4th Circuit: Construction Company Can Be Liable for Harassment by Another Company’s Agent

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Construction is a relationships-driven business.  The most successful companies understand that rising to the top requires developing and nurturing solid relationships up and down the contractual chain, both before the contract is signed and throughout the period of performance.  It’s the ticket to generating repeat business, increasing bonding capacity, maximizing profit and thriving over the long haul.

Of course, a relationship between two corporate entities represents the sum of the interpersonal interactions between and among the owners and employees of the respective companies to the relationship.  Unfortunately, those interactions might not always be pleasant.  They might even become downright abusive.  And when one company’s agent harasses another company’s employee, the employer of the aggrieved employee could face hostile workplace liability.

Monday MemoThat’s the unmistakable message driven home by the April 28, 2014 Fourth Circuit Court of Appeals’ published decision in Freeman v. Dal-Tile Corporation.

In Freeman, a sales consultant for a ceramic tile and natural stone products supplier had daily interactions with a representative of a kitchen and bath remodeling company that conducted significant business with the supplier.  The representative had a habit of spouting off racist and sexist comments, bragging about his romantic dalliances and engaging in other bad behavior you’ll have to read the decision to discover.  The affected employee reported all of this conduct to her superiors, who typically shrugged off her complaints.  At one point, the supplier banned the offensive representative from its offices, but the ban was lifted shortly thereafter, and the employee feared having future interactions with him.  After three years of abuse, not to mention a stint in therapy, the employee resigned her position and sued her employer for hostile workplace liability under Title VII of the Civil Rights Act of 1964, among other claims.

The district court granted the supplier summary judgment, but the 4th Circuit reversed, finding that the employee had forecast sufficient facts for her case to reach a jury.  Most significantly, the Court laid down a new bright-line rule: an employer is liable under Title VII when third parties create 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.  Under the facts before it, the 4th Circuit believed a jury could find in the employee’s favor and allowed her suit to proceed to trial.

Bottom line?  A company that receives complaints from an employee about abusive behavior by outsiders confronts an uncomfortable choice.  It can adopt a “see-no-evil, hear-no-evil” approach, perhaps believing that tact best to preserving a valuable business relationship.  Or it can take steps to protect its employee from further abuse, even if that means potentially jeopardizing a relationship with a key customer.  The former path presents legal and reputational risks; the latter, business relationship risks.

In other words, a test of the company’s core values, with no risk-free way out.

1 Comment

Filed under Employment Law Issues, Federal case law

One response to “4th Circuit: Construction Company Can Be Liable for Harassment by Another Company’s Agent

  1. If invited to a face-to-face screening interview, it will usually be with a third-party construction recruiter or someone from human resources. Human resource interviewers are typically experienced and often are professionals skilled at construction interviewing and screening candidates. They may not understand the details of the job that you interview for, but they are effective at judging character, intelligence, and good fits for the company culture. They are also good at identifying potential “red flags” or problem areas with your work background and general qualifications.

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