Employment Law Report
Client Alert: Sixth Circuit Sets High Bar for Employer Liability in Customer Harassment Cases
Written by R. Joseph Stennis, Jr.
The Sixth Circuit recently issued a decision that significantly raises the bar for when employers can be held liable under Title VII regarding harassment by customers or other non-employees. In Bivens v. Zep, Inc., a sales representative of a manufacturing company that distributes cleaning products to retail and commercial businesses alleged that a motel manager propositioned her during a sales call. The sales representative rejected the manager’s advances and reported the incident to her boss. She was reassigned to a different sales team, but shortly thereafter was included in a reduction in force (“RIF”). This led her to file suit under federal and state discrimination laws, claiming her employer failed to prevent the alleged sexual harassment and retaliated against her for reporting it by being including in the RIF.
The district court dismissed her claims, holding that employers can only be held liable for third-party harassment if they intended for it to occur or were willfully indifferent, not merely negligent. This departs from the approach taken by most other federal appellate courts and the EEOC, which have long applied a negligence standard—making employers responsible if they knew, or should have known, about the harassment and failed to act. On appeal, the Sixth Circuit affirmed the district court’s decision to dismiss the sales representative’s lawsuit.
The Sixth Circuit’s reasoning emphasized that customers were not agents of the employer and highlighted the Supreme Court’s ruling in Loper Bright v. Raimondo, which limits judicial deference to agency interpretations – such as EEOC guidance as an example. As a result, the Sixth Circuit placed itself in direct conflict with several other circuits, setting the stage for a possible future Supreme Court review to resolve the split. For plaintiffs, this creates a much higher evidentiary burden in Kentucky, Michigan, Ohio, and Tennessee, where proving employer intent or willful indifference will be significantly harder than showing negligence.
For employers, the decision reduces immediate exposure to liability from client or customer misconduct in the Sixth Circuit, but does not eliminate risk. Retaliation claims remain a concern, and courts will still look closely at whether companies respond promptly and effectively to complaints. Best practices remain critical: employers should investigate reports thoroughly, reassign problematic clients when necessary, train managers on handling third-party harassment, and document their actions to demonstrate compliance. Multistate employers must also be cautious, since the majority of circuits continue to apply the more employee-friendly negligence standard, meaning policies should be robust enough to satisfy both standards.
Key Takeaways for Employers:
· Higher Burden for Employees in the Sixth Circuit: Liability now requires proof of employer intent or willful indifference to third-party harassment, not mere negligence.
· Circuit Split Increases Legal Uncertainty: Other federal circuits still apply a negligence standard, creating inconsistent obligations across jurisdictions.
· Policies Still Matter: Employers should maintain strong anti-harassment policies, provide training, and act swiftly when complaints arise.
· Retaliation Risks Remain: Even if liability for harassment is harder to establish, retaliation claims continue to pose significant legal exposure.
· Multistate Employers Must Balance Standards: Companies operating outside the Sixth Circuit must ensure compliance with the broader negligence-based standard while adapting to this new ruling.
