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Employer can be liable for harassment by client

RICHMOND, Va. — When your biggest client is sexually harassing your employee, it’s a tough situation to manage.

The 4th U.S. Circuit Court of Appeals hasn’t officially looked at whether an employer can be liable for harassment by non-employees. But three members of the court tipped their hand last week in an unpublished opinion that revives an employee’s claim of harassment by the client’s staff.

Drawing on the “negligence” standard adopted by other federal appellate courts and EEOC regulations, the panel said that an employer can be liable if it knew or should have known of the harassment and failed to take appropriate steps to halt it.

In its March 3 opinion, the panel said the employer, a South Carolina supplier of Nabs, could not ignore a truck driver’s complaints about sexual harassment because it was afraid to lose its most important customer.

Same-sex harassment

The employee, Homer Ray Howard, drove a Greensville delivery route for Cromer Food Services, a company that supplied vending-machine snacks. Its biggest client is Greensville Hospital, according to allegations recounted in the 4th Circuit opinion.

Howard’s route took him to the hospital on the second shift, from 3:00 p.m. to 11:00 p.m. In 2006, several months into the job, Howard began complaining about two male hospital housekeepers, who harassed him on a daily basis. The housekeepers allegedly stalked the stocker, calling him “Homo Howard.”

Howard said the men repeatedly made unwanted sexual comments, including graphic discussions of oral sex that featured the two men groping themselves and propositioning Howard. Howard said because the men waited for him at the vending machines, he had to keep stocking and could not just walk away.

According to complaint filed by the Equal Employment Opportunity Commission, Howard took several steps to report the alleged gay bias.

He complained to his supervisor, who told him the guys were only joking. He talked to another supervisor, who told Howard “it was just a joke” and not to take things too seriously because ‘f—– are ignorant, retarded people and Homer, I know you’re not retarded.’”

Howard went to another supervisor, who said it was “unfortunate the situation was being handled as it was, but that [the first supervisor] has already dealt with it,” according to the opinion written by Judge Roger Gregory.

Howard then allegedly spoke to Chet Cromer, one of the sons of the chairman of the board of directors and a manager with the company. Cromer informed his father, C.T. Cromer, who met that very night with Howard.

But the senior Cromer allegedly was less than sympathetic. “The first words out of his mouth were ‘[d]o you not realize this could cost me everything?’” according to Howard’s complaint.

When Howard complained again he said he was told the company was not responsible for hospital employees’ conduct.

After Howard’s complaints to hospital personnel brought no relief, a Cromer supervisor told him to “quit whining” and the company offered him a transfer to a day shift, which Howard said increased his hours, paid less money and interfered with his child-care responsibilities.

The EEOC sued in federal court in Greensville, S.C. U.S. District Judge Henry Herlong granted summary judgment for CFS, saying Howard had failed to provide sufficient detail about the harassers to allow the company to respond.

Duty to investigate

Gregory, though, said there was “clear evidence” that Howard “tried to communicate the nature and extent of the harassment and was effectively ignored by all levels of CFS management who scoffed at him and told him to quit being a ‘crybaby.’”

Even if it’s true Howard refused to name names, CFS still had a duty to investigate or take other measures to combat the harassment, Gregory wrote for the panel, which included Judges Diana Gribbon Motz and Robert B. King.

On the facts here, a “reasonable person would have known about the harassment given Howard’s vocal and vociferous complaints to practically anyone who would listen,” which the company policy indicated would be dealt with up the chain of command.

Gregory also found fault with the policy itself, which had any of the company’s 100 employees reporting harassment directly to the company president, an intimidating prospect. Howard said he didn’t even know who the company president was.

The company said its transfer of Howard to first shift was appropriate remedial action at the appropriate time, but Gregory said a jury could find that in fact it was retaliation for Howard’s complaints, as there was a factual dispute about whether Howard was materially better off with the shift change.

The panel vacated the employer’s win, and said it didn’t need to consider the employer’s request for attorney’s fees.

The case is EEOC v. Cromer Food Services Inc., No. 10-1476.

Deborah Elkins writes for Virginia Lawyers Weekly, a sister publication of The Daily Record.