In EEOC v. Cromer Food Services Inc., 2011 U.S. App. LEXIS 4279 (4th Cir. March 3, 2011), found here, a recent unpublished opinion by the U.S. Court of Appeals for the Fourth Circuit, it was decided that an employer may at times be liable for third-party harassment if the employer knew or should have known of the harassment and failed to take appropriate steps. The Court vacated the district court’s grant of summary judgment for the employer, Cromer Food Services, Inc. (“CFS”), and remanded for trial.

Homer Ray Howard was an employee of CFS, a food-stocking company that sells snacks in vending machines that it places on its clients’ premises. Howard claimed he was harassed repeatedly while stocking vending machines at a hospital, one of CFS’ biggest clients. According to Howard, his problems began when two male hospital employees began harassing him with unwanted sexual comments. Howard also claims one employee left him a note calling him gay. Howard asserts that he was harassed on a daily basis and that the men continually referred to him using sexually graphic names.

Howard claims that he told his supervisor of the harassment, but Adams told Howard to “let it go, that the men were just joking.” Howard also reported the harassment to the head of the company and to his direct supervisor, who replied that was “it was just a joke.” Op. at 5. Howard claims that when he told the chairman of the Board of Directors about the harassment, the chairman was visibly upset and exclaimed “do you not realize this could cost me everything?” Op. at 6. CFS told Howard there was nothing they could do because the harassers weren’t under their control. After months of complaints to superiors, CFS finally offered Howard a different shift which included longer hours, less pay, and interference with his childcare responsibilities. When Howard turned down the offer, he was terminated.

The EEOC filed suit on behalf of Howard claiming sexual harassment in violation of Title VII of the Civil Rights Act of 1964. For the Fourth Circuit, this was the first consideration as to whether an employer may be liable for the activities of non-employees in a claim for sexual harassment. The court looked at other Circuits, which have found that an employer can be liable if it took no steps to protect its employees and if it had actual or constructive knowledge of the situation. The EEOC regulations echo this principle. The Court decided to adopt a negligence standard, commensurate with the case law of the Tenth and Eleventh Circuits.

The Court found that Howard tried to communicate the nature and extent of the harassment and was effectively ignored by all levels of CFS management who scoffed at him and told him to quit being such a “crybaby.” CFS failed to ask Howard follow-up questions or ask him the names of those who were harassing him. CFS had a duty to investigate or take other measures to combat the harassment but did not act accordingly.

CFS argued that Howard failed to follow company policy, which required him to report harassment incidents to the President of the company. The Court replied that despite this fact, “a reasonable person would have known about the harassment given Howard’s vocal and vociferous complaints to practically anyone who would listen.” Op. at 15. The Court highlighted the inadequacy of the company’s policy of requiring the employees of a 100-person company to report harassment incidents directly to the president. “Evidence of repeated complaints to supervisors and managers creates a triable issue as to whether the employer had notice of the harassment.” Op. at 16, quoting EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 320 (4th Cir. 2008). Summary judgment was improper.

This case is instructive for Virginia employers. Employers in Virginia would be well advised to make prompt remedial measures in the event an employee complains of sexual harassment by a client or independent contractor. Failure to take remedial measures to protect the employee may, as in the instant case, lead to liability under Title VII. In addition, just because a company has a written policy concerning the reporting of harassment, courts may still, depending on the facts of each case, find that actual notice is sufficient to impose liability.