The Danger for Employers of Third Party Discrimination or Harassment

By Amy Epstein Gluck

As Rich aptly noted at the close of 2016, more than 50 years after the Civil Rights Acts were passed, racism continues in the society at large, and in the workplace in particular.

Case in point: this past weekend, Kelly Carter, a waitress in Ashburn, Virginia, discovered this receipt after a customer left:

great service

don’t tip Black people

NBC in Washington, D.C. reported Ms. Carter’s astonishment upon finding the message. The owner of Anita’s Restaurant, where this incident occurred, expressed that he was appalled and outraged by this message.

While this incident is disgusting and reprehensible, you may wonder, “What does this have to do with employment law?”

Third Party Discrimination or Harassment

Well, if a customer or client treats one of your employees unfavorably because of the employee’s race or because of personal characteristics associated with race (such as hair texture, skin color, or certain facial features), such conduct may constitute unlawful race discrimination under the Title VII of the Civil Rights Act of 1964. Race discrimination is a close cousin to color discrimination, which involves treating someone unfavorably because of skin color complexion. Both are unlawful if they rise to the level of harassment or if such conduct adversely affects the employee in his or her terms and conditions of employment.

We know that one of the main tenets in the service business is—the customer is always right. Right?

Not always. Remember the Costco case? There, the EEOC filed suit against Costco for failing to prevent sexual harassment by a customer of an employee. There, a federal district court judge ruled that Costco violated Title VII by failing to prevent a male customer from stalking and harassing a female employee and failing to take reasonable steps to stop the harassment, considering that the harassment went on for an entire year before Costco banned the customer from the store.

Why would an employer bear liability for acts of a customer?

The courts have made it clear that the source of discriminatory treatment doesn’t matter. What matters is what an employer does to prevent or address the discriminatory treatment.

Here, in this recent incident in Virginia, I think that Anita’s public and blatant condemning of its customer’s actions effectively mitigates its risk of any potential liability. Anita’s might lose a customer, but think of all the money it will likely not have to lay out responding to an EEOC investigation.

In addition, this is one incident. One incident is unlikely to rise to the level of harassment, but if this act becomes repeated or pervasive to the point that the workplace becomes harassing, than the employer must take steps to ameliorate the situation, such as having someone else serve this customer or even barring this customer.

Employer Takeaways

Here are some steps employers can take to handle or prevent third-party harassment:

First, encourage your employees to report inappropriate behavior from any source, including customers or clients. In fact, include this provision in your anti-discrimination EEO policy.

Second, train your employees to recognize and deal appropriately with harassment and other discriminatory behavior, including misconduct by customers.

Third, as an employer, once you know about discriminatory or harassing conduct by a third party, investigate it and take corrective measures.

If you don’t want the EEOC down your neck, preventative and corrective action is the way to minimize your risk of liability—and, of course, it’s the right thing to do.


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Amy Epstein Gluck

Amy Epstein Gluck has represented individuals and corporate clients in Virginia, Washington, D.C., and various federal district courts for more than twenty years. Ms. Epstein Gluck’s current practice areas include employment law—advising on and drafting employment agreements; handling employment negotiations, severance agreements, noncompete and nondisclosure agreements, “wrongful terminations” and other EEO matters; representation at the EEOC level; advising employers about discrimination laws and how to remain in compliance, and employment negotiations.