Employer Liability for Non-Employee Discrimination

Abstract

Discrimination against employees by customers, vendors, and other third parties is a serious issue that will likely become even more pressing in the near future. Increased workplace interactions between employees and non-employees, coupled with the societal shift toward subtle, covert, and sometimes even unconscious discrimination, mean non-employee discrimination is likely to become more pervasive—even as it becomes harder to detect. As this perfect storm brews, it is worth considering how judicial treatment of non-employee discrimination can be improved. I argue that one of the most important changes needed is for the law to cease treating discrimination by non-employees and discrimination by fellow employees as one and the same. These forms of discrimination should be analytically distinct because employers generally cannot exercise the same degree of control over non-employees as they can over their own employees. The law can best account for this crucial distinction by holding employers to a reasonableness standard for non-employee discrimination. Under this standard, employers would be liable for the discriminatory actions of third parties if: (1) they knew or should reasonably have known about the discrimination and (2) failed to act reasonably in response to the discrimination. This approach apportions liability more commensurately with the level of control employers can realistically exercise over non-employees, while still incentivizing employers to aggressively monitor and address non-employee discrimination.