What business doesn’t value its customers? After all, the customer is always right. The trouble is, customers are people, too, and people come with a variety of biases and bad behavior that can create issues for employers. In other words, racist, sexist, or discriminatory customers can present a liability problem for your company because you can be found responsible when you knew or should have known about harassment by customers or vendors and failed to take immediate corrective action. 
Under Title VII of the Civil Rights Act of 1964 and other employment laws, employers must create and maintain a harassment-free workplace, and that obligation extends to nonemployees and customers. As a result, if someone who isn’t an employee engages in behavior that violates the law, you are required to step in and protect your employees. That typically requires some knowledge of what’s happening, an investigation, and remedial action.
Know what’s going on
Customer or other nonemployee harassment surfaces just like hostile work environment claims involving employees. To transform the situation into an issue for HR, the employer must have knowledge of the harassment.
Typically, you will learn about a problem when an employee complains or reports it. As with employee complaints about coworkers or supervisors, you should listen to employee complaints about a customer and take them seriously. A common reaction is to dismiss the employee’s concerns and protect the relationship with the customer. You must avoid that reflex and listen carefully to determine if the employee is making a routine complaint or a protected complaint that invokes your legal obligations.
Courts have gone so far as to hold employers responsible even if a third party’s harassment took place off company premises if there is a connection to the employment. As a result, you should carefully analyze complaints about customers to look for connections to the workplace.
Even if there is no direct complaint or report by an employee, there may still be situations in which the employer “should have known.” For instance, an employer should know about harassment when it is open, obvious, and observed by a supervisor or another member of management. The employee may not report it if she feels her supervisor will gloss over the situation even after witnessing it. The Equal Employment Opportunity Commission (EEOC) and the courts may consider your avoidance to be ratification of the customer’s behavior.
Investigate
After you become aware of customer harassment, either through a direct report or when a supervisor or manager has witnessed an incident, you have an obligation to investigate. You should treat allegations of harassment by a customer the same way you would treat allegations of harassment by a coworker or supervisor, and interview any witnesses in a timely and fair manner.
Make sure you document your findings and inform the complaining employee of your conclusions. Depending on the results of the investigation, you may then have an obligation to take prompt remedial action.
Take action
You are required to take reasonable steps to eliminate a nonemployee’s discrimination or harassment. If you take reasonable steps to put an end to the situation, but they are unsuccessful, then a court will judge your liability based on the reasonableness of your actions. According to one federal court, “The inquiry is not whether the employer’s response was the best course of action possible, but rather whether it was appropriate in light of all the circumstances.”
Examples of reasonable employer responses include warning the customer or other third party, orally or in writing, that repeated misconduct will result in a ban or refusal to do business, following through with a ban on the customer, or allowing the employee to avoid any interactions with the offender. If the employee is agreeable, you could reassign her to another job or area of the workplace so she can avoid interacting with the customer.
A court will consider the amount of control you had over a nonemployee harasser when deciding whether you reacted in a “reasonable” way. If the customer could not be controlled, then it’s less likely you will be held responsible for his behavior. However, if you could have easily controlled a harasser—for example, by banning him from your premises—then you failed to uphold your obligations to the employee. Depending on the situation, you may need to encourage or help the employee take other action, such as involving security or law enforcement officials.
Don’t retaliate
It’s important to remember that if an employee complains that a customer or another nonemployee is harassing her, she has engaged in protected activity. As a result, you must refrain from retaliating or otherwise making any adverse employment decisions based on her complaint. Adverse decisions include changing the conditions of employment, such as reducing the employee’s wages, revising her schedule, revoking vacation time, or taking away other privileges.
So, for example, if a customer is harassing an employee who works the first shift, you shouldn’t transfer the employee to third shift to prevent her from crossing paths with the alleged harasser. You should reassign or transfer a complaining employee only if she expressly consents to the transfer or reassignment. If the employee objects and the change occurs over her objection, it may be considered actionable retaliation.
Anticipate future issues
Sometimes, situations may arise that aren’t necessarily harassment in your particular workplace but might be somewhere else. For example, if your business involves providing care for patients with dementia, your clients or patients may say and do things that would get them arrested if they were out in public. Or if you sell lingerie or bachelor/bachelorette party favors, then your employees should expect some exposure to racy advertising. The trick in those situations is to not assume that any harassment that occurs is just “the job.”
An uncomfortable incident can quickly escalate into an environment that is intolerable to the average employee. If you are in a high-risk industry, you need to be very aware of the possibility that harassment might occur and train your employees to address any concerns before they get out of hand. Include references to potential issues and exposure to delicate situations in your job descriptions. Most important, get ahead of problems when they are brought to your attention.
Bottom line
Maintaining a harassment-free workplace is the employer’s responsibility. Employees often feel they have no choice but to continue to work with or speak to a customer who is harassing
them. If you know your employees are being harassed by one of your customers or another third party and you fail to do anything about it, you may find yourself liable for a hostile work environment. Reasonable action protects you and your employees.
Michele L. (Warnock) Brott is an attorney with Davis Brown Law Firm in Des Moines, Iowa. She may be contacted at michelewarnock@davisbrownlaw.com.
Need to learn more? Preventing workplace harassment is a top priority for the EEOC—which means it should be a top priority for you, too. Note that “Workplace harassment” can extend far beyond “sexual harassment.” An EEOC task force has identified a “wide range of bases of harassment” that exist in today’s workplace—including age, disability, sexual orientation, and gender identity harassment. Establishing an anti-harassment policy is simply not enough. HR must be proactive about training for both supervisors and employees, responding promptly to allegations of harassment, and conducting thorough investigations. Join us on April 7 for the BLR webinar Workplace Harassment: How to Address Complaints, Avoid Legal Catastrophes, and Create a Safe Work Environment to learn how to establish a harassment-free workplace environment, respond promptly to complaints, and avoid catastrophic legal pitfalls. For more information, click here.