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The 6th Circuit Court of Appeals recently held that Title VII requires intentional conduct by the employer before liability attaches based on the actions of a non-employee, such as a client or customer. This holding in Bivens v. Zep, Inc. marks a major departure from the negligence standard applied by most other federal courts—including the Tenth Circuit—and conflicts with guidance from the Equal Employment Opportunity Commission (EEOC).
The Case: Bivens v. Zep, Inc.
The plaintiff sued her employer after she was terminated in a reduction in force. Her claims centered on the fact that she had been harassed when she was visiting a company client—a third party—and the client's manager locked his office door and propositioned her. She reported the incident to her supervisor, who simply reassigned that client to another sales team so she would not have to interact with the manager who had harassed her.
The Court's Divergent Analysis
Recognizing that a company can be held vicariously liable for actions taken by low level employees, the 6th Circuit turned to the trickier question of when an employer can be held liable for harassment of its employee by a third party. The court discussed traditional agency law principles and noted that coworker harassment is evaluated by a negligence standard—i.e. if the employer is negligent in allowing the harassment. The Court concluded that agency law principles did not apply because the customer was not acting as an agent.
As a result, the 6th Circuit ruled that liability for non-employee harassment will only exist if the plaintiff proves that the employer itself acted with intent. Specifically, the court held that an employer must either:
- Desire the harassment to occur, or
- Be "substantially certain" that unlawful consequences will result from its actions.
The Court explained that there must be a "legal bridge" between a third party's intent and the employers responsibility. By holding a company responsible only for its own intentional actions, the Sixth Circuit broke from most other circuit courts and explicitly rejected the contrary interpretation found in the EEOC's guidelines (which notably, have no controlling effect).
Employer Takeaways
With this clear circuit split, the issue is well suited for Supreme Court review. The fundamental disagreement about Title VII's scope and the proper role of agency law principles in harassment cases creates uncertainty for employers and employees across different jurisdictions.
While this standard favors employers in the Sixth Circuit, the fact remains that most employers should still take care and understand that the EEOC's negligence standard is the best one to follow. It remains a best practice to institute policies that encourage reporting of third party harassment incidents and that require managers to take prompt and appropriate corrective action when faced with such reports. These issues will be of particular importance to customer-facing industries with a wide range of clientele—such as retailers, restaurants, and companies with a lot of salespeople.
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