Mad Men can be tough to watch for an employment lawyer. I was thinking of this while watching the show’s most recent episode, “New Business.” In a particularly cringe-worthy scene, Harry Crane propositions Megan under the pretense that he can help get her acting career back on track. Harry is a buffoon and a jackass, and I wondered if he was exposing the firm to potential liability. 
There is precedent for the theory that an employee who harasses a third party can expose his employer to vicarious liability. Twenty-five years ago, a New York trial court famously found that a model was sexually harassed by Penthouse Enterprises, which, among other things, required her to engage in sexual activities for the benefit of the company’s business. In that case the model was quasi-employed by Penthouse, but the court pointed out that the conduct constituted intentional infliction of emotional distress as well as sexual harassment.
Had Sterling Cooper learned of Crane’s quid pro quo proposition to Megan, it could have fired him and faced little risk of loss if Crane sued. In a 2003 Connecticut case, the court granted summary judgment to an employer who fired an IT employee it had loaned to another company after that company’s female employees complained the IT employee was harassing them.
Employers must understand that their employment-related liability can extend beyond their own workforce. An employee who harasses a third party is a problem, as is the situation when the employer fails to take reasonable steps to protect its employees from harassment by third parties. Turning back to Sterling Cooper, Peggy seemed unfazed by Pema’s advances. Unfortunately for employers, not all your employees can be Peggy.
In today’s world, employees subject to suspect behavior of the sort that Harry engaged in are more inclined to pursue a claim. We have become way more litigious since the 50’s.
This presents a great point for employers to keep in mind–that their liability can extend beyond their own workforce. It’s very important to provide employees with sexual harassment training to avoid problems like those you mentioned.