Most organizations recognize they must respond to harassment involving their own employees, such as supervisors or coworkers. However, risk also arises from individuals who are not part of the workforce — including customers, vendors, contractors, patients, clients, and members of the public.
Legal claims tied to this type of conduct are becoming more prominent, especially as courts continue to evaluate when an employer can be held responsible for actions taken by non-employees. For employers in California, caution is especially important. Uncertainty at the federal level does not lessen exposure under state law.
Under the California Fair Employment and Housing Act (FEHA), an employer may be held accountable for harassment by a non-employee if the employer—or its managers or agents—knew, or reasonably should have known, about the behavior and failed to act promptly and effectively to correct it.
In many cases, how the employer responds matters more than whether the person engaged in the misconduct works for the company.
Defining Third-Party Harassment
Third-party harassment occurs when someone outside the organization engages in unlawful or inappropriate behavior toward an employee. Examples often include:
- Customers making inappropriate or sexual remarks
- Vendors engaging in discriminatory conduct
- Patients mistreating healthcare staff
- Clients making repeated unwelcome advances
- Contractors targeting employees based on protected traits
Employers sometimes argue they lack authority over these individuals. While that may be true to an extent, it does not eliminate their obligation to act reasonably once issues arise.
California law does not expect employers to control every outside party, but it does require them to take appropriate steps when they become aware of misconduct.
Employer Response Drives Liability
When courts review these cases, a central issue is how the employer handled the situation after learning about it.
Common considerations include:
- Whether the complaint was taken seriously
- Whether an investigation began without delay
- Whether steps were taken to prevent further exposure
- Whether the affected employee was protected
- Whether business interests (such as preserving a client relationship) were prioritized over addressing the issue
Employers are rarely faulted for investigating concerns. Problems more often arise when complaints are ignored, minimized, handled informally, or delayed.
Limited Control Does Not Mean Limited Responsibility
Third-party situations can be challenging because employers cannot always discipline or remove the individual involved. For example, they may not be able to terminate a customer or refuse service in every situation.
Even so, some level of responsibility remains.
Reasonable responses may involve:
- Adjusting job assignments to limit interaction
- Communicating expectations or warnings to vendors or customers
- Modifying schedules or reporting structures
- Ending business relationships when necessary
- Keeping detailed records of complaints and actions taken
- Training managers to recognize and escalate concerns
The appropriate approach depends on the circumstances, but failing to act is often the most significant risk.
The Role of Frontline Management
Employees frequently raise concerns first with supervisors or managers, rather than human resources. If those leaders dismiss the issue, downplay it, or fail to report it upward, the organization may lose the opportunity to address the problem early.
Ensuring that frontline leaders understand how to identify and respond to potential harassment complaints is one of the most effective ways to reduce risk.
Key Takeaway
Today’s workplaces often involve ongoing interaction with people outside the organization. As those interactions increase, so does potential liability.
For employers in California, the primary issue is often not whether a legal duty exists in a given situation, but whether the organization acted reasonably under the circumstances once it became aware of the conduct.
