Don’t Let Customers Create a Hostile Work Environment 9:50, April 20, 2017

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Don’t Let Customers Create a Hostile Work Environment

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Most employers realize that they can be held responsible if an employee does something to create a hostile work environment. But some employers don’t know that they can also be liable for failing to protect employees from customers’ harassment or discrimination.

Danielle Creacy worked for BCBG Max Azria Group, LLC (BCBG), a clothing retailer with more than 650 standalone stores and “partner shops” worldwide. Creacy, who is African American, worked in a BCBG partner shop inside a Lord & Taylor store in Scarsdale, New York. She had several encounters with a customer, Lexi Peng, who yelled at her, waved a hangar in her face, and hit her. Peng also referred to “you people” and pointed to the skin on the back of her hand, a gesture that Creacy took as a reference to her own skin color. After Creacy complained, Lord & Taylor’s Human Resources manager told Peng not to return to the BCBG register and not to touch any employees. She told Creacy to “just go sit in the back” if Peng returned to the store. During a later visit by Peng, Creacy spent an hour in the stockroom while Peng shopped.

Although Creacy talked to five BCBG managers about the incidents, none of them notified Human Resources or conducted an investigation. BCBG also refused to let her transfer to another store. Creacy became increasingly upset, lost weight, and was afraid to enter the store. She eventually found another job and resigned from BCBG.

Then she filed a lawsuit claiming that BCBG subjected her to a racially hostile work environment and constructively terminated her by compelling her to quit. BCBG argued that she should not be able to go to trial on her claims.

BCBG’s Control Over Peng

BCBG said that it didn’t create a hostile work environment, because it had no control over Peng. However, the Second Circuit, which covers New York, has held that employers can be liable for harassment by non-employees. BCBG also claimed that it had no authority to ban a customer from a Lord & Taylor store. But Lord & Taylor routinely issued “trespass warnings” to customers caught shoplifting or making threatening and harassing remarks. BCBG provided no evidence that it had requested such a warning to be issued to Peng.

Involuntary Resignation
BCBG also argued that the mere fact that Creacy was unhappy at BCBG, even considering the incidents with Peng, did not mean that she was constructively discharged. But the court left it up to a jury to decide whether a reasonable employee may have felt compelled to quit her job after the company failed to protect her from a customer who physically assaulted her and repeatedly berated her.

Request for Punitive Damages
Creacy’s request for punitive damages required her to show that BCBG acted with malice or reckless indifference regarding the hostile work environment. BCBG argued that it didn’t act with malice or reckless indifference because it had a comprehensive equal employment opportunity policy and because several employees spoke with Creacy and made suggestions on how she could remain safe if Peng returned.

But the court pointed out that BCBG misunderstood the definition of malice and reckless indifference, which means an “employer’s knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination.” The court went on to explain that:

BCBG has 651 stores worldwide, and what it calls its “comprehensive” equal employment opportunity and anti-harassment policy. . . . Thus, if it did fail to properly investigate Creacy’s complaints, it was a sophisticated corporation with anti-harassment and discrimination policies in place such that it understood that its actions could run the risk of violating federal law.

The court determined that Creacy could proceed to trial on her claims that BCBG and the customer created a hostile work environment.

Size of an Employer

In this case, the court took the size of BCBG into account when it was considering whether BCBG understood that it could be violating federal law, so that Creasy could ask for punitive damages. The EEOC sometimes considers a company’s size, too. For instance, in its guidance on employers’ vicarious liability for supervisor harassment, the EEOC says that: “Small employers may be able to effectively prevent and correct harassment through informal means, while larger employers may have to institute more formal mechanisms.” In addition, although the EEOC recommends that anti-harassment policies should be in writing, it has stated that in a small business, an owner can tell employees about the anti-harassment policy at staff meetings and can tell them that they can report harassment “straight to the top.”

Of course, small businesses also have to avoid creating a hostile work environment. But large companies should be aware that a court or government agency may consider that they have more experience in, and resources to handle, issues of discrimination and harassment. Therefore, they may be more vulnerable to a punitive damages award.

BCBG’s Harassment Policy

In this case, BCBG had a corporate harassment policy requiring supervisors to notify the Human Resources department of complaints and requiring that department to “undertake an immediate and objective investigation of the employee’s claims.” But that didn’t happen. As we’ve stated before, companies must make sure that their managers take harassment policies seriously.

Employee’s Reports

BCBG also claimed that Creasy didn’t notify it of the racial basis for Peng’s attack and did not articulate the action that she wanted BCBG to take. But the court disagreed, saying that there was “ample evidence” that Creasy made the company aware of the racial nature of the incidents. As we’ve discussed before, companies must act quickly even if an employee informally reported harassment. In addition, Creasy had asked to be transferred and for BCBG to ban Peng from the store.

As the court in this case concluded, telling an employee to “just go sit in the back” is a wholly inadequate response to customer harassment and a hostile work environment. A manager who was trained in the company’s responsibilities to employees, and familiar with its harassment policies, would never have done such a thing. The failure of five managers to follow BCBG’s harassment policy is a big red flag.  

The court in this case was also concerned that BCBG didn’t even try to get the customer banned from the store. The same point was brought up by the EEOC in December 2016, when it won a jury verdict against Costco for failing to protect an employee from harassment and stalking by a customer.

“Costco repeatedly refused to take simple steps to prevent known harassment by a person it could easily ban from its stores, or direct to shop at a different store,” said EEOC trial attorney Laura Feldman. “An employer should not wait until an employee is so fearful that she resorts to seeking a restraining order before intervening against a customer. Employers should work diligently to ensure that all of its employees have a safe, harassment-free workplace.”

Creacy will now have her day in court to tell a jury the same thing. 

LawRoom (powered by EverFi) delivers online training to help your business meet compliance requirements both dynamically and scalably. In addition to our award-winning online courses, LawRoom delivers a robust, cloud-based learning management system to help you easily deploy and track our growing library of ethics, anti-harassment, data security and employee conduct courses.

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Christine Day
Christine Day is a legal editor at EverFi. She writes about employment law issues and tracks case law and legislative and regulatory updates. Before joining EverFi she worked in legal publishing, researching and writing about tax law, business law, and employment law. She earned her JD from the University of San Diego Law School and her BA from the University of Southern California.

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