With winter slowly fading out, some spring cleaning of old employment policies may be in order. Recent Title VII decisions should prompt wary employers to dust off their anti-discrimination and anti-harassment policies and reevaluate if they offer the necessary protection from not just employees who act inappropriately—but also third parties.
Third party discrimination occurs when an employee suffers discrimination or harassment based on a protected characteristic, but not at the hands of a fellow employee. Instead, someone outside the company—the titular “third party”—is the perpetrator. These third parties may include vendors, clients, customers, contractors, temporary workers, independent contractors, or members of the public. Depending on the nature of the business, employees may be interacting with many different third parties (or many different kinds of third parties), any one of which may pose a discriminatory threat.
To be clear, not all acts by a third party impose liability on employers under federal (or state) anti-harassment and discrimination statutes. Instead, the Equal Employment Opportunity Commission (EEOC) has guidelines that hold an employer liable under Title VII for third parties discriminating, harassing, or otherwise creating a hostile work environment if the employer (a) knew or should have known of the harassment and (b) failed to take prompt remedial action reasonably calculated to end the harassment. Most federal courts (including those in the Fourth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits) have used the same negligence-based standard to determine third party discrimination liability.
Recently, however, a decision out of the Sixth Circuit has imposed a new legal standard for third party discrimination, creating a split among the circuits. In Bivens v. Zep, Inc., No. 24-2109 (6th Cir. Aug. 8, 2025), a Black female sales representative sued her former employer, a manufacturer and distributor of commercial cleaning products, for third party harassment. During a sales meeting, a customer locked the meeting room door and asked the plaintiff if they could date. She said no, left immediately after the door was unlocked, and reported this incident to her own employer. The customer was reassigned to another sales representative and the plaintiff was terminated soon thereafter.
The Sixth Circuit, faced with a claim of discrimination against the plaintiff’s employer based on the actions of the customer, rejected the negligence-based standard used by the EEOC and the majority of other circuits. Instead, the Sixth Circuit held that an employee must show that the employer intended for harassment by a third party to occur—either that it “desired to cause” the harassment or was “substantially certain” that harassment would result from its actions. This is a much higher standard than the “negligence” based standard used in the majority of other Circuits. The Bivens decision has been appealed to the United States Supreme Court, which is poised to resolve the circuit split and determine, once and for all, how an employer is to be held liable under Title VII for the conduct of non-employees.
The Supreme Court’s decision will be well-timed, as the EEOC initiated a new lawsuit for third party discrimination just this last month. In EEOC v. Mid-Michigan Home Health & Hospice, LLC, the employer provided in-home services to patients. The plaintiff, a Black employee, was not being assigned to as many shifts or homes as her white counterparts. When she raised this issue, the employer acknowledged that some patients “are from old times” and “don’t care for Black people.” Shortly thereafter, she was terminated for lack of work, and the EEOC brought a third party discrimination lawsuit.
While there is now a circuit split, employers in the Fourth Circuit – the majority of our firm’s footprint – must remember that the negligence standard is the law. Even for employers in the Sixth Circuit, Bivens did not exempt employers from liability. Thus, while we may well see a decision from the Supreme Court on this issue, the time is right for employers to review their policies and procedures prohibiting harassment and discrimination. Employers should ensure that:
- Written policies expressly apply to the conduct of third parties, provided the employee reports the conduct to management;
- Managers are trained on how to identify and respond to inappropriate actions by third parties with whom employees interact;
- Reporting procedures are in place and clearly communicated to employees so they know when and how to report issues;
- Reports are promptly investigated and rectified;
- Employers do not acquiesce to third parties’ discriminatory or harassing preferences or conduct;
- Consider adding anti-discrimination and anti-harassment clauses to contracts with third parties; and/or
- Consider adding insurance coverage for third party employment practices liability.
