Recently, in a case titled Bivens v. Zep, Inc., the Sixth Circuit Court of Appeals ruled that an employer will only be liable for a customer's harassment of an employee when the employer intends for such harassment to occur. The decision departs from other federal appellate courts and the EEOC's position, creating a higher burden for plaintiffs in the Sixth Circuit to establish harassment by customers and other third parties.
The Plaintiff, Dorothy Bivens, worked for Zep, Inc. ("Zep") as a territory sales representative where she frequently visited Zep's Detroit-area clients to sell products and maintain relationships. During one such visit at a motel, Bivens stepped into the manager's office. The manager locked the door behind her and asked if they could date. Bivens said no and asked to leave.
Bivens later described the event to her supervisor, who reassigned the client to another sales team, meaning Bivens would not need to interact with the client again. Neither Bivens nor her supervisor mentioned the incident to anyone else at Zep. Shortly thereafter, in an effort to cut costs, Zep terminated Bivens.
Bivens later sued Zep for harassment, retaliation, and discrimination, arguing that the client's action at the motel subjected her to a hostile work environment, and that she was fired because she complained about the client's advances and because she was black. Zep moved for summary judgment on each of Bivens' claims, which the district court granted. Bivens then appealed.
The Sixth Circuit rejected Bivens' appeal, explaining that agency principles prohibit liability when the third-party is not acting at the behest or to serve the employer, as employers are generally only liable for torts employees commit that are within the scope of their employment and to further the employer's business. The Sixth Circuit pointed out the differences between the Company's relationship with supervisors/employees with those of customers, who rarely agree to act on the corporation's behalf and are not subject to its control. Explaining that there was "no legal bridge" between the client's intent and Zep's responsibility, such as the Company being "substantially certain" the harassment would keep happening, Zep could be held liable only for its own intentional action. Thus, Bivens would need to demonstrate that Zep intended for the harassment to occur.
Before applying the heightened standard to Bivens' case, the Sixth Circuit acknowledged it was departing from precedent set by most other circuit courts, as well as the EEOC's reading of Title VII. Such decisions and the EEOC's interpretation have allowed employer liability for a non-employee's conduct under a lower negligence standard, when the employer knows or should have known of the conduct and fails to take immediate and appropriate corrective action. While other courts have relied on the EEOC's interpretation, the Sixth Circuit clarified that the EEOC's guidance should not carry the day, as the agency has limited interpretative authority over Title VII and is only authorized to issue procedural regulations, not substantive ones interpretating the statutory rights of parties. As such, and under the Supreme Court's recent decision in Loper Bright Enters. v. Raimondo, courts are obliged to independently interpret the statute and need only respect the agency's decision to the extent it finds that reasoning persuasive.
Applying those principles to Bivens' case, the Sixth Circuit reasoned that because there was no evidence that Zep intended to cause or allow the harassment or was "substantially certain" harassment would result from its actions, Bivens' harassment claims failed.
Bivens also sought to hold Zep liable for retaliation, but the Sixth Circuit rejected that claim too, as she could not link her allegations to an improper motive for her termination with the company officials who made the decision to terminate her employment. Similarly, Bivens' discrimination claims also failed on appeal.
In sum, although the decision is only binding in the Sixth Circuit, it may be instructive as to how courts should address the issue of employment claims regarding the conduct of third parties, especially post Loper Bright.
