Dive Brief:

• The 7th U.S. Circuit Court of Appeals has upheld a ruling for a former Costco employee who brought a hostile work environment claim, finding that harassment need not be "overtly sexual" to constitute actionable discrimination under Title VII of the 1964 Civil Rights Act (EEOC v. Costco Wholesale Corp., No. 17-2432 (7th Cir., Sept. 10, 2018)).
• Dawn Suppo, a former part-time employee at Costco, allegedly faced harassment by a male customer over a 13-month period, during which Suppo claimed the customer stalked, videotaped and touched her and subjected her to various personal questions and comments. Suppo secured a no-contact order against the customer and later took a medical leave of absence. During that leave, Costco investigated the incidents but told Suppo in a letter that it could not confirm a violation of its harassment policy. The company later terminated Suppo on grounds that her unpaid medical leave extended beyond 12 months.
• The U.S. Equal Employment Opportunity Commission (EEOC) sued on Suppo's behalf, alleging that Costco discriminated against her because of her sex "by creating and tolerating a sexually hostile work environment." EEOC also accused the company of constructively discharging Suppo. The district court granted summary judgment on the latter claim, but allowed the former to go to trial. A jury awarded Suppo $250,000 in compensatory damages. Costco appealed, claiming in part that the interactions constituted "tepid" incidents. The 7th Circuit disagreed, saying that whether a workplace is hostile is determined "based on 'all the circumstances' of a case" rather than a separate analysis of each incident. The court added that Costco's liability for the customer's harassment, according to precedent, depended on both the customer's actions and Costco's response to Suppo's complaints. Because Costco challenged the trial jury's decision only on the first point, the 7th Circuit did not address the second. The court remanded the case to the district court to determine whether Suppo deserved back pay for taking an involuntary leave.

Dive Insight:

The case serves as an interesting study of two points in sex discrimination litigation: 1) what conduct constitutes actionable discrimination; and 2) whether employers are liable for harassment of employees by customers. The 7th Circuit's opinion may provide few answers for employers in the circuit, pointing to a case-by-case standard that takes into account the particular context of an incident or series of incidents rather than a measurement of individual incidents.

Meanwhile, the answer to the second question presents a warning: employers may be liable for inappropriate harassment by customers — much like that which comes from managers or coworkers. Ensuring good faith during subsequent investigations and follow-ups is crucial to prevail against resulting litigation, as is thorough documentation.

But many employers have been slow to update their processes in this area, despite a flurry of high-profile sexual harassment claims that also spawned the #MeToo movement. There are a variety of strategies for employers looking to be proactive on the issue, ranging from enhanced training procedures to the involvement of senior leadership and management in recognizing and correcting culture failings.