The #MeToo movement has sparked an increase in sexual harassment investigations and focused attention on the potential liability of employers for the actions of third parties with whom their employees interact for business purposes. We previously noted the importance of employers maintaining policies and providing training on proper responses to complaints about third-party harassment in the hostile environment context. Two recent decisions underscore the importance of awareness of potential liability from third party harassment claims outside the area of sexual harassment and in potential quid pro quo situations.
In a recent case involving racial harassment, the U.S. District Court for the Northern District of Alabama, found that the company could be liable for the harassment endured by a former employee subjected to the use by a customer of the "n word" toward him for a number of years. The court noted that despite the fact that the company had a “strict policy” against unlawful harassment, including acts of “clients, customers, and outside vendors,” the former managerial employee was told by his supervisor that if the company “fired" the customer, then the employee would be held responsible for the budgetary impact of the loss of the customer, likely resulting in a loss of bonus for years to come.
In a case out of the U.S. Fifth Circuit Court of Appeals, the court recently cautioned employers about potential liability arising from a supervisor’s comments in the sexual harassment context. In this case, the employee alleged that her supervisor's request that she date a wealthy potential customer in exchange for a "big bonus" constituted "quid pro quo" harassment. Although the employer argued the request could not form the basis of a quid pro quo claim because the supervisor requested that the employee engage in a relationship with a third party – and not with the supervisor himself -- the court held that the situation could constitute quid pro quo harassment because the supervisor conditioned the payment of a bonus on the employee's agreement to engage in a sexual relationship with the potential customer. The court noted that quid pro quo liability exists when an employee can show that a tangible employment action arises out of acceptance or rejection of a supervisor's "sexual harassment," a term which is generally defined as including "unwelcome sexual advances," "requests for sexual favors," or "other verbal or physical conduct of a sexual nature." It did not matter whether the supervisor requested the sexual favors on his own behalf or on behalf of a third party.
To avoid potential liability, employers should not only review and update anti-harassment policies to ensure they provide the strongest possible protection against claims of third-party harassment but also train employees and managers to report and address any instances of alleged harassment by third parties
#third party harassment