By: Amy Epstein Gluck

Employers, we know that you are trying your hardest to prevent sexual (and other unlawful) harassment in your workplace.

You’re training your supervisors, employees, and, in many states, even your independent contractors.

You have policies, procedures, and a clear reporting and investigation procedure.

You are training your workforce, and you have worked to keep your business free of unsavory behavior. In fact, you have read Sexual Harassment Prevention 101 and learned How to Slay the Dragon that is sexual harassment (and if you did not, click on the links!).

#MeToo will not be you, too. The Equal Employment Opportunity Commission (EEOC) is not going to come knocking on my front door with a Charge of Discrimination for sexual harassment.

Except, employers, you MUST remember that if you are in any kind of service industry, you may have the conduct of third parties with which to contend.

EEOC Lawsuit Alleging Third-Party Sexual Harassment and Retaliation

This week, the EEOC filed a lawsuit against a casino in the Commonwealth of the Northern Mariana Islands (CNMI) for sexual harassment and retaliation alleging that Imperial Pacific International, LLC, dba Best Sunshine Inter­national, cultivated an environment where its customers engaged in unlawful harassment of its employees, including sexual advances, demands for sexual favors, sexual comments, and sexual physical touching.

What’s more, the EEOC alleged that the casino ignored multiple complaints of sexual harassment and then retaliated against female employees for complaining. How? The EEOC reports that the complaint states that the company reduced the complainants’ hours, imposed additional duties upon these employees, and either fired the employees or made their workplace conditions so awful that they had no choice but to quit.

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“Sex harassment remains a persistent problem,” said Anna Park, regional attorney for the EEOC’s Los Angeles District. “Employers should be mindful of their responsibility to create a discrimination and harassment free work environment and should not be fostering a workplace that allows verbal and physical sexual abuse and harassment.

Indeed.

But, You May Think, These Are Customers, Not Employees. 

Doesn’t matter.

Title VII of the Civil Rights Act of 1964 (Title VII) prohibits sexual harassment by customers, clients, and any third parties—the same as it prohibits sexual harassment between employees, regardless of whether or not they are just employees, managers or supervisors, or in the C-suite. Third-party harassment is illegal.

While your policies may not apply to your third party and you cannot train a third party, you can create an organizational culture or climate that does not tolerate harassment.

Remember our roadmap to preventing unlawful harassment—along with policies, procedures, and training, employers must cultivate an organizational climate that encourages reporting and works to prevent harassment.

We first talked about organizational culture here stating that scientific studies show that organizational “tolerance” is the single most powerful factor in determining whether sexual harassment will occur. In fact, studies have shown that strict management norms and a climate that does not tolerate offensive behavior can inhibit harassment, even by those with a propensity toward such conduct.

Leaders shape the culture.

But, It’s a Customer. We Run a Business.

Yes, I get it. And, isn’t the customer always right? “How can I control the actions of customers or clients,” you might ask.

First, courts have made it clear that the source of discriminatory treatment doesn’t matter. Rather, what matters is what an employer does to prevent or address the discriminatory treatment.

Second, tolerating offensive conduct encourages the behavior to continue, and employees become discouraged from reporting sexual harassment.

Third, employers compound the problem by retaliating against the employee. What do I mean by “retaliation”? Once an employee complains to a supervisor or the Human Resources Department about sex discrimination, including sexual harassment, an employer engages in retaliation if it then cuts an employee’s hours, heaps additional duties upon the employee, ignores complaints of sexual harassment, or fires the employee. Each of these types of actions are material adverse actions.

Employer Takeaway and Steps

While an employer may be responsible for a third-party’s actions, if takes immediate action to try to correct the problem, the EEOC is far more likely to consider the extent of the employer’s control over a third party and the extent to which an employer went to stop any additional sexual comments or touching.

Additional steps to take:

  • Timely investigate any allegations of sexual harassment by a customer or client. By timely, I mean as soon as possible. Don’t put it off. Interview the employee, supervisors, and any witnesses.
  • Take the employee’s complaint serious and do not ignore it.
  • If you think third-party harassment may have occurred once you conclude your investigation, take prompt remedial action! Ban the customer from the establishment. The profits gained from that customer are not worth the resulting EEOC complaint if you ignore the problem.
  •  Do not retaliate or take a adverse action against the employee, such as those alleged in this recent lawsuit. Such an action must be more than a petty slight or difference—it must dissuade or deter a “reasonable person” from reporting harassment or engaging in lawfully protected activity. For example, courts have concluded that a temporary transfer from an office to a cubicle consistent with office policy was not a materially adverse action and that occasional brief delays by an employer in issuing refund checks to an employee that involved small amounts of money were not materially adverse.
  • Training. Include bystander intervention training in your anti-harassment regimen even if it’s not required by law.

You can read more details about these steps in my earlier post here.

“When employers dis­cover such unlawful practices, they must root it out rather than retaliate. This lawsuit sends a clear message to employers that the EEOC will not hesitate to enforce these federal protections across its jurisdiction, which, in this case, means across the Pacific,” said the director of the EEOC’s Honolulu Local Office.

Employers, the EEOC is watching. Make sure this topic is on your collective radars.