State court narrows employers' harassment liability.

It happens at Q's Billiard Club in Brentwood almost every night. At some point, a male customer makes obscene or sexual comments to a female cocktail waitress.

"It's a bar environment," said Jessica Naponelli, manager of Q's. "It's a given there is going to be some degree of cheesiness or harassment."

And while employers are responsible for harassment by employees, an Oct. 28 ruling in the state's 2nd Appellate District finds they can't be held liable for their patron's boorish behavior.

The ruling, the first regarding sexual harassment by non-employees to be published in California, effectively blocks workers in the state from suing employers when a customer or client harasses them. It also conflicts with federal law, which holds employers liable in such cases.

"This decision surprised 97 percent of the employment law community, both plaintiffs and defendants," said Jeffrey Winikow, an attorney with the California Employment Lawyers Association, which filed a brief in the case on behalf of California employees. "I'm concerned that employers under state law now can allow a workplace to be infected with discriminatory actions by third parties."

Susan Graham Lovelace, an attorney with Long Beach-based Wiezorek Rice & Lovelace LLP representing the plaintiff in the case, said she plans to petition the California Supreme Court to hear the case.

Extending liability for the behavior of clients or patrons to business would increase insurance costs and create more lawsuits, said Dorothy Rothrock, vice president of government affairs for the California Manufacturers and Technology Association. The association filed a brief in support of Diversified Paratransit Inc., the defendant in the case decided last month.

Further, the practicality of controlling one's customers is far too difficult for some businesses.

"We as management can't control what our customers are going to do and not do," said Naponelli. "The employee can tell management, and we can remove them from the premises. But it's a bar. Guys come in here, and they're looking for action."

Restaurants exposed

Restaurants and bars could be most affected by the ruling.

In her dissenting opinion, 2nd Appellate District Presiding Judge Joan Klein specifically addressed the industry. The ruling, she wrote, means state law "affords no protection to a waitress who repeatedly is groped by a customer and who reports the harassment to her employer... Despite being on notice, the employer in that situation has no duty to take any corrective action and is free to direct the employee to continue serving that customer."

Lawsuits involving harassment by customers and clients are rare because employees rarely report the cases, said Anna Park, regional attorney of the U.S. Equal Employment Opportunity Commission.

"I think it's more prevalent than we think," Park said. "But it goes back to people not wanting to jeopardize their jobs. In the restaurant industry, you have this sense that it impacts tips. And even if they do complain, there's probably a hesitancy by employers to do something because this is how they make their money."

But Naponelli said the nature of the business necessitates an element of sexual interplay.

"I used to cocktail a few years ago, and there was always a boundary," she said. "There was only so much I could take. Other cocktail waitresses would use it to their advantage. They would flirt and get the bigger tip. You're in that environment, and the waitresses know it happens, so they tolerate a certain amount of it."

Raising the bar

The ruling's interpretation of California's harassment statute, under the Fair Employment and Housing Act, conflicts with federal law, which prohibits employers from allowing such harassment.

And while federal law does not supercede state law if the lawsuit is filed in state court, most sexual harassment cases historically have been filed in state courts because federal judges and juries tend to favor employers more than employees, Winikow said.

Now, employees will have to file in the less-friendly federal court to avoid state law, hurting their chances of success, he said.

In the appellate case, a woman bus driver at Pomona-based Diversified Paratransit sued the company after it failed to take an action when a frequent male passenger was alleged to have repeatedly made comments, exposed himself and attacked her while she was on the job. She lost the case in L.A. Superior Court and appealed.

Lovelace said Diversified Paratransit, which provides transportation services to the developmentally disabled, should be liable because the preamble to the state harassment statute specifically addresses harassment by non-employees. The preamble says, "work sites will be maintained free from prohibited harassment and discrimination by their agents, administrators and supervisors as well as by their non-supervisors and clientele."

But the courts found that in rejecting a proposed 1984 amendment to the statute making employers liable for sexual harassment by non-employees, legislators did not intend to include harassment by non-employees.

Winikow said he sees broader implications of the court's ruling.

"I'm worried this decision will apply to relationships other than customers or clients, such as independent contractors or leased employees or any person who sits next to an employee but isn't technically an employee," he said.

Mixed Message

Recent ruling clouds how employers respond to harassment.

California Fair Employment and Housing Act:

"Harassment of an employee, an applicant or a person providing services... shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action."

Appellate ruling:

"If the legislature wished to create employer liability for harassment by clients and customers, it would have included clients and customers...It did not do so, and this court will not rewrite the statute to include what the legislature omitted."

U.S. Equal Employment Opportunity Commission provision:

"An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the work place ..."