California Employers' Workplace Obligations for Acts of Non-Employees

If employers feel like the risks of doing business in California are steadily rising, that's because they're probably right. Whether it be the rising costs of workers' compensation insurance, the attendant tax penalties and other liabilities associated with misclassifying workers as independent contractors (the action of choice for many employers seeking to avoid workers' compensation, unemployment, and disability insurance obligations) or the more longstanding concerns of being hit with a six or seven figure harassment, discrimination or wrongful termination verdict, the liability risks to California employers are indeed, real and substantial.

For the past few years, California employers were led to believe by recent appellate court decisions that they did not have to worry about lawsuits by employees for harassing conduct committed against them by non-employees, such as customers, clients, or independent contractors. As of January 1, 2004, this, too, is an added concern for employers. Specifically, the Legislature recently amended Government Code section 12940 subdivision (j)(i), of California's Fair Employment and Housing Act (“FEHA”) to clarify that the FEHA, indeed, is intended to impose liability on the part of an employer for harassment by any person. [1]

The Legislature amended FEHA, in part, as a response to recent California Court of Appeal decisions which concluded that FEHA does not impose liability on employers for the acts of non-employees. In the most notable of these decisions, Salazar v. Diversified Paratransit, Inc. (2002) 103 Cal.App.4th 131, the Court of Appeal reversed a lower court's findings in favor of a bus driver who was grotesquely attacked by one of her regular passengers after she had repeatedly complained to her employer about being subjected to that passenger's harassing conduct. Salazar is pending review by the California Supreme Court but it and decisions following it, will effectively be made moot in light of the FEHA amendment.

Lessons for Employers

The trial court's findings in Salazar illustrate the legal landscape California employers will face in 2004 and beyond. Employers, therefore, are advised to pay close attention to the types of clients, customers, and independent contractors with whom they do business. In the case of clients and customers, the old adage “the customer is always right” must be conditioned when it comes to inappropriate or unwanted behavior to which employees may be subjected by customers and clients. Employers are advised to educate their employees to voice complaints about any unwelcome or inappropriate conduct that adversely affects their working environment, regardless of the source. In this manner, employers will go a long way toward fulfilling their obligations of providing a zero-tolerance, harassment-free workplace.

Employers must also take the added step, when at all possible, of monitoring the activities of their clients and customers. In the case of an employer who provides services to the paying public, such as a movie theatre or a restaurant, sound judgment must be exercised before an employer allows a prospective customer onto its premises or, alternatively, an employer may be advised to demand that certain customers leave the premises, depending on the circumstances. To this end, these employers are strongly advised to establish and post in conspicuous places on their premises Rules of Conduct designed to give customers notice of the types of conduct and behavior that will not be tolerated and the actions that may be taken in the event such conduct and behavior occurs.

With respect to workers hired as independent contractors, additional care should be taken in the drafting of independent contractor agreements to address the contractor's liabilities and obligations concerning workplace conduct. Such contracts are not foolproof. But taking the effort to create a contract and to list the types of behavior and conduct by a contractor that will not be tolerated and the actions that will be taken in the event such conduct occurs, will certainly assist an employer's defense of a sexual harassment claim by its employee(s) relating to alleged harassment by the worker under contract.

Conclusion

A potentially problematic ramification of FEHA's expansion into the realm of employer's liability for the conduct of non-employees, is the likely escalation of discrimination claims from such non-employees who may claim they were denied or refused service because of a protected status, such as race, sex, gender, sexual orientation, or the like. It remains to be seen how this dichotomy will play out in the courts. In the near term, however, employers must be careful to educate their employees about all of these concerns. A recommended step to take in this education process is to consult with an employment practices specialist, such as an attorney or human resources professional, to make sure your company's harassment policies are consistent with applicable legal requirements and that your employees, and, particularly, your managers and key decision-makers, are fully advised of their obligations to provide a harassment-free workplace.

[1] This “clarification” is consistent with federal law where employers may already be held responsible for not protecting their employees from customer, client or contract worker harassment under Title VII of the Federal Civil Rights Act.

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