Employers Who Fail to Address Discrimination from Customers and Guests in the Workplace May Be Liable to Their Employees

By Robert M. Thomas, Of Counsel

The Equal Employment Opportunity Commission (“EEOC”) recently filed suit against a nursing home which allegedly ignored racially-charged harassment levied by home residents against minority employees.  The lawsuit, and prior similar lawsuits before it, are a telling reminder for employers that the customer is not always right, and employers must take action to protect employees from discriminatory or harassing conduct levied by customers and guests, or else be subject to liability under Title VII of the Civil Rights Act of 1964 (“Title VII”).  

EEOC sues companies for failing to prevent discrimination from customers to employees.

              98 Starr Road Operating Co, LLC (doing business as Elderwood at Burlington) (“Elderwood”), is a long-term senior living and nursing home care facility in Vermont where, as alleged by the EEOC, African American employees and caregivers were consistently subjected to racial insults and slurs from white patients and residents, including from certain patients who followed African American employees in order to racially berate them and/or physically assault them.

              The EEOC claims that Elderwood’s managers witnessed some of the misconduct and heard multiple complaints about the mistreatment, but did nothing, except tell employees that the residents could say whatever they wanted in the facility.  One Elderwood manager allegedly told an African American employee that she should be accustomed to the racial comments because she was “from the South.”

              The EEOC lawsuit alleges violations of Title VII of the Civil Rights Act of 1964[1] and seeks compensatory and punitive damages.[2]     

              As the current Elderwood case demonstrates, employers must endeavor to protect their employees from discrimination and/or harassment—regardless of the source—and it is important for employers to understand how to address such misconduct as it arises.  United States Equal Employment Opportunity Commission v. GNLV Corporation[3] provides another telling example of the importance of an employer’s responses to discriminatory or harassing behavior from customers.  The EEOC sued GNLV Corporation when the employer was accused by its employees of condoning a discriminatory and harassing workplace environment by failing to take action against reports of racially-charged abuse and harassment from casino patrons.  

In its ruling, the court emphasized that employers can be liable for the harassing behavior of customers and guests when employers ratify or acquiesce to the harassment by not taking immediate and/or corrective action.  However, the court granted the company summary judgment on at least one employee’s racial hostile work environment claim because 1) the employee either did not report the racial incident to the employer, or; 2) when the employee did report a customer’s racial misconduct, the employer promptly told the customer to leave the casino.  The court allowed another employee’s sexual harassment claim to proceed in order to determine whether the employer overhead the sexually-charged comments and did nothing, or otherwise failed to act on claims of customer sexual harassment. 

Key Takeaways.

              Title VII makes no distinction between employer, employee, or customer misconduct for purposes of prohibiting discrimination and harassment in the workplace, and employers should ensure that their EEO policies prohibit discriminatory or harassing conduct by unrelated third parties (guests, customers, contractors, vendors, etc.) and, more importantly, act on any reports of such misconduct immediately.  As always, Campbell Litigation is available to assist employers with navigating such workplace issues and policy language in order to avoid any potential liability in the future.     

[1] Title VII generally prohibits employers from discriminating against any individual with respect to compensation, terms, conditions, or privileges of employment because of, among other things, race. 

[2]See generally E.E.O.C. v. 98 Starr Road Operating Co., LLC, d/b/a Elderwood at Burlington, 2:22-cv-00168 (D. Vt. Sept. 6, 2022). 

[3]E.E.O.C. v. GNLV Corp., 2014 WL 7365871 (D. Nev. Dec. 18, 2014).