When a customer harasses an employee, the EEOC says employers are liable if they knew or should have known and didn’t act. The Sixth Circuit says: not unless you intended it to happen.
TL;DR: An employee claimed a customer sexually harassed her and her employer should be liable under Title VII and Michigan law. The EEOC applies a negligence standard: if you knew or should have known and didn’t act, you’re liable. The Sixth Circuit held liability exists only if the employer intended the harassment, meaning it wanted the conduct to occur or was substantially certain it would happen. Leaning on the Supreme Court’s Loper Bright decision, the court stressed that agency interpretations aren’t binding and judges must read the statute for themselves.
The incident and the layoff
The facts were straightforward — and uncomfortable. The employee, a sales rep for a cleaning products company, went on a motel sales call where the manager locked the office door, asked her out twice, and let her go only after she refused. She told her supervisor, who reassigned the account so she’d have no further contact with the customer again.
Soon after, the company president cut staff to save costs, eliminating roles in low-revenue territories. Her territory was under $100,000 annually, so she was included in the reduction in force.
The employee later sued her employer for creating a hostile work environment.
Why her hostile work environment claim failed
The hostile work environment claim failed because the harasser wasn’t the company’s employee or agent, so there was no vicarious liability. Without that agency link, she had to show the company intended the harassment — either wanted it to happen or was substantially certain it would. No such evidence existed.
Where Loper Bright comes in
Last year, the Supreme Court in Loper Bright ended the old Chevron rule, which often required courts to defer to federal agency interpretations of unclear laws. Now, agencies like the EEOC don’t get that kind of automatic deference. Courts must read the statute themselves and decide what it means — agency guidance is considered only if it’s persuasive.
That’s exactly what happened here. The EEOC says an employer can be liable for customer harassment when its “knows or should have known” of the conduct and didn’t act. The Sixth Circuit said that’s just an agency view — not binding. Loper Bright ended automatic deference to agencies, so courts decide for themselves what the statute means. Here, the court decided negligence isn’t enough.
Employer takeaways
- Lower liability in Sixth Circuit — unless you intended the harassment, you likely won’t face Title VII liability for customer conduct. But remember, other circuits still follow the EEOC’s negligence approach, so multi-state employers must tread carefully.
- State and local laws can be stricter — many states and municipalities impose negligence-based or even stricter standards for third-party harassment, meaning this same fact pattern could be much harder to defend outside the Sixth Circuit.
- Legal isn’t always smart — even if you avoid federal liability here, ignoring customer harassment can sink morale, drive turnover, invite state-law claims, and tarnish your reputation.
- Audit & update policies — review harassment policies to ensure they address customer and vendor conduct, and confirm complaint procedures are easy to access and well-publicized.
- Train and document — develop a clear process for handling customer misconduct, train managers to respond in the moment, and document every action taken to show you acted quickly and effectively.
Bottom line: In the Sixth Circuit, customer harassment liability is narrower than the EEOC’s standard — and post-Loper Bright, courts can ignore the agency’s playbook.