When most business owners think about workplace discrimination or harassment, they focus on internal issues between employees, managers, or supervisors. However, legal risk can also arise when the problem comes from outside the company.
Texas employers may face liability when someone who is not on the payroll harasses or discriminates against an employee. This may include a customer, client, vendor, contractor, temporary worker, visitor, or member of the public. Our labor and employment lawyers at Fee, Smith & Sharp help Texas businesses understand these risks and respond in ways that protect both their workers and their companies.
What Is Third-Party Discrimination?
Third-party discrimination occurs when an employee faces unfair treatment or harassment at work based on a protected trait. Still, the person engaging in the conduct does not work for the employer. Protected traits may include race, color, religion, sex, national origin, age, disability, pregnancy, sexual orientation, gender identity, or other legally protected characteristics.
This can happen in many ways. A client may make sexual comments to a receptionist. A delivery driver may use racial slurs around employees. A contractor may mock an employee’s disability. A customer may ask that a worker be removed from an account because of the worker’s accent, pregnancy, religion, or age.
In each example, the person causing the harm is an outsider. Still, the conduct is affecting the employee’s work environment. That means the employer may have a duty to step in.
Why Outside Conduct Can Still Create Employer Liability
Some employers assume they are not responsible because the person causing the problem does not work for them. That assumption can be risky. The issue is often not whether the harasser is on the company’s payroll. It is what the employer knew, what it should have known, and what it did in response.
The legal standard often looks at two questions: Did the employer know, or should it have known, about the harassment or discrimination? And did the employer take prompt and appropriate action to stop it?
If an employee reports that a customer, vendor, or contractor is harassing them, the company is on notice. However, employers can also face risk when the behavior is obvious enough that management should have known about it. For example, if offensive comments are made openly in front of supervisors, the company may not be able to defend itself by saying no formal complaint was filed.
The “Customer Is Always Right” Mindset Can Be Dangerous
Many businesses train workers to be polite, patient, and professional with customers. That is usually good business, but problems arise when managers expect employees to tolerate abusive or discriminatory behavior to keep a customer, client, or vendor happy.
Simply ignoring or laughing off discrimination as a joke can create serious problems. It may suggest that the company cared more about the business relationship than the employee’s rights. If the employee later files a complaint, they may use those facts to show that the employer knew about the issue and failed to take it seriously.
Common Risks for Texas Employers
Ignoring third-party harassment or discrimination can lead to more than an uncomfortable workplace. It can create legal, financial, and business problems.
Employment Claims and Investigations
An employee who believes the company failed to protect them may file a charge with the Equal Employment Opportunity Commission (EEOC) or the Texas Workforce Commission. That can lead to an investigation, legal fees, settlement pressure, and possible damages.
Loss of Good Employees
Employees are unlikely to stay where they feel unsafe, unsupported, or ignored. If a worker is forced to keep dealing with a hostile customer, client, or vendor, they may leave. Turnover can cost the company time, money, and trust.
Reputation Damage
Discrimination and harassment claims can also harm a company’s reputation. A public claim that a business allowed outsiders to mistreat employees can affect recruiting, client relationships, and employee morale.
Temporary Workers and Contractors Need Special Attention
Temporary workers, staffing agency employees, and contractors can create added risk because they often work closely with regular employees. They may attend meetings, use the same job site, share break areas, or report to company supervisors while on site.
Employers should make expectations clear before these workers begin. Vendor, contractor, and staffing agreements should address workplace conduct, anti-harassment rules, reporting duties, cooperation with investigations, and the company’s right to remove someone who violates policy.
This is especially important on construction sites, in warehouses, in health care facilities, and in other places where several businesses may have workers in the same space. If one company’s worker harasses another company’s employee, the response may need to involve more than one business.
How Employers Should Respond to Complaints
When an employee reports harassment or discrimination by a third party, the employer should act quickly. The right response will depend on the facts, but doing nothing is rarely a safe option.
The company should listen to the employee, document the complaint, review available evidence, speak with witnesses, and take steps to prevent further harm. Depending on the situation, the employer may need to contact the vendor’s management team, require a different representative, warn a customer, remove a contractor from the premises, change how the employee interacts with the third party, or end the business relationship.
Employers should also be careful not to punish the employee who complained. This can create a separate retaliation claim.
How Texas Businesses Can Reduce Risk
The best time to address third-party discrimination is before a complaint arises. Employers should review their handbooks and make sure their anti-discrimination and anti-harassment policies cover conduct by customers, clients, vendors, contractors, visitors, temporary workers, and others connected to the workplace.
Managers should also be trained to take these complaints seriously. They should know who to notify, how to document the concern, and what immediate steps may be needed.
Businesses should also consider adding conduct language to vendor, contractor, and staffing agreements. These provisions can require outside workers to follow workplace policies, cooperate with investigations, and allow the company to remove individuals who violate anti-discrimination or anti-harassment rules.
A Labor and Employment Attorney Can Help You Protect Employees and Your Business
Third-party discrimination can put Texas employers in a difficult position, especially when the conduct involves an important client, vendor, or contractor. Still, employers should take these concerns seriously and respond quickly. Fee Smith & Sharp can help Texas businesses review policies, train managers, address active complaints, and reduce legal risk when discrimination or harassment involves someone outside the company.
