Amendment Making Employers Responsible For Sexual Harassment By Non-Employees Does Not Apply Retroactively


In Carter v. California Department of Veterans Affairs(2004 Daily Journal D.A.R. 10,147, Cal.App. 4 Dist., Aug. 17, 2004), the California Court of Appeal addressed the issue of whether an amendment to the Fair Employment and Housing Act (FEHA), which may make employers responsible for sexual harassment by non-employees in certain circumstances, should apply retroactively to an incident that occurred before the effective date of the amendment.


Employee, Helga Carter, worked as a nurse in a veterans residence facility administered by Employer, the Department of Veterans of Affairs. She sued Employer, claiming it should be responsible for sexual harassment by one of the residents of the facility. In an appeal from a judgment in favor of Employee, the California Court of Appeal determined that the FEHA did not impose liability on an employer for sexual harassment by a client or customer of the employer. After the California Supreme Court agreed to review the Court of Appeal’s decision, the Legislature amended § 12940 of the FEHA to expressly provide that an employer may be responsible for sexual harassment by non-employees. Therefore, the Supreme Court sent the case back to the Court of Appeal to determine whether the amendment to § 12940 should apply to Employee’s case.

Appellate Court Decision

The Court first reaffirmed its decision from the first appeal that the former § 12940(j)(1) did not make employers liable generally for harassment committed by non-employees. The Court then turned to the amendment to § 12940(j)(1), which provides, “An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees, . . . in the workplace where the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action.” The Court determined that this amendment did not merely clarify existing law; it changed the law because the prior law did not impose liability for harassment by non-employees. Despite the fact that the Legislature expressed its intent to apply the amendment retroactively to all existing causes of action, the Court determined that retroactive application of the amendment would be unconstitutional. It would violate due process because it would “impose substantial new obligations on employers . . . without clear notice, for conduct which was already completed in the past.” The Court also noted that the amendment treats both employers and employees unfairly – it only protects employees who are subjected to sexual harassment, and it imposes responsibility only on employers, not on other entities covered by the FEHA, such as labor organizations, employment agencies, and apprenticeship programs.

The Court held, “To prevent fundamental unfairness of all kinds – imposition of substantial new liabilities without due notice, unequal treatment of employees, and unequal treatment of employers – we conclude the amendment cannot constitutionally be applied retroactively to this case. If it is applicable at all, its effect must be prospective only.” Thus, the Court determined the amendment does not apply to Employee’s case.

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