Employer Liability for Conduct of Non-Employees

Part of running a successful professional practice involves fostering a work environment that is free from harassment. Federal law protects employees from harassment in the workplace, which becomes unlawful where the conduct is so pervasive as to create a work environment that a reasonable person would consider intimidating, hostile, or abusive. Many employers train employees about the consequences of harassment and have policies to handle employees who violate the rules. However, managing the conduct of employees is not necessarily sufficient to prevent liability.

In a recent decision in Freeman v. Dal-Tile Corporation, the Fourth Circuit Court of Appeals joined a growing number of courts to hold that an employer is not immune from a Title VII claim merely because the hostile conduct was committed by a non-employee. The plaintiff in Freeman claimed that she was subjected to numerous instances of discrimination and harassment by a representative of an outside vendor, who allegedly made inappropriate sexual and racial jokes over a three-year period. The employee went to her supervisor to complain of the harassment, but the employer did not take adequate measures to stop the inappropriate conduct. Rather than enforcing a permanent ban on the representative, the employer only prohibited him from direct communication with the employee. The employee’s fear of seeing the representative caused her to take a medical leave of absence, and eventually to resign from her employment altogether.

The employee filed a charge with the EEOC asserting that her employer had subjected her to discrimination based on her sex and race. After receiving a right to sue letter, the employee filed action in federal court in North Carolina asserting claims against her employer for hostile work environment under Title VII of the Civil Rights Act of 1964. The employer filed a motion for summary judgment, which the district court granted, asserting that it was not liable under Title VII for the actions of a non-employee. The Fourth Circuit reversed on appeal, however, holding that a jury could conclude that the employer failed to take sufficient remedial action to end the harassment. The court then remanded the action to the trial court to determine whether the employee was subjected to a hostile work environment.

Employers can act to limit liability under Title VII by developing discrimination and harassment policies that cover actions by non-employees and provide clear remedial actions to be taken by the employer to prevent unwanted conduct by third-parties. Employers should ensure that employees have multiple avenues to report unwanted conduct or discrimination, and may consider working with outside vendors or contractors to stop third-party discrimination at its source. Failure to take action, even when the person committing the conduct is not a member of the company, could create a hostile work environment for employees and lead to costly legal liability.