A Tale of Two Standards: Supreme Court Lets Conflicting Rules on Third-Party Harassment Stand

Quick Hits

• The Supreme Court left intact the Sixth Circuit’s intent-based standard for employer liability for third-party harassment.
• The Sixth Circuit’s ruling diverges sharply from the EEOC’s position, as well as that of almost all other circuits to address the issue.
• Employers in Kentucky, Michigan, Ohio, and Tennessee continue to benefit from the higher bar for employer liability set by the Sixth Circuit, while employers in most other jurisdictions remain subject to a more employee-friendly standard.

Background

In Bivens v. Zep Inc., the Sixth Circuit held that an employer can be liable for customer harassment only if it intended for the harassment to occur or was willfully indifferent to it. In its decision, the Sixth Circuit rejected the negligence standard of coworker harassment applied by the U.S. Equal Employment Opportunity Commission (EEOC) and almost all other federal circuit courts that have considered the issue. According to this standard, an employer is liable if it knew or should have known about the harassment and failed to take immediate and appropriate action. The Sixth Circuit reasoned that customers are not agents of the employer in the same way coworkers are. The court also noted that, under the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled the Chevron doctrine of judicial deference to reasonable agency interpretation, it was not bound to follow the EEOC’s guidance on the issue.

The Circuit Split Persists

The Supreme Court’s denial of certiorari results in employers and employees being subject to materially different legal standards regarding employer liability for third-party harassment, depending on their geographic location. In the Sixth Circuit—covering Kentucky, Michigan, Ohio, and Tennessee—employees must demonstrate that their employer intended for the harassment to occur or was willfully indifferent to it. However, in the First, Second, Eighth, Ninth, Tenth, and Eleventh Circuits, employees face a lower bar for establishing employer liability.

Key Takeaways for Employers

The Supreme Court’s decision not to intervene reinforces the importance of proactive measures regardless of jurisdiction. Employers may wish to review their written policies and training programs to ensure they clearly address harassment by customers and other third parties and set forth effective complaint procedures. Prompt and effective responses to complaints of harassment continue to serve as best practices, as does ensuring that employees do not face retaliation for reporting such conduct.

Ogletree Deakins’ Workplace Investigations and Organizational Assessments Practice Group will continue to monitor developments and will provide updates on the Employment Law, Kentucky, Michigan, Ohio, State Developments, Tennessee, and Workplace Investigations and Organizational Assessments blogs as new information becomes available.

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