Diversity & Inclusion, HR Management & Compliance

The Customer Isn’t Always Right: Addressing Third-Party Discrimination

In pursuit of customer satisfaction, employers may be inclined to take a hands-off approach when customers or other third parties exhibit discriminatory conduct towards their employees. This can be a costly mistake.

Courts have repeatedly held employers responsible for the discriminatory wrongdoing of third parties, even when the employer itself claimed to be free of bias. An employer’s obligation to take prompt, reasonable remedial action is designed to address and respond to complaints of harassment, even if the alleged harasser is not an employee of the company.

The EEOC and Third-Party Discrimination

The danger of not addressing third party harassment is demonstrated by a recent lawsuit filed in the U.S. District Court for Vermont by the Equal Employment Opportunity Commission (EEOC). On September 6, 2022, the EEOC sued 98 Starr Road Operating Co., LLC. The company is a long-term care facility in Burlington.

The EEOC claimed that patients at the facility repeatedly told African American employees to “go back to Africa,” followed them around the facility to racially berate them, and physically assaulted them because of their race. It’s alleged that management’s response to the employee complaints was that the residents of the facility could “say what they want” and that the employees should be used to being the target of racial slurs because they were “from the South.”

The issue of third-party discrimination and harassment is a repeated area of concern for the EEOC. In 2013, the Hurley Medical Center in Michigan entered into an agreement with the agency to settle a race discrimination charge. It alleged that the medical center complied with a father’s request to not let any African American nurses treat his infant.

Hurley Medical Center agreed to pay approximately $200,000 and entered into a five-year agreement with the EEOC, which provided that the agency would conduct nondiscrimination training for all hospital staff and evaluate their progress.


Employers can reduce potential liability for third-party discrimination and harassment claims by following these commonsense measures:

  • Employers shouldn’t accept a client’s possibly discriminatory request. Courts have repeatedly ruled that customer preference isn’t a sufficient justification for discrimination.
  • Employers should review their policies to make sure that a well-defined complaint procedure exists. The policy should provide clear instructions for employees regarding when, where, and how to report their concerns. The policy should also indicate that it covers conduct by both employees and third parties.
  • Ensure that all complaints (including complaints of discrimination or harassment by third parties) are fully investigated. If warranted, the employer should take prompt remedial action that’s reasonable under the circumstances.

Amanda McSween Empey is an attorney with Bodman PLC in Detroit, Michigan. She can be reached at aempey@bodmanlaw.com.

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