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Fourth Circuit: Employer May Be Held Liable for Third-Party Harassment

The Fourth Circuit recently joined a number of other federal circuit courts (including our 11th Circuit) in holding that an employer may be held liable for a third party’s unlawful harassment if it knew or should have known about the harassment but failed to take prompt remedial action. Freeman v. Dal-Tile Corp., 2014 WL 1678422 (4th Cir. April 29, 2014).

Freeman worked for Dal-Tile as a customer service representative. Her job required her to interact with one of Dal-Tile’s vendors, Koester. For three years, Koester subjected Freeman to lewd racially and sexually charged comments and behavior, sometimes in the presence of Freeman’s managers. Despite Freeman’s complaints about Koester, Dal-Tile largely shrugged off his behavior. Freeman eventually took a medical leave for depression and anxiety, then quit and sued Dal-Tile for hostile work environment discrimination. The district court awarded Dal-Tile summary judgment on Freeman’s hostile work environment claim but the Fourth Circuit reversed.

The Fourth Circuit, for the first time, adopted a negligence standard for addressing claims of third-party harassment. It held that “an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed ‘to take prompt remedial action reasonably calculated to end the harassment.'” In adopting this standard, the Fourth Circuit cited approvingly to similar rules adopted by the Seventh, Ninth, Tenth, and Eleventh Judicial Circuits. Applying this standard to the facts of Freeman’s case, the appellate court found that the trial court erred in awarding summary judgment to Dal-Tile, reversing its decision.

The lesson: just because a harasser doesn’t work for you does not mean you can, in the Fourth Circuit’s words, “adopt a ‘hear no evil, see no evil’ strategy.” An employer must step up and stop the harassment, even at the risk of alienating a customer or vendor, lest it expose itself to Title VII liability.

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