Once upon a time the Fourth Circuit Court of Appeals held that employers can be found liable under Title VII for third party harassment of employees if the employer knew or should have known of the harassment and failed to take "prompt remedial action." This means when a customer comes into your store and makes racial comments to your sales associate and the sales associate brings it to your attention, you are obligated to act. Don't believe me? Just ask these guys. It also means if a customer continually comes into your store and "stalks" your employee, you need to do something to stop it and prevent further occurrences. Costco knows all about this dilemma.
This obviously creates a bit of a problem when the offensive customer is a big deal to your company or generally someone you would like to keep around since they are buying your goods and services. With this in mind, what should you do and what must you do as the employer?
FREE ADVICE #1: Identify the "Who" first, then the "What" and the "Where."
When an employee brings up third-party harassment, one of the first questions you should ask (after making sure the employee is okay and feels safe) is who did the harassing? Was it Creepy Bob who comes into your store every Tuesday at 2:15? Was it the a-hole rep your vendor/supplier sends for deliveries? Was it some street youth that has been in trouble at your place of business in the past? It is important to know WHO did the harassing because this will help determine HOW you address the employee's concerns.
If, for example, the harasser is "Creepy Bob" you are going to need to face Creepy Bob and either ban him from your particular location or ask that he cease all contact with your employee. If Creepy Bob tends to come by at a certain time, you may want to consider re-arranging the employee's schedule to avoid contact (so long as you are not cutting the employee's hours or doing anything adverse to their job).
If your culprit is the a-hole vendor/supplier rep, you should address the rep but should also address the rep's employer. Call up his HR department and tell them what's been going on behind their backs. Employers don't want their employees acting a fool to other people/companies so let them do the majority of the talking and figure out how to reprimand their own employee. (NOTE: Make sure you keep any communication to the harasser's HR department so you have a clear record that you have taken remedial action).
If the culprit is someone more random, you are going to have to face them like Creepy Bob (see above) and demand they cease contact with your employee. You may also consider banning them entirely if the harassment is really bad, consistent, or particularly distasteful (think: touching, grabbing, etc).
FREE ADVICE #2: Employee Safety is Priority 1.
If your employee feels unsafe or offended to the point they are frightened or uneasy, you MUST address this. Consider changing schedules and/or the level of contact that employee has with the harasser (or other customers, in general). If this isn't possible without adversely harming the employee's job (in amount of pay, hours, title, etc), consider having the employee work with another employee or create some sort of "bat signal" to alert the employee that the bad customer is entering the premises and he/she should go to the back or remove him or herself from contact.
If none of this is possible, you're going to have to cut ties with the bad guy or banish them to another location.
Just keep in mind you cannot punish the employee who was harassed, no matter how stupid you think his or her complaint. Any sort of adverse employment action could be seen as retaliatory which could lead to another lawsuit. Retaliation claims can suck so avoid, avoid, avoid.
FREE ADVICE #3: Any Cost Benefit Analysis should include Attorneys Fees for Litigation. (yay!)
If the harasser we are dealing with is particularly valuable to the company, you're going to want to determine whether his or her value outweighs the costs of potential litigation. I'm talking about the classic employer argument: it was cheaper to get rid of the employee than to deal with the BFD customer-turned-harasser and possibly lose that business. That's great, really it is. Until the employee sues you and you get to participate in 2+ years of litigation (in Federal Court, mind you), that will only result in a win for your attorney, regardless of the outcome.
In other words, yes, your BFD customer may be just that. But you SHOULD consider talking to them, getting rid of them, or otherwise reprimanding them to protect your employee to avoid a case like this or this.
FREE ADVICE #4: Keep good records.
This should not need an explanation but every.single.remedial.action.you.take.must.be.documented. Period. Keep everything. Follow-up phone calls with memorializing emails. Keep notes of meetings. Write down everything and (please) store all this information in a safe location that you can actually find at some undefined point in the future. I can only prove you took "prompt remedial action" if you have the documents to prove it.
If this is a something you have dealt with in the past or are currently dealing with, I'd be happy to sit down and chat.