Attorney Blog, Human Resources

Employer Hit with Giant Fine Arising from Non-Employee Harassment

Attorney Harrison Oldham

Recently, a jury in New Jersey ordered a large bank to pay a former employee $2.4 million in damages for allegedly failing to take effective action to protect her and other employees from a customer’s alleged sexual harassment and misconduct.

According to her lawsuit, former wealth manager Damara Scott said she was leaving the bank lobby in October 2013 when the customer, Patrick Pignatello, allegedly followed her and made lewd sexual comments. After approaching her, Pignatello allegedly grabbed Scott and pressed himself against her without her consent.

The lawsuit claims bank management knew Pignatello as he was was known to managers as a serial harasser of women, particularly African-American women, but the bank allowed him to continue doing business at the branch because it feared losing potential customers due to his perceived standing in the community. Court filing reflect that Pignatello had been involved in at least two prior incidents with bank employees that involved inappropriate physical contact and comments.

Scott filed suit against Pignatello and the bank, alleging the bank failed to take reasonable measures to prevent Pignatello’s known misconduct, and failed to reasonably protect Scott in the workplace.

The Equal Employment Opportunity Commission established standards for dealing with non-employee harassment, and those standards provide that “an employer is liable for harassment of its employee by a non-employee if it knew or should have known of the misconduct and failed to take immediate and appropriate corrective action within its control.”

Several circuit courts have applied this standard, where they have concentrated on whether the response by the employer was “timely and appropriate in light of the circumstances, particularly the level of control and legal responsibility [the employer] has with respect to the…behavior.”

In late 2019, the Fifth Circuit has addressed a somewhat similar situation (the Fifth Circuit decides appeals from the federal district courts in Texas, Louisiana, and Mississippi). There, the Fifth Circuit heard the case of Gardner v. CLC of Pascagoula, L.L.C. where it ruled that a jury should decide whether an assisted living facility in Mississippi is liable for an alleged hostile work environment created by a nonemployee resident.

In Gardner, the plaintiff, a nursing assistant, provided care at the facility for an elderly patient who suffered from a variety of physical and mental illnesses. The facility knew that the patient had a history of violent behavior and sexual behavior toward other patients and staff. The plaintiff allegedly experienced the patient’s inappropriate sexual behavior every day for years. She and other co-workers reported the incidents to their supervisors.

In one incident, the patient allegedly groped and punched the plaintiff. After this incident, the plaintiff’s request to be reassigned was denied. The plaintiff then took three months of leave and was terminated after returning to work.

The district court granted summary judgment in favor of the defendants. However, the Fifth Circuit determined that the frequency and nature of the patient’s violent behavior and sexual behavior would allow a jury to find that a reasonable caregiver would find the conduct sufficiently severe or pervasive under Title VII, even in light of the patient’s dementia.

In addition, the Fifth Circuit found that there was sufficient evidence to show that the plaintiff’s employer knew about the hostile work environment experienced by the plaintiff but failed to take any action to remedy her work situation. The employer, the Fifth Circuit stated, violated its duty to take reasonable steps to protect its employees once it knows that they are subject to abusive behavior.

The Fifth Circuit reversed the district court’s summary judgment in favor of the employer. It concluded that the plaintiff’s hostile work environment and retaliation claims under Title VII should go to the jury so the case was remanded to the district court for further proceedings.

For many, this might feel fairly concerning. Large companies are likely already aware of this concern and are taking steps, providing trainings, and implementing policies. But what about smaller companies that have fewer resources to devote? In the end, a company’s actions are viewed for reasonableness, and that is perhaps the best answer. If you become aware of a situation where a non-employee is negatively impacting one of your employees, don’t ignore it. Take reasonable actions to help stop the situation from occurring again.

About Harrison Oldham

Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.

Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://lonestarbusinesslaw.com/.

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