Liability doesn’t stop at company door

The president of Windermere Relocation Services really wanted to win the Starbucks account. He told Maureen Little, the firm's top corporate services manager, that he wanted to "do whatever it takes to get this account."

Little had two business lunches with her contact at Starbucks. Then, she and her contact went out to dinner. After dinner and a couple of drinks, Little said she became ill and passed out. When she awoke, she said, he was raping her in his car. Little was raped twice more at his apartment.

She was reluctant to tell anyone at work. Finally, she told the vice president who was designated to take harassment complaints. But the VP said she believed the rape fell outside that policy, so she didn't conduct an investigation or follow up with Little.

Little finally told the president. His response: He didn't want to hear about it. Within minutes, he cut her pay. When she objected, he told her to clean out her desk and move on.

Now the company has to defend itself against Little's hostile work environment and retaliation claims. A federal appeals court let her case proceed, saying the company's actions appeared to reinforce rather than remediate the harassment. A jury could find that the company's "failure to take immediate and effective corrective action allowed the effects of the rape to permeate Little's work environment and alter it irrevocably." (Little v. Windermere Relocation Inc., No. 99-35668, 9th Cir., 2001)

Bottom line: You can be liable for a hostile environment when an employee is harassed by anyone in the workplace, including customers and vendors. The definition of the "workplace" is determined on a case-by-case basis, but courts and administrative agencies define the term broadly.

The workplace definitely is not limited to company-owned facilities and vehicles. It includes anywhere and any time the employee is working.

Advice: Make sure your company policy prohibits harassment by both employees and nonemployees. Train managers to take off-site harassment seriously. After investigating a complaint against a nonemployee, you are duty-bound to take prompt and effective remedial measures if the harassment is substantiated. That may include dropping a vendor, asking a client to work with a different rep or cutting off a relationship with a long-standing customer.