Public Accommodation Employers Are Strictly Liable for Discriminatory Acts of Their Employees

Public Accommodation Employers Are Strictly Liable for Discriminatory Acts of Their Employees

April 16, 2019

In Floeting v. Group Health Cooperative, 434 P.3d 39 (2019), Floeting, a patient of Group Health Cooperative, sued Group Health after Floeting was sexually harassed by a female employee, “T.T.,” while Floeting was seeking medical treatment.  It was undisputed that the Group Health clinic was a place of public accommodation. The trial court granted Group Health’s motion for summary judgment and dismissed Floeting’s claim. The trial court apparently accepted Group Health’s argument that an employer is not liable for the discriminatory conduct of its employee if it did not know about the conduct.

The Court of Appeals reversed, remanding the case for trial. The Washington Supreme Court affirmed the Court of Appeals. The Supreme Court concluded that Washington’s Law Against Discrimination make places of  public accommodations liable for acts of discrimination, including sexual harassment, regardless of whether the proprietor of the public accommodation knew whether the discrimination/sexual harassment took place. The Court found this result mandated by the differing languages of the employment discrimination and public accommodation statutes. Public accommodations, according to the Court, are directly (and statutorily) liable to patrons of the establishment, without the need to resort to doctrines such as vicarious liability. The Court went on to declare that places of public accommodations are “subject to strict liability for the discriminatory conduct of its employees.” The Court suggested that its holding would motivate employers to eliminate discrimination by making sure their employees are well trained, well supervised, and do not discriminate. The Court suggested its holding would require employers to focus on preventing discrimination in the first place, rather than punishing its employees after it occurred. The Court ended by noting three defenses public accommodation employers could still assert at trial: (1) the discrimination did not happen at all, (2) the conduct did not meet the objective or subjective standards required by statute and therefore was not an unfair practice, or (3) the person who committed the discrimination was not its agent or employee.

Justice Madsen authored a well-reasoned dissent. Justice Madsen disagreed with the majority’s decision to not import employment law standards (requiring, among other things, employer knowledge of employee’s conduct before the employer can be liable) into the realm of public accommodations. Justice Madsen argued that the strict vicarious liability standard makes business owners guarantors of their employees’ behavior, and essentially imposes a burden on employers to maintain a “pristine working environment.” Such a standard is unfair to employers, will not eradicate discrimination, and will result in “management by lawsuit.” Justice Madsen advocated for “a more balanced, workable approach, holding employers vicariously liable when they know, or should know, of the discriminatory behavior.”

Floeting is concerning for public accommodation employers on a number of levels.

First, how do public accommodation employers insure against the risk of employees discriminating against patrons of the public accommodation?  A standard liability insurance agreements exclude coverage for intentional acts. As most acts of discrimination are arguably intentional, employers appear to have little hope that traditional insurance will operate to defend against discrimination claims and judgments. Public accommodation employers will seemingly have to self-insure in anticipation for such lawsuits.

Second, the Floeting majority suggests that a strict liability standard will incentivize employers to conduct more training and to supervise its employees more closely. But if an employee is the type of person who feels compelled to harass or discriminate against patrons of the business, it seems unlikely that any amount of workplace training will diminish such internal, deep seated beliefs and behaviors. It is unlikely that an hour long lecture and PowerPoint presentation, or even a more extensive training, would have dissuaded T.T. from sexually harassing Floeting. Increased supervision of employees is also problematic.  Employees have a right to privacy in the workplace (albeit a diminished right), as do patrons of the business.  Finally, what happens if a supervisor is the person who is the harasser? An unintended result of Floeting could be an increase of surveillance to an Orwellian level.  And even with the best, maximum supervision, an employer would still be strictly liable for a spontaneous discriminatory act of an employee. So even the most diligent supervision will not be a defense to employers.

It will be up to the state legislature to reverse the Floeting’s decision to hold public accommodation employers strict liable for the discriminatory acts. Until then, employers should be more careful than ever to hire employees who will refrain from discriminating against others and may want to set aside funds to defend itself when they are sued for discriminatory acts of their employees.

By: Paul S. Stewart, Associate

Floeting