When Are Employers Liable for Harassment from Customers?
We often warn our clients that not only do they have to watch out for the inappropriate actions of their employees, but also the creepy conduct of their customers. This comes in part from the EEOC’s long-standing guidance: Employers can be held liable for the harassment of non-employees (customers, vendors, etc.) if the employer is aware of the harassment and fails to correct it. But on August 8, 2025, the Sixth Circuit came to a different conclusion in the case of Bivens v. Zep, Inc. In that case, Dorothy Bivens went to visit a company customer—a motel. When she entered the motel manager’s office, he locked the door behind her and asked if she would go on a date with him. She said no thanks, and the motel manager unlocked the door. Bivens left and reported the incident to her supervisor. Bivens was later let go as part of a reduction in force. Bivens sued her former employer, alleging hostile work environment. After she lost on summary judgment, Bivens appealed to the Sixth Circuit Court of Appeals.
The court noted that, to prevail on a hostile work environment claim, Biven had to show that she was treated differently, and that the difference in treatment was intentional—i.e., the perpetrator meant to tell off color jokes, touch a coworker, or lock someone in their office and ask them on a date. If the harassment arises out of conduct by the company’s “official actions” (i.e., intentional conduct by the company’s high-level officials) the analysis is simple: it’s direct liability. If the harassment comes from the intentional conduct of rank-and-file employees, the employer can still be held liable, depending on the employee’s role within the company: that’s vicarious liability. But when the harasser is employed by a company client, the analysis becomes more complicated. And that was the issue before the Sixth Circuit.
The court concluded that, for Ms. Bivens to hold her employer liable for hostile-work-environment harassment by a customer (or any other non-agent), she had to show that her employer “intended” for the harassment to occur. And she could make that showing by providing evidence that her employer either “desired to cause” her harassment or was “substantially certain” that it would result from its actions—in this case, sending her to a motel run by a real gem of a manager. Clearly, this standard imposes a much higher burden on plaintiffs than the EEOC standard, which is followed by several courts across the country. For now, this higher standard for plaintiffs will only be binding in the states covered by the Sixth Circuit: Michigan, Ohio, Kentucky, and Tennessee. But stay tuned to see if other circuits follow suit. You can read the Bivens court opinion here.
Some Good News for Employers Resisting FLSA Collective Actions
Being named as a defendant in a class action lawsuit can be a real headache. The costs and administrative hassle are generally much more significant than in run-of-the-mill lawsuits. And you can pretty much guaranty that the lion’s share of any money paid in a settlement or in satisfying a judgment will go straight to the plaintiffs’ lawyers. In the wage-and-hour context—which is governed in large part by the Fair Labor Standards Act (FLSA)—we use a different name for these multi-party cases: collective actions. The FLSA permits employees to pursue claims not only on their own behalf but also for other “similarly situated” individuals through collective actions. While there are some differences between collective actions and class actions, the upshot is the same: they’re a real pain. So, like in class actions, employers try to stay out of collective actions (often by including collective-action waivers in employment agreements) or get out of them early through dismissal or settlement.
Historically, district courts have used the two-step approach for determining whether a “collective” can be formed and withstand scrutiny, before issuing collective-action notices to putative collective members. In practice, this approach prejudiced employers by expediting early notice and limiting the employers’ ability to present evidence before notice went out to plaintiffs. This often prompted employers to settle claims that lacked merit just to avoid astronomical attorney fees. But the Seventh Circuit’s new approach, as announced in Richards v. Eli Lilly & Co., requires plaintiffs to introduce evidence that creates a material factual dispute as to whether the proposed collective is, in fact, similarly situated, and courts (within the Seventh Circuit) are required to consider both plaintiffs’ and defendants’ evidence when assessing whether notice is appropriate. And if discovery can resolve the dispute, limited pre-notice discovery may be permitted. So, this is good news for employers and bad news for plaintiff-side law firms (we can feel your sympathy from here). You can read the Richards decision here.
