Sixth Circuit departs from majority approach, requiring “intent” for employer liability for third-party harassment under Title VII
In Bivens v. Zep, Inc., a customer engaged in unwanted romantic advances towards a former employee. The employee sued the employer for harassment and hostile work environment under federal law, asserting that the employer failed to address the customer’s advances. The Sixth Circuit Court of Appeals broke from federal agency guidance and the prevailing approach of other circuit courts, affirming summary judgment against the employee because there was no evidence that the employer “desire[d] to cause” the harassment or was “substantially certain” the harassment would occur, given the employer’s prompt reassignment of the offending customer’s account.
The U.S. Equal Employment Opportunity Commission (“EEOC”), as well as the First, Second, Eighth, Ninth, Tenth and Eleventh Circuit Courts, apply a negligence standard to third-party harassment, holding employers liable when they “knew or should have known” about non-employee harassment and failed to address it. The Sixth Circuit rejected this approach, reasoning that negligence applies only to coworkers and supervisors—those agents whose intent may be imputed to the employer. According to the court, because third parties are not agents of the employer, holding employers liable for their conduct without showing employer intent—i.e., that the employer “intentionally created or tolerated” the condition—would exceed the scope of Title VII, which targets intentional discrimination.
S&K Take: This decision creates a clear circuit split on employer liability for third-party harassment. Employees in Kentucky, Michigan, Ohio, and Tennessee now face a higher bar to establish employer liability for harassment by clients or customers. Nonetheless, employers should continue to respond promptly and diligently to all harassment complaints.
Connecticut federal court compels arbitration of sex bias suit, reinforcing EFAA’s plausibility standard
In Smith v. Boehringer Ingelheim Pharmaceuticals, LLC, a federal court in Connecticut compelled arbitration of a former vice president’s gender and sex discrimination claims, rejecting his attempt to evade arbitration by invoking the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”). The court determined the EFAA was inapplicable to the dispute because although the employee alleged gender-based mistreatment by his supervisor, he conceded there was no sexual conduct underlying his claims.
The court’s decision aligns with the growing consensus among district courts in the Second Circuit—which includes New York, Connecticut, and Vermont—that have “almost uniformly” adopted the standard articulated in Yost v. Everyrealm, Inc. That standard requires a plaintiff to “plausibly allege” sexual harassment—not merely “garden variety” gender discrimination—in order to avoid arbitration under the EFAA. Notably, the court declined to follow the more lenient standard adopted by the Southern District Court of New York in Diaz-Roa v. Hermes L., P.C., which would exempt from arbitration any non-frivolous claims “relating to” or “arising from” a sexual harassment dispute.
S&K Take: We’ve covered several court cases defining the scope of the EFAA before—including here, here, and here. Although the Second Circuit Court has not yet ruled on the EFAA’s pleading standard, Smith joins the majority of district courts in that circuit (and elsewhere) in narrowly interpreting the EFAA’s reach to only those claims alleging actual sexual misconduct, rather than all sex-based workplace disputes. In other words, employees cannot avoid arbitration by asserting sex-based claims absent plausible allegations of sexual harassment.
Michigan federal court prohibits employee from working for competitor based on trade secret claims, despite likely overbroad noncompete
In Partner Assessment Corp. v. Rosen, a federal court in Michigan granted a temporary restraining order (“TRO”) prohibiting a senior employee from joining a competitor. The basis for the injunction was a finding that the employer was likely to succeed on its state and federal trade secret claims. Notably, the court granted the TRO despite concluding the employer was unlikely to succeed on its claim that the employee breached a noncompete agreement, which the court said was likely too broad to be enforceable.
The company supported its trade secret claims with forensic evidence showing that shortly after noticing her resignation, the employee accessed and uploaded confidential company documents to a personal Dropbox account, including client lists, financial data, and information regarding business partners and referral sources. On these facts, plus a showing that the employer undertook efforts to safeguard trade secrets—including the fact it imposed a noncompete—the court enjoined the employee from working for the competitor. Notably, the court issued the injunction even though it thought the noncompete was likely unenforceable under Michigan law because it lacked a geographic scope and prohibited the employee from working in any capacity with a competitive business.
The employee has moved to dissolve or modify the TRO, arguing the order amounts to “an anti-competitive” blanket employment ban.
S&K Take: This case highlights that non-disclosure agreements and trade secret laws provide employers with additional means of protecting their proprietary and confidential information from competitors outside of the traditional noncompete and nonsolicit landscape. These alternative protective measures are likely to become even more important as noncompetes come under increasing legislative and judicial scrutiny.
