As anyone who has worked in a customer-facing job can tell you, dealing with difficult customers often comes with the territory. However, when customer behavior crosses a line into illegal conduct like sexual harassment, both the customer and the employer may find themselves in hot water.

Wynn Las Vegas, a Nevada hotel, learned the hard way recently when an appellate court reinstated a lawsuit filed against the hotel by one of Wynn’s employees, Vincent Fried, in Fried v. Wynn Las Vegas. Fried argued that Wynn was liable for creating a hostile work environment not because of any harassment by a boss or coworker but rather by a customer.

What is a “hostile work environment”? In the sexual harassment context, a hostile work environment exists when an employee is the target of: 1) sexual conduct that is 2) unwelcome and 3) “sufficiently severe or pervasive so as to alter conditions of employment.”

In 2017, a customer came into Wynn’s salon and sexually propositioned Fried. Fried immediately went to his manager to report the customer, at which point the manager allegedly told him to “get it over with” and serve the customer despite the lewd comments.

This response from the manager, according to the Ninth Circuit’s recent holding, by itself could be grounds for a hostile work environment claim against Wynn.

Fried is not seeking to hold Wynn liable for the customer’s harassment. Rather, he is arguing that his manager’s response to the harassment by itself created a hostile work environment, a separate cause of action in its own right.

As the court notes in its decision, it is already well-settled across all circuits that employers can create a hostile work environment by failing to take speedy action against harassment by a third party, such as a customer. Here, the court held that an employer’s response (or lack thereof) to a third party’s harassing conduct can independently support a hostile work environment claim, at least enough to survive summary judgment.

This means that a single instance of customer harassment, as allegedly existed here, can be enough for an employee to get before a jury.

What This Means for Employers

Of course, since this is a pretrial motion, Wynn has not lost the case just yet. The Ninth Circuit’s decision simply sends the dispute back to the District Court and presumably onto trial. But what does this holding mean for other employers, especially those in customer-facing industries like hospitality?

First—if it wasn’t already clear—businesses need to be extra vigilant in training employees how to recognize sexual harassment, no matter the source or target. In Fried’s case, the alleged harasser was a customer, but the court’s ruling could apply just as well to a contractor, supplier, visitor, or any other third party who happens to be present in a place of business.

Second, businesses should impress upon employees—especially managers and supervisors—the importance of taking swift corrective action in response to reports of harassment in the workplace, even if it’s just a single instance. Downplaying the harassing conduct could give rise to a hostile work environment lawsuit, as occurred here.

Of course, managers do not have the authority to investigate or “fire” a customer. However, that does not mean a business is powerless in the face of customer misconduct. The court suggests that Fried’s manager could have “requir[ed] the customer to leave the premises immediately” or at least have another employee serve the customer so as to protect Fried.

Wynn follows a similar case from January 2021 where an employee alleged sexual harassment by a customer. In Christian v. Umpqua Bank, the Ninth Circuit also found that the employer could have created a hostile work environment by failing to take “prompt, appropriate, and effective action” in response. The court’s suggested responses in that case included telling the customer not to come back to the premises, obtaining a no-trespassing order, or involving security.

Employers may need to get creative, since different scenarios will require different responses. Until additional guidance emerges from the courts, it is better to be safe than sorry.

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law…

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Dixie Morrison Dixie Morrison

Dixie Morrison is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Discrimination, Harassment, & Title VII and the Labor-Management Relations practice groups.

Dixie assists clients across a…

Dixie Morrison is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Discrimination, Harassment, & Title VII and the Labor-Management Relations practice groups.

Dixie assists clients across a variety of industries in litigation and arbitration relating to wrongful termination, discrimination, harassment, retaliation, wage and hour, trade secrets, breach of contract, and whistleblower matters in both the single-plaintiff and class and collective action contexts. She also maintains an active traditional labor and collective bargaining practice and regularly counsels employers on a diverse range of workplace issues.

Dixie earned her J.D. from Harvard Law School, where she was the Executive Editor of Submissions for the Journal of Sports and Entertainment Law. Dixie received her B.A., magna cum laude, from Pomona College. Prior to law school, she served as a labor and economic policy aide in the United States Senate.