The U.S. Supreme Court passed on an opportunity last month to address a question that has quietly divided courts across the country: when can an employer be held liable for harassment committed by someone who is not an employee?

The issue arose in Bivens v. Zep Inc., a case involving allegations that a customer sexually harassed a sales representative. For many employment lawyers, the significance of the case had less to do with the underlying facts than with the legal standard the Sixth Circuit applied. The court concluded that the employer could only be liable if it intended the harassment to occur or acted with deliberate indifference toward it. That approach departed from the standard traditionally applied by many courts and created a split among the federal circuits.

Many observers expected the Supreme Court to resolve the disagreement. Instead, the justices declined review, leaving the issue unsettled at the federal level.

The Court’s decision attracted little attention outside employment law circles. Yet the issue is an important one because some of the most difficult workplace harassment claims involve misconduct committed not by supervisors or coworkers, but by people outside the organization.

The modern workplace extends far beyond the employer’s workforce. Employees routinely interact with customers, vendors, contractors, patients, students, constituents, elected officials, and members of the public. In many industries and public-sector settings, those interactions are not occasional; they are central to the job itself.

The challenge is obvious. Employers have direct authority over their employees. They can investigate misconduct, impose discipline, change reporting relationships, and terminate employment. Their authority over third parties is often much more limited.

A city cannot simply terminate a resident who behaves inappropriately at a public meeting. A public university cannot avoid interactions with students. A hospital cannot always refuse treatment to a difficult patient. Private employers face similar constraints when the alleged harasser is a customer, client, or vendor whose relationship with the organization carries economic significance.

Those realities help explain why third-party harassment cases often present issues that are more complicated than traditional workplace disputes.

California’s Framework

Although federal courts continue to wrestle with the issue, California law is considerably less ambiguous. The Fair Employment and Housing Act has long recognized that unlawful harassment can be committed by non-employees. California regulations specifically address harassment by customers, clients, independent contractors, and other third parties. The focus is not on whether the employer controls the alleged harasser. Instead, the inquiry generally centers on whether the employer knew or should have known about the conduct and failed to take immediate and appropriate corrective action.

That standard reflects a practical understanding of the workplace. Employers cannot prevent every inappropriate interaction. They can, however, determine how they respond once misconduct is brought to their attention.

The distinction is significant. Under the approach adopted in Bivens, liability may depend on proving something approaching intentional wrongdoing by the employer. Under California’s framework, the question is more often whether the employer’s response was reasonable under the circumstances. That difference can be outcome-determinative.

The Most Difficult Cases

Third-party harassment claims often place employers in situations where competing obligations collide. An employee reports that a customer has repeatedly made inappropriate comments. A staff member alleges harassment by a vendor who provides critical services. A government employee complains about the conduct of a constituent. A university employee raises concerns about a student. The facts vary, but the challenge is frequently the same. The employer must address the complaint without possessing the level of control it would have if the accused were an employee.

The difficulty is compounded by the fact that these cases rarely arise in a vacuum. Business relationships, political considerations, operational needs, and public-service obligations often influence decision-making. Organizations may hesitate because the accused generates substantial revenue, occupies an influential position, or cannot easily be excluded from the workplace.

That hesitation frequently becomes the focus of litigation. The Second Circuit’s recent decision involving former Fox News producer Abby Grossberg illustrates the point from a different angle. The court upheld dismissal of her claims after concluding that Fox News was not aware of the alleged misconduct while it was occurring and acted promptly once it learned of the allegations. The case underscores how heavily these claims can turn on what the employer knew, when the employer knew it, and what the employer did next.

Employment lawyers often discover that the most significant liability exposure does not arise from the offensive comment or inappropriate conduct itself. Courts generally understand that employers cannot control every interaction involving a member of the public, customer, patient, or vendor. What receives greater scrutiny is the employer’s response after learning of the problem.

Was the complaint taken seriously? Was an investigation conducted? Were reasonable steps taken to prevent future misconduct? Did decision-makers simply hope the issue would resolve itself? These questions often matter more than the initial incident.

Beyond Legal Compliance

The legal obligations associated with third-party harassment are reasonably well established in California. The practical challenges are not.

Many organizations continue to approach workplace harassment through a framework developed primarily for employee misconduct. Policies, training programs, and investigative procedures are often built around relationships within the workforce. Third-party misconduct does not always fit neatly within those systems.

Yet the employee experiencing the conduct generally views the situation no differently. The source of the harassment may affect the legal analysis, but it rarely affects the impact.

That reality may explain why courts have been reluctant to excuse employers simply because the alleged harasser falls outside the organizational chart. A workplace does not become less hostile because the person creating the hostility receives a paycheck from someone else.

The Supreme Court’s decision not to hear Bivens v. Zep Inc. means that the disagreement among federal courts will remain unresolved for now. Additional cases will undoubtedly emerge, and the legal standards may continue to evolve.

In California, however, the broader principle is unlikely to change. Employers are not expected to control every third party who enters the workplace. They are expected to respond when misconduct occurs. The distinction may seem subtle. In practice, though, it often is the distinction that determines liability.