Question:

A friend of mine is a business owner (as am I) and was recently charged with the sexual harassment of one of her employees. The crazy thing was, the person harassing her employee doesn’t even work for the company! I don’t understand how my friend can be responsible for the behavior of someone that doesn’t even work for her. Can you explain this for me?

Answer:

While it comes as a surprise to many people, it’s true that an employer can be held liable for the sexual harassment of one of its employees even if the person committing the harassment is not actually an employee. As a result, if an employer knows about outside conduct that is harassing in nature, it can face liability if it fails to take immediate and appropriate corrective action to protect its employee(s).

The foregoing rule is actually relatively new in the state of California. In 2002, a California Court of Appeal held that a bus company was not liable for sexual harassment committed by a customer against the company’s driver. In reaching that decision, the court ruled that California’s Fair Employment and Housing Act (FEHA) did not include employer liability for the acts of non-employees. A similar result was later reached in the 2003 decision of Carter v. Dept of Veteran Affairs, which involved a nurse who was being harassed by a patient and who ended up suing the hospital where she worked. The court in that case once again found that the FEHA did not impose liability on the employer in those circumstances. In response, the California legislature quickly moved to make a change in the law.

Effective January 1, 2004, AB 76 amended the FEHA to make employers responsible for sexual harassment committed by non-employees where the employer “knows or should have known of the conduct and failed to take immediate and appropriate corrective action.” This law is now codified at section 12940(j)(1) of the California Government Code. Under this law, employers may be liable for punitive and emotional distress damages as a result of third-party harassment. This rule has been held to be retroactive.

What this means for California employers is that they now have a duty to protect their employees from harassment from non-employees. An employer who is aware that an employee is being harassed therefore has an affirmative obligation to do something about that harassing behavior. By way of example, assume that the deliveryman who comes to your office each day to deliver packages routinely harasses one of your employees. Also assume that your employee has complained to you, or to a supervisor in your office. You (as the employer) would now be “on notice” that one of your employees was being subjected to harassment, and you would need to promptly investigate the situation. If the employee’s claims turned out to be substantiated, you would then be legally required to take immediate and appropriate corrective action. This might include transferring your employee to a position where he/she would no longer encounter the harassing behavior, or you might need to begin using a different delivery service in order to eliminate the possibility of your employee being harassed. Depending on the facts, it may also be a good idea to contact the supervisor of the individual doing the harassing, in order to inform the supervisor of his/her employee’s inappropriate behavior. Lastly, you would want to discuss the matter with your employee and to explain the protective measures you had taken, and to document your efforts to remedy the situation.

It is important to keep in mind that the foregoing rules are generally applicable even if the harassment does not actually occur on your premises. If an employee is engaged in job-related activity away from the employer’s place of business and encounters harassment, and if the employer knows about the harassment, the employer can still face liability if it fails to take action to prevent the conduct in the future.
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