See No Evil, Hear No Evil: See No Defense for Third-Party Harassment?

19 May 2014 Labor & Employment Law Perspectives Blog

It is rare that a distinguished federal appellate court invokes the “See No Evil, Hear No Evil” approach to deciding a case, but this is exactly what happened in a recent decision  involving a North Carolina based tile and stone distributor. The case confronted the court with the question whether an employer is liable for harassment of its employee by an outside vendor. The plaintiff was a customer service representative who had the unenviable task of dealing with an independent sales representative for the vendor. This sales rep was rather crude in what he said around the employer’s customer service representative with whom he interacted nearly every day. His comments were often directed to the assistant manager and overheard by the customer service representative, but on other occasions, the sales rep showed the customer service representative pictures of naked women he had on his phone, “passed gas” on the representative’s phone, and spoke to her in racially and sexually offensive language. Fed up, the customer service representative told the assistant manager about comment, but, according to the employee, the assistant manager appeared disinterested, so the customer service representative eventually complained to human resources. In response, the employer initially banned the sales rep from the facility but later allowed him to return if he agreed not to talk to the customer service representative. However, the customer service representative took a medical leave for depression and anxiety and later resigned from employment.

The Fourth Circuit Court of Appeals, covering Maryland, Virginia, West Virginia, North Carolina and South Carolina, reversed parts of the employer’s victory in the trial court. The appellate court concluded that the repeated complaints established the customer service representative found the sales rep’s conduct unwelcome and that a reasonable jury could find the comments to be racially and sexually tinged. The appellate court also found a reasonable jury could find the harassment subjectively hostile or abusive, and that the conduct was severe and pervasive. Of course, given the sales rep’s behavior, all of this seemed rather obvious.

Having reached those conclusions, the appellate court then turned to the question of whether the employer should be liable for the act of its vendor’s employee. For the first time, the court adopted a “negligence standard for analyzing an employer’s liability for third-party harassment under Title VII.” Speaking about vendor liability (or liability of any third party coming into the workforce), “an employer cannot avoid Title VII liability for [third-party] harassment by adopting a ‘see no evil, hear no evil strategy. In other words, an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed to take “prompt and remedial action reasonably calculated to end the harassment.” In this case, the appellate court concluded that the employer knew or should have known of the vendor’s offensive behavior by the complaints it had received and by virtue of the frequent occurrences of bad conduct.

What does this case suggest an employer should do? Like in the case of co-worker harassment, employers must be on watch for offensive behavior in the workplace regardless of who the bad actor is. And, once the conduct is known, or should reasonably be known, they must stop it. Employers should treat complaints of harassment by third parties (including by vendors or customers) as aggressively as if the complaint involved the behavior of its own employee. To conclude with another well-worn cliché, an employer “cannot stick its head in the sand.” The potential costs are too high.

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