In the latest issue of The Wright Toolbox:
Employer Liability for Harassment Extends to Actions of Customers as Well
The EEOC recently filed case against a staffing services company, claiming it violated federal law by allowing a group of female employees to be subjected to sexual harassment while they were working at a customer’s office. In the suit, the EEOC alleged that the staffing company allowed women to be subjected to sexual harassment when they were placed at the customer’s office and that despite complaints, the company did nothing about the sexual harassment of its employees. The EEOC said that the women were subjected to pervasive unwelcome sexual comments, including comments about their breasts and buttocks, they were referred to as “prostitutes” and “sluts,” and they were subjected to unwelcome touching, which created a hostile work environment for them.
This is an important reminder that employers have obligations to employees to protect them from harassment from other employees and from vendors and customers. Employers must walk a fine line and ensure that employees are not being placed into positions where they are expected to be exposed to illegal conduct and comments. Customer or other nonemployee harassment surfaces just like hostile work environment claims involving employees and have the same implications for employers. After an employer becomes aware of customer harassment, either through a direct report or when a supervisor or manager has witnessed an incident, it must investigate, take prompt remedial action and ensure that the employer doesn’t retaliate against the employee in any fashion because of the conduct of the alleged harasser.
Reasonable employer responses may include warning the offender that repeated misconduct will result in a ban or refusal to do further business, following through on such threats, or allowing the employee to avoid any interactions with the offender. Because employers need to be conscious to not retaliate, if the employer has confirmed the harassment and the employee is agreeable, the employer could reassign the employee to another job or area of the workplace so the employee can avoid interacting with the customer. Because the employee has the right to complain, adverse decisions include changing the conditions of employment, such as reducing hours or changing schedules or taking away other privileges are to be avoided.
Who Is An Additional Insured – Are You Covered?
A recent case points out how important it is to read the additional insured endorsement of a policy. Most construction contracts require the general contractor to obtain various types of insurance and to make various other parties additional insureds on those policies. Typically, a certificate of insurance will be provided showing the additional insureds listed. But, what does the actual insurance policy and its endorsements say with respect to additional insureds? In the recent case, the owner contracted with a general contractor to build a new forensic laboratory. To oversee the construction work, the owner entered into a separate contract with a construction manager. The owner’s contract with the general contractor required the contractor to obtain general liability insurance for the project naming the owner and its construction manager as additional insureds.
The contractor’s policy had a typical endorsement titled “Additional Insured – By Written Contract” which provided in relevant part that an “insured” under the policy includes any person or organization with whom you have agreed to add as an additional insured by written contract. During performance of the work, the owner alleged that the contractor negligently damaged the excavation shoring system which damaged a neighboring building. The owner sued the contractor and the project architect and the construction manager was subsequently added to the suit as a third party. The construction manager sought coverage as an additional insured under the contractor’s policy. The insurer denied coverage to construction manager contending that construction manager was not an additional insured under the language of the endorsement because the contractor did not have a written contract with the construction manager.
The Court ruled that construction manager was not an additional insured and that the denial of coverage was proper. The Court stated that the additional insured endorsement only provided coverage to a person or entity that the contractor agreed to add as an additional insured in a written contract with that person or entity. In this case, the contractor only entered into a written contract with the owner. The construction manager was not in direct contract with the contractor. Thus, the Court concluded that the construction manager was not an additional insured under the terms of the endorsement.
There are several key points to take away from this decision: (1) certificates of insurance do not provide coverage, just because you are identified as an additional insured does not mean you are covered under the terms of the policy; (2) to ensure that a party is properly included in an insurance policy as an additional insured, one must read the policy and any applicable endorsements relating to the issue; (3) the review of the policy terms must be thorough because as the Court noted in the case if just the word “with” in the endorsement had been removed the outcome would have been different and (4) insureds charged with adding additional insureds should work with their insurance agents to ensure the proper endorsement form is used.
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