A new state law puts employers on the legal hook for sexual harassment of employees by clients and customers. The legislation invalidates a controversial California appeal court holding that the California Fair Employment and Housing Act (FEHA) wasn’t intended to cover harassment by nonemployees.
We’ll explain your obligations under the new law, which takes effect Jan. 1, 2004. We’ll also outline how you can limit your liability in these tricky situations.
Join us this fall in San Francisco for the California Employment Law Update conference, a 3-day event that will teach you everything you need to know about new laws and regulations, and your compliance obligations, for the year ahead—it’s one-stop shopping at its best.
Expanded Employer Liability
Under existing FEHA provisions, you are liable for workplace sexual harassment an employee commits if you knew or should have known about the harassment but didn’t take immediate corrective action.
The new law expands FEHA’s antiharassment provisions to hold you liable for harassment committed by nonemployees against your employees, applicants, or contract workers—if you knew or should have known about the harassment and failed to take immediate corrective action. However, the legislation clarifies that an employer’s liability in these situations depends on how much control or other legal responsibility you have over the nonemployee’s conduct.
The antiharassment prohibitions of FEHA, including these new ones, apply even if you have just one employee—unlike other FEHA provisions, which generally apply only if you have five or more employees.
Law Mirrors Federal Rules
The new legislation aligns California’s harassment rules with federal law—including guidelines from the Equal Employment Opportunity Commission and Ninth Circuit Court of Appeals case law—which has long held employers can be liable for harassment by nonemployees. The federal law, however, only applies to employers with 15 or more employees and sets a lower limit on the damages employees can recover.
Steps to Take
Here’s what you can do to avoid potential harassment complaints—and expensive liability—involving your customers, vendors, or other nonemployee business associates:
- Review and publicize your complaint procedures. Your complaint-reporting process should encourage workers to feel comfortable raising complaints about inappropriate behavior—whether by a co-worker, manager, client, or customer. Conduct training on your antiharassment program for all employees at least once a year.
- Respond promptly to all complaints. Carefully investigate complaints and swiftly take any needed steps to prevent further harassment. If the customer or vendor doesn’t act to stop the problem, you may have to sacrifice your business relationship—or face a harassment lawsuit. Don’t ignore the problem, no matter how important the client.
- Make your policies known. One way to avoid harassment by clients and customers is to distribute a brief policy statement outlining the ethical practices you expect to govern your relationship, including a statement barring sexual, racial, or other harassment. Distributing this statement may be more practical at the start of new business relationships or when a contract is being renewed than during ongoing relationships.