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EPLI: The Risk of Third-Party Sexual Harassment of Employees


EPLI The Risk of Third-Party Sexual Harassment of EmployeesEmployers realize the potential liability of an employment practices liability suit when an employee is sexually harassed by another employee and measures are not taken to mitigate and correct the problem. Employee handbooks need to specifically outline a company’s policies and procedures and clearly state adherence to regulations, which most employers also understand. But there is another related risk that is perhaps less well known. A similar liability exposure can result when employees are harassed by customers, patients, or other non-employees. Previous cases in fact have confirmed that an employer may be liable for harassment even when the harasser isn’t an employee if the employer failed to remedy or prevent a hostile or offensive work environment and management-level employees knew or, in the exercise of reasonable care, should have known about the harassment. Two recent cases filed by the Equal Employment Opportunity Commission (EEOC) underscore this real exposure for employers.

One case involved a suit against a private healthcare facility in Virginia after a female employee complained that a resident sexually harassed her. The employee told her supervisor about the harassment, but the employer failed to take proper corrective action. The employer ultimately settled that case by agreeing to pay $30,000 and agreeing to conduct regular training on sexual harassment prevention. Another cased involved an auto parts store in which a Missouri court awarded $2.5 million in punitive damages to a female employee who had been sexually harassed by two customers. The employee complained to her managers, but to avoid losing the customers’ business, they took no action.

Following are three measures to implement as part of your employment practices to minimize the potential risk when it comes to third-party sexual harassment of an employee:

  1. Maintain a written policy that explicitly addresses sexual harassment by patients, residents, customers, or other third parties. The policy should specifically address how employees can report the harassment when it occurs. Maintaining such a reporting policy is critical as it provides important legal defenses in situations involving alleged harassment by a supervisor.
  2. Regularly train employees on how to react when harassed by patients, residents or customers. If employees are trained to react properly and promptly to harassment, the unwelcome conduct may be stopped before it becomes “severe or pervasive” – the standard used by courts in determining whether the conduct rises to actionable sexual harassment.
  3. Investigate and respond to complaints appropriately. While the response will depend on the circumstances of the complaint, there are several “best practices” that you should consider. For example, assign another employee to assist a customer or take care of a resident. If this doesn’t work, you may need to ban the harasser from the company premises. In the case of a resident at a healthcare facility, speak to the family in an effort to stop the offensive behavior.

If you receive a complaint, be sure to avoid any action that may constitute retaliation against the employee for making the complaint. Retaliation claims have increased across all industries in recent years. Also, don’t take any action that is “materially adverse” to the employee as a result of the complaint – including serious actions such as discipline, or even lesser actions such as a transfer to a position with more onerous job duties. If you have to take disciplinary action against an employee who has recently made such a complaint, make sure your reasons for doing so are well documented and consistent with past practice.

Also, be sure you have the proper insurance protection to address this type of risk. Third-party Employment Practices Liability Insurance (EPLI) is intended to protect an employer and its employees from allegations of various wrongful acts committed against the insured’s customers, clients, vendors, suppliers and visitors. The list of potential claimants may include medical patients, volunteers and all other non-employees. Third-party wrongful acts include harassment and all forms of discrimination. Discrimination claims may allege discriminatory practices against a person based on their race, religion, age, sex, national origin, disability, pregnancy or sexual orientation. Harassment claims allege unwelcome sexual advances or requests for sexual favors. Such acts include verbal and physical conduct, and other forms of harassment that create a hostile or offensive work environment. Some policies also respond to allegations of mental anguish, emotional distress and humiliation. Some may even cover allegations of assault.

Axis Insurance Services specializes in EPLI and would be happy to review your specific policy. Give us a call at (877) 787-5258 to speak with one of our professionals.

 

Source: Fisher & Phillips LLP, Property/Casualty 360

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Blogged on: August 17, 2015 by Mike Smith
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