Costco Found Liable for “Third-Party Harassment” – Failing to Adequately Protect its Employee from Sexual Harassment by a Customer.

In a decision that has significance for retailers and employers whose employees have meaningful customer contact, the U.S. Court of Appeals for the Seventh Circuit, in the case Equal Employment Opportunity Commission v. Costco upheld a $250,000 verdict against Costco because it failed to protect its employee from a harassing customer. Broadly, the decision underscores the importance for retailers and employers of taking and documenting appropriate measures after being made aware of harassment of an employee by a customer, and the potential liability inherent in failing to do so.

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