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The Fourth Circuit U.S. Court of Appeals, which covers Maryland, recently held that an employer may be liable for the sexual harassment of one of its employees by a customer. Homer Howard was a driver for Cromer Food Services (“CFS”), which sells snacks and beverages in vending machines on its clients’ premises. Its largest client is Greenville Hospital, which was part of Mr. Howard’s territory. Two hospital employees harassed Mr. Howard on a daily basis, calling him “Homo Howard” and made unwanted sexual advances. Mr. Howard complained to his immediate supervisor who told him that the men were only joking and that he should let it go. The supervisor did not investigate the matter nor report it to the President as required by CFS policy. Mr. Howard met on two occasions with the Chairman of the Board of Directors, C.T. Cromer, wherein he complained about being harassed by the hospital employees. Mr. Cromer told Mr. Howard that CFS was not responsible for the conduct of hospital employees, only that of CFS employees. Mr. Howard also complained to the Greenville Hospital. Neither CFS nor the hospital took any action to remedy the situation.

Mr. Howard filed a discrimination charge with the EEOC, and the EEOC filed suit on behalf of Mr. Howard. The trial court found that CFS lacked the requisite details regarding the harassment totake corrective action. The EEOC appealed. The Fourth Circuit found that CFS had actual or constructive notice of the harassment and failed to take any corrective action. The Court further held that an employer may be liable for sexual harassment by a customer or client if it knew or should have known of the harassment and failed to take appropriate actions to stop it.

As this case demonstrates, it is critical not only to have appropriate discrimination and harassment policies and complaint reporting procedures but also to take reasonable action in response to a complaint. Stein Sperling, in addition to its counseling and preparation of Employer Policies and Handbooks, also provides sexual harassment and discrimination training for H.R. Managers and supervisors.

If you have questions about this new case and how it might apply to your company, please contact one of the members of our Employment Law Group at (301) 340-2020.