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Employer may have negligently tolerated sexual harassment by non-employee

By Lorene D. Park, J.D.

Noting that an employee’s report to a manager that the manager’s non-employee husband was sexually harassing the employee constituted actual notice to the employer of the harassment, and finding that the employer could be liable under a negligence standard for undisputedly severe and pervasive sexual harassment, a federal district court in Kansas denied the employer’s motion for summary judgment on the employee’s Title VII sexual harassment claim. It also found that the employer’s reporting policy was too general to be considered directed at sexual harassment and did not apply to non-employee harassers. The employee’s retaliation claim failed because no reasonable jury could find her harassment complaint, which was made during an investigation into the conduct for which she was fired, was the “but for” reason for her discharge (Shaeffer v Anderson Management Co, Inc, July 9, 2014, Gale, K).

A self-storage employee was allegedly sexually harassed by the husband of the site manager, whose family lived on the property. According to the employee, he exposed his genitals, touched her breasts, attempted other sexual contact, and made inappropriate comments. The employee told the site manager, but the manager refused to believe her.

Meanwhile, the site manager began to suspect the employee was engaging in improper conduct with respect to auctions on foreclosed units. The manager noted that an address used by the employee was the same as the address used by a successful bidder on a unit sold for only $10 over the second highest secret bidder (which itself was unusual since it was the only bid made by the successful bidder and it was made two days before bidding ceased). The site manager reported her suspicions to the property manager, who conducted an investigation. In a May 23, 2012, meeting on the issue, the employee told the property manager that she had been sexually harassed by the site manager’s husband and intended to file a police report. According to the employee, the property manager responded by saying “He’s not our employee, so figure it out.”

On May 29, the employee was terminated based on the property manager’s conclusion that she lied when she said she did not have a “personal relationship” with the successful bidder, given that the bidder was listed as the employee’s first personal reference on her employment application. The employee filed suit alleging sexual harassment and retaliation under Title VII.

Liability for non-employee harassment. Denying the employer’s motion for summary judgment on the sexual harassment claim, the court noted that it was undisputed that the incidents alleged by the employee qualified as severe and pervasive. They happened over several months and included indecent exposure, indecent propositions, and unwelcome sexual touching. Since the alleged harasser was a non-employee, the employer could be liable if it condoned or tolerated the condition. The court explained that a negligence standard applies and the employer would be “liable if it failed to remedy or prevent a hostile or offensive work environment created by non-employees of which management-level employees knew or in the exercise of reasonable care should have known.”

Here, the employee testified that she told the site manager that the site manager’s husband was sexually harassing her. That was a “report to a management-level employee and gave the employer actual notice of the harassment,” the court found. While the fact that the offender was her husband no doubt placed the site manager in an awkward position, it did not change the fact that management had notice.

Policy too broad, inapplicable. The employer argued that the employee’s claim failed because she did not comply with its reporting policy, which required a report “to management [of] suspicious, unethical, or illegal conduct by fellow employees, customers, or suppliers.” Rejecting this contention, the court explained that the language of this policy was “too general to be considered a policy directed at discriminatory conduct or sexual harassment.” Moreover, it did not literally apply here because the harasser was not a “fellow employee, customer or supplier.” Finally, the court found that the policy was not specific as to whom a report must be made, though the site manager to whom the employee made her report was likely “management.” For these reasons, summary judgment was inappropriate on the harassment claim.

Retaliation. On the other hand, the employee’s retaliation claim failed as a matter of law because she did not have sufficient evidence from which a reasonable jury could find her harassment report was the “but-for” cause of her termination. It was uncontroverted that the employer was investigating suspected misconduct by the employee at the time she reported the harassment. Furthermore, it was essentially uncontroverted that the property manager decided to discharge the employee because he believed she lied to him about knowing the successful bidder at some foreclosure sales.