What Happens When a Customer Harasses an Employee?

Key Highlights

• Customer harassment can create employer liability. Employers may be responsible for unlawful harassment by customers and other nonemployees when they knew or should have known of the conduct and failed to take prompt corrective action.
• Customer preferences are not staffing rules. Requiring an employee to continue serving a harassing customer—or honoring a discriminatory staffing request—can compound exposure.
• Customer restrictions should follow a consistent process. Warnings and exclusions should be based on documented conduct, applied consistently and account for public-accommodation laws and workplace-safety remedies.

Luxury retail is built on personalized service. Retail employees may communicate directly with customers, arrange private appointments and cultivate long-term relationships. When a customer crosses the line, retailers must protect the employee, respond proportionately and ensure that any restriction rests on legitimate, nondiscriminatory reasons. Neither the customer’s value nor protected status changes those principles.

When a Customer Creates a Hostile Work Environment

In the sexual-harassment context, federal regulations provide that an employer may be responsible for acts of nonemployees when it knew or should have known of the conduct and failed to take immediate and appropriate corrective action. The analysis considers the employer’s control over the nonemployee. In retail, the response may range from ending an interaction or limiting communications to requiring supervised appointments or excluding the customer from a store or event.

Fried v. Wynn Las Vegas, LLC illustrates why management’s response matters. A manicurist reported that a customer had propositioned him and that he was uncomfortable continuing the service. His manager allegedly instructed him to finish the pedicure. The Ninth Circuit concluded that a jury could find the manager’s response contributed to the hostile work environment.

Similarly, in Freeman v. Dal-Tile Corp., the Fourth Circuit held that an employer may be liable when it knew or should have known of third-party harassment and failed to take prompt action reasonably calculated to end it. The alleged harasser was an independent sales representative who regularly visited the workplace and made racist and sexist comments.

State and local law may be more protective. California’s Fair Employment and Housing Act expressly addresses harassment by nonemployees. Covered California employers also must maintain a written workplace violence prevention plan, train employees, and log and investigate customer or client violence under Labor Code § 6401.9. Chicago imposes liability for sexual harassment by nonemployees when the employer becomes aware and fails to take reasonable corrective measures. New York’s Human Rights Law does not require harassment to be “severe or pervasive.” Covered New York retailers also must maintain workplace violence prevention policies and training under Labor Law § 27-e; employers with at least 500 retail employees statewide must provide silent response buttons beginning January 1, 2027.

Customer Preferences Are Not Staffing Rules

A retailer should not respond by adopting the customer’s discriminatory preference. In Chaney v. Plainfield Healthcare Center, a health care facility honored a resident’s request for no Black nursing assistants and placed the restriction on assignment sheets. The Seventh Circuit rejected customer preference as a justification for race-based assignments.

The same principle applies when a customer requests—or refuses to work with—a retail employee because of a protected characteristic. An employee-requested reassignment for safety reasons is different from a staffing rule dictated by the customer. Even then, a protective reassignment may create retaliation risk if it results in lost commissions, sales credit, desirable shifts or advancement opportunities.

Applying Customer Conduct Standards Consistently

After a retailer warns, restricts or bans a customer, the customer may allege discrimination under 42 U.S.C. § 1981 or public-accommodation laws, including California’s Unruh Civil Rights Act, New York Executive Law § 296(2), the Chicago Human Rights Ordinance and Virginia Code § 2.2-3904.

Williams v. Staples, Inc. demonstrates the risk of inconsistent decisions. A Black customer alleged that a Virginia store refused his out-of-state check while accepting a comparable check from a white customer. The Fourth Circuit found sufficient evidence to permit the claim to proceed.

A restriction is more defensible when the retailer identifies the specific conduct, treats comparable conduct consistently and follows an established process. If disability is raised, the assessment should be individualized and consider reasonable modifications rather than assumptions. Notices should describe conduct—not speculate about the customer’s character, diagnosis or protected status.

When Customer Conduct Escalates to Threats or Violence

When nonemployee conduct escalates to stalking, violence or credible threats, employers may need to implement workplace-safety measures and legal remedies, which vary by jurisdiction. Some jurisdictions permit employers to seek protection on behalf of employees. For example, the California Code of Civil Procedure § 527.8 and the Illinois Workplace Violence Prevention Act permit an employer to seek a workplace restraining order on an employee’s behalf where there are credible threats that violence against an employee will occur in the workplace.

In other jurisdictions only the employee may seek protection. For example, under Virginia Code § 19.2-152.9, the petitioner generally must allege that the petitioner was subjected to an act of violence, force or threat. An affected employee may qualify to petition, but the employer ordinarily cannot substitute itself as petitioner merely because the conduct is workplace related. A variety of factors may lead an employee not to seek a protective order against threats of violence. However, employers have other options to protect the workplace including a written trespass notice, coordinated security measures and law-enforcement involvement.

Looking Ahead

Luxury retailers can address risks that stem from nonemployee misconduct by establishing a coordinated protocol that permits employees to disengage from unsafe interactions, provides clear reporting and escalation channels, preserves evidence, accounts for compensation interests and applies a documented range of customer restrictions. HR, legal, security and client-relations personnel should know their roles before an incident.

A customer’s status may affect who communicates the company’s decision and how. It should not determine whether the company protects its employees or enforces its conduct standards. Employers with questions about customer misconduct, workplace safety or customer restrictions should consult their Polsinelli Labor & Employment attorney.