eliminated 23 jobs, including Bivens’. She sued Zep for hostile work environment harassment, retaliation, and discrimination in violation of Title VII and Michigan law. The district court granted Zep’s motion for summary judgment, and Bivens appealed.

Contrary to the EEOC’s guidance, the Sixth Circuit determined that Zep could not be held liable unless it “intend[ed] for the harassment to occur.” Because Zep did not “desire[]” that the inappropriate interaction with the customer occur, it could not be held liable for the actions of the harassing customer.

In reaching its decision, the court expressly acknowledged that its holding diverged from the EEOC’s interpretive guidance and departed from the conclusion reached by nearly every other circuit court in the country. This standard is a high bar for establishing employer liability related to customer/nonemployee harassment; the employer must “desire an unlawful consequence from [its] actions” or be “substantially certain that it will result.”

Although the Bivens case seemingly requires less of employers with regard to non-employee harassment, it remains unclear how meaningful the court’s distinction will be in application. The court itself noted that many circuit cases that have evaluated employer liability under a negligence standard “would likely have been resolved the same way under the intent standard.” For example, if an employer were to repeatedly require Paloma (from the EEOC’s hypothetical) to interact with the offending guest, a jury could reasonably find that the company was “substantially certain” that harassment would result from its actions.

Takeaways

• EEOC guidance is not binding on courts, and current administrative law principles do not require courts to defer to the EEOC’s interpretations. When making employment decisions, it is important to consider both the EEOC’s guidance, as well as the applicable case law, which continues to evolve.
• Despite the higher burden promulgated in Bivens, curbing customer harassment is still imperative to reduce legal exposure and to foster a safe workplace culture.
• Employers operating in multiple states should recognize that the negligence-based liability standard still applies to courts outside of the Sixth Circuit.
• Even in jurisdictions applying this heightened standard, employers should continue to address customer harassment promptly and effectively to mitigate risk and protect employees.

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