When Clients Harass Employees, Is the Employer Liable? Court Rules

It’s a relatively uncommon type of Title VII claim, but it happens: An employee sues their employer based on alleged harassment not by a supervisor or co-worker but instead by a client or customer of the employer.

In that situation, is the employer liable for the third-party harassment?

More specifically, is it enough for the employee to show that the employer was negligent, or does the employee instead have to prove that the employer intended for the harassment to happen?

A new federal appeals court ruling in a case from Michigan shakes up the rules just a bit – and makes it more difficult for some employees to prove a legal violation.

Employee Claims Harassment by Motel Manager

Dorothy Bivens worked as a sales representative for Zep, Inc., which makes and distributes cleaning products to retail and commercial businesses. Her job was to sell Zep products and develop customer relationships in the Detroit area.

Bivens said that just a few months after she started working, she visited a motel that was a client of Zep. She alleged that the motel manager locked her in his office and asked for a date. She added that after she said no, the manager unlocked the door and let her leave.

Bivens reported the alleged incident to her supervisor, who reassigned her to a sales team that did not visit the motel.

At around the same time, Zep decided to eliminate Bivens’ position, saying it did so as part of a cost-cutting effort.

Bivens sued Zep, alleging a hostile work environment. She also claimed Zep fired her because she complained about the motel manager’s alleged harassment or because she is black.

A lower federal court in Michigan ruled in favor of Zep, and Bivens filed an appeal.

Was Employer Liable for Harassment?

The appeals court first considered Bivens’ hostile work environment claim, which was premised on the allegation that the motel manager harassed her.

The question was this: When is an employer liable for harassment of an employee by a non-employee?

Appeals Court Explains Harassment Standards

Importantly, the appeals court said that sexual harassment under Title VII “presupposes intentional conduct” (emphasis added). It added that intentional harassment by an employer’s agent can be imputed to the employer.

However, it continued, because sexual harassment does not serve a business purpose, an employer is liable for it only if the employer was negligent or reckless – or the existence of the agency relationship helped the employee engage in the harassing behavior.

No Harassment by Employee or Agent

In this case, the appeals court noted, the alleged harasser was not one of its employees or agents. The motel was nothing more than a Zep customer, and nothing permitted the motel manager to act on Zep’s behalf.

Because the legal rules regarding agency did not help Bivens, she could win only by showing that Zep was directly liable for the alleged harassment, the appeals court said. According to this court, that meant the decisive question was whether Zep intended for the alleged harassment to take place.

Bivens did not meet this standard, the appeals court ruled. Referring to the alleged incident with the motel manager, it said Zep was “entirely absent from the timeline of this one-off event.” No jury could reasonably find that Zep intentionally treated Bivens worse based on her sex, it determined. It upheld the lower court’s decision to reject the claim of hostile work environment.

Harassment Ruling Creates Split of Authority

The appeals court acknowledged that its decision to require intentional conduct rather than just negligence was a bit rogue. Six other federal appeals courts and the Equal Employment Opportunity Commission say that negligence is enough, but the federal appeals court (covering Kentucky, Michigan, Ohio and Tennessee) that decided this case broke ranks with those who say negligence is sufficient to hold a customer or client liable.

The appeals court rejected Bivens’ other claims as well and affirmed the decision for the employer.

Where’s the Respect?

There was a time – and not too long ago – when courts gave substantial deference to guidance issued by federal administrative agencies regarding federal laws. But a 2024 U.S. Supreme Court decision changed that general rule and essentially said courts are to interpret laws independently and for themselves.

As shown by this decision, that new standard has the potential to breed inconsistent results. If courts nationwide are not tending to defer to federal agency interpretations, they are more likely to reach different conclusions – especially on close questions.

Limited Applicability, But Still Important

Though the decision applies only in states covered by the Seventh Circuit, it nonetheless creates a new split in authority – the kind of split that may ultimately lead to review and final resolution of the question by the U.S. Supreme Court at some later date.

Bivens v. Zep, Inc., No. 24-2109 (7th Cir. 8/8/25).