Remembering Shay Litvak Our Co-Founder and CTO

November 1979 - September 2023

‌Here's What to Do When a Customer Harasses an Employee

Customer harassmentCustomer harassment
min read
September 5, 2023

Small business owners and management play an important role in creating a workplace where employees feel safe, protected, valued, and free from harassment. While typically, this means keeping staff members free from employee harassment (from co-workers or bosses), there are times when it means that your team needs to be protected from unexpected harassers who don't work for you.

For instance, can a customer create a hostile work environment?

You bet.

Indeed, in workplaces where employees regularly interact with customers, there's the potential for harassment stemming from that third party. And the small business needs to take the issue seriously.

Here's how.

What is Harassment From a Customer?

Customer harassment is when a customer, vendor or other third party verbally, physically or sexually harasses an employee.

Third-party harassment is actually a very well-known claim of harassment and an aspect of employment discrimination law. It encapsulates a range of unwelcome behaviors.

These actions could be rooted in factors such as sex, race, national origin, religion, gender, gender identity, age, and more. They can also manifest in a variety of ways

  • Derogatory comments 
  • Requests for sexual favors 
  • Slurs regarding sexual orientation 
  • Off-color jokes 
  • Offensive imagery
  • Physical intimidation

Are Employers Responsible for Harassment from Customers?

Yes, employers are responsible for protecting their workers from customer harassment.

Under both state and federal law, employers are legally obligated to maintain a workplace free from harassment as per employment law and anti-discrimination laws. 

This obligation extends to protecting employees from workplace harassment originating from any individuals within the work environment, even customers.

Employers can be held liable for creating a hostile work environment if they do not take appropriate action to prevent or address harassing behavior. The ramifications of your failure to protect your staff can include employee lawsuits, as well as actions and penalties from the U.S. Equal Employment Opportunity Commission (EEOC).

It is crucial to extend the same level of protection and support to employees facing harassment from customers as would be offered in cases involving fellow employees and co-workers. Not only does this make your staff feel safe and valued, but it protects your business from a variety of unwelcome legal actions.

Is Customer Harassment a Problem in Small Businesses?

Yes, the potential for harassment from these third parties is very real for small businesses because their employees often interact closely with clients, independent contractors, and other non-employees. 

Third-party harassment has been particularly problematic in the healthcare and hospitality fields, where employees frequently interact with a diverse range of clients.

What Should You Do When a Customer Harasses an Employee? 3 Important Steps

When faced with harassment, small business owners must have (and work through) an established harassment policy, investigate the incident, and translate the reported incidents into actionable steps. 

Let's look at the ideal process one step at a time.

Step 1: Review Your Policy

Obviously, if your business does not have a harassment policy, now is the time to establish one. If your company does have one as part of the employee handbook, review it to know what steps to take after incidents involving both employees and customers. 

Your policy should emphasize a zero-tolerance approach toward harassing conduct and lay out a clear course of action, from reporting mechanisms to appropriate corrective actions. (You can get a sample policy here.)

It is vital that both your policy and your culture emphasize open communication and encourage employees to report incidents. Doing so is not only legally smart, but it also fosters a culture of trust and accountability. 

As you begin your investigation, remember that thorough documentation, clear communication, and adherence to procedural guidelines are essential to ensure equitable resolutions. 

Step 2: Hear the Employee Out

If an employee complains about the actions of a customer or other third party, listen to what they have to say and thank them for coming forward. Let them know that you take such actions seriously and will address the issue with the other party promptly.

Emphasize that they are safe and will not be retaliated against (they may fear this if the other party is an important customer).

Step 3: Investigate the Incident

You should then immediately work to figure out what happened: 

  1. Take a statement from your employee. Make sure you get the facts right. 
  2. Speak with witnesses and make sure that when you do, you have another witness in the room with you who can corroborate what was said. 
  3. Document what was said in each interview and have employees and any other witnesses sign their witness statements. 
  4. Speak with the customer. If the customer comes from another company with whom you do business, it may be necessary to speak with the human resources department in that company.

The purpose of your investigation should be to find out, to the extent possible, what actually happened. Who said what to whom? Who did what? You need to be objective, reasonable, and non-judgmental in your dealings with all parties. Collect any supporting data, such as photographs, surveillance videos, emails, and so on.

Whatever you find out, if an employee complained about a customer, that employee felt threatened or violated. While it may not be necessary for you to dissolve your relationship with the client, it is imperative that you work to separate the employee from any further interactions with that person.

Step 4: Come Up with a Resolution

Once your investigation is complete, you need to come up with a plan of action. Needless to say, your course of action will depend on the facts and situation. It could be, for instance, that you need to:

  • Address the customer and inform them that their behavior is unacceptable and will not be tolerated.
  • Sever your relationship and bar the customer from doing any further business at your establishment.
  • Take steps to ensure your employee's safety if the harassment poses a physical threat to the employee. You could change their work schedule, provide additional security measures, or adjust their responsibilities.
  • Report the incident to law enforcement in the more extreme cases where the harassment involves threats, stalking, or other criminal behavior.

What Should You Do if the Employee Files a Complaint with the EEOC?

If an employee files a complaint with the EEOC, the best thing to do is to hire new counsel who specializes in this sort of offensive conduct and employment law. 

This is no time to cut corners. The prospect of an investigation by a regulatory agency is a scary proposition for any small business. Bringing in your lawyer or law firm is a must.

No matter what steps you've taken, sometimes a staff member doesn't feel that your actions are sufficient, or worse, that you were complicit in the harassment. Even if you don't believe it's justified, the employee has the right to file a formal third-party harassment complaint with the federal EEOC.

What Happens When a Complaint is Filed? 

Once a complaint is lodged and the EEOC complaint process starts, the EEOC investigates to determine what happened and if the employer may be liable for the alleged sexual harassment or other harassing behavior.

The actual process looks like this:

  1. Investigation: The EEOC will conduct an investigation into the third-party harassment complaint.
  2. Mediation and settlement: In some cases, the agency may offer mediation as a way to resolve the complaint. Mediation involves bringing together the parties to discuss the issues and work towards a mutually acceptable resolution. If a settlement is reached, it may include remedies such as compensation for the aggrieved employee, changes in the workplace, and training.
  3. Issuing a Right to Sue: If the EEOC's investigation does not lead to a resolution, it may issue a "Notice of Right to Sue" to the employee. This gives the employee the right to file a lawsuit against the employer in federal court if they choose to do so.
  4. Lawsuit: If the EEOC finds reasonable cause to believe that discrimination or harassment occurred, they may choose to file a lawsuit against the employer on behalf of the worker.

If you are found liable for the harassment, EEOC penalties can include back pay and front pay (for lost income as a result of the harassment) and stiff fines for particularly blatant misconduct. 

How to Prevent Customer Harassment in the Future

Preventing this type of harassment, of course, is the ideal and requires a proactive approach that extends beyond reactive responses.

Create a Strong Company Culture

It starts with culture. Small business owners can foster a company culture of respect and inclusivity through employee training, clear and accessible policies and procedures, and open lines of communication. Creating an environment where employees feel empowered to report incidents without fear of retaliation is essential.

Train Employees on How to Deal with Problem Customers

Beyond your internal culture, creating a safe work environment also clearly means keeping customers in check. For one, not only can they harass your staff, but in addition, a bad customer can, in fact, create what is known as a "hostile work environment."

Here's how: Persistent disruptive behavior from a customer has the ability to change the overall dynamics of your workplace. As such, your team needs to understand the parameters of acceptable customer behavior and be empowered to address and manage potentially problematic situations from the get-go. 

This proactive approach will not only reinforce your business' dedication to employee well-being, but it will go a long way to reducing the likelihood of incidents escalating in the future.

A safe workplace is a happy workplace.

The Customer Isn't Always Right

When customers or other third parties harass your staff, either sexually, verbally or physically, as a small business owner or manager, you MUST take the allegation/actions seriously. 

This means separating your team member from the offending individual, promptly investigating the claim, and then working towards preventing it from happening again.

Doing so will not only create a safer and more loyal employee but will also save your business from expensive and protracted legal entanglements.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.