Sixth Circuit Requires Employer Intent for Customer Sexual Harassment Under Title VII

The Sixth Circuit in Bivens v. Zep, Inc. brushed aside the EEOC’s and several circuit court positions with respect to the standard to be used when determining an employer’s liability under Title VII for sexual harassment of its employee by a customer and instituted a stricter standard of its own.

Background

Dorothy Bivens was a sales representative for Zep, Inc., a manufacturer and distributor of cleaning products to retail and commercial businesses. Her job involved selling directly to customers and maintaining ongoing relationships, often by visiting them at their locations.

On one such visit to a motel customer’s office, a customer locked his door and asked Bivens if she would date him. She asked to leave; he unlocked the door, and she left. She later reported the incident to her supervisor. Zep reassigned that customer to another sales representative, ensuring Bivens had no further contact with him.

Around the same time, Zep experienced financial difficulties due to COVID-19 and began eliminating positions, including Bivens’s role. She sued Zep for hostile work environment, retaliation and race discrimination under Title VII of the Civil Rights Act of 1964.

The Court’s Decision

The District Court granted summary judgment to Zep on all claims. In addressing the error assigned to the lower court’s ruling that there was no liability for sexual harassment, the Court identified the five elements Bivens needed to prove:

1. 1. She was a member of a protected group;
   2. She experienced unwelcome harassment;
   3. The harassment was based on her sex;
   4. The harassment created a work environment that unreasonably interfered with her work performance; and
   5. Zep was responsible for the harassment.

Only the fifth element, what the court called the “corporate responsibility” prong, was in dispute. The court explained that generally employers may be liable for harassment in two ways:

• • Direct liability when the harassment stems from high-level employees acting on behalf of the company; or
  • Vicarious liability for discrimination by lower-level employees, imputed through negligence and the employer’s fail to prevent harassment.

After a torturous analysis of the agency principles that the EEOC and other circuit courts typically have relied upon to find employers liability for harassment by non-supervisory and non-employees, the Court deviated from that framework. The Court emphasized that customers are not analogous to non-supervisory employees, stating the obvious – there is no “legal bridge” between an employer and its customer. Therefore, it concluded that there is “no legal mechanism for imputing unlawful intent of a customer to a business he frequents.” Instead, the Court held that an employer can be liable for harassment by a non-employee only if it intended the harassment, meaning it either desired it to happen or it was substantially certain that the harassment would occur.

Relying on the Seventh Circuit’s decision in Dunn v. Washington County Hospital, 429 F.3d 689 (2005), the Court rejected the EEOC’s regulation that allowed liability for non-employees under a “knew or should have known” negligence standard. First, as stated above, it did not comport with the reality of the customer and employer relationship. But also, the Court rejected the notion that the EEOC’s regulations extended to creating substantive standards beyond the statute itself. Rather, the EEOC’s authority is limited to procedural matters. Since Zep neither desired that Biven suffer harassment nor was it substantially certain it would occur, it is not liable.

Significance

• The Sixth Circuit has created a new circuit split with its decision that creates a novel and stricter intent-only standard for customer based harassment.
• Expect renewed scrutiny of EEOC guidelines, with this ruling fueling potential review by the U.S. Supreme Court due to the circuit split.

Best Employer Practices

• Employers should adopt a policy on handling potential harassment by non-employees and educate management and supervisory employees.
• Employees should provide training to prevent such harassment and assure prompt investigation and remedial action of any complaints by employees of such harassment.
• Employees should maintain documentation demonstrating a lack of intent to allow such harassment.

Contact

To discuss further, contact KJK Labor & Employment partner Maribeth Meluch (MM@kjk.com).