In Department of Health Services v. The Superior Court of Sacramento, (cite), the California Supreme Court considered whether, in a lawsuit under the Fair Employment and Housing Act (FEHA) for sexual harassment by a supervisor, an employee’s damages can be reduced by the amount of damages the employee could have avoided by reasonably using an employer’s complaint mechanism for reporting sexual harassment.
Theresa McGinnis sued her employer, the Department of Health Services (DHS), under the FEHA, claiming that her supervisor sexually harassed her for nearly two years. When McGinnis first reported the supervisor’s behavior to management, DHS investigated the matter and disciplined the supervisor.
In defending against McGinnis’ lawsuit, DHS attempted to use a defense that the United States Supreme Court adopted in two sexual harassment cases based on hostile work environment. The Supreme Court analyzed the circumstances under which an employer might be held vicariously liable under Title VII (federal anti-discrimination law) for a supervisor’s harassing conduct. The Court held that, when a supervisor makes a tangible employment decision (i.e., one that constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment, significant change in benefits), the decision becomes the act of the employer and the employer may be held liable. However, when the supervisor does not make a tangible employment decision, an employer may defend against a sexual harassment lawsuit by showing (a) that the employer promptly exercised reasonable care to prevent and correct any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. (This defense is not available when the supervisor makes a tangible employment decision.)
The trial court determined that this defense does not apply in FEHA sexual harassment cases, and the California Court of Appeal agreed. The California Supreme Court agreed to review the Court of Appeal’s decision
California Supreme Court Decision
In this complex case, the Supreme Court agreed with the Court of Appeal that this defense does not apply in FEHA sexual harassment cases, because FEHA differs from Title VII in one very important respect. The Supreme Court focused on section 12940(j)(1) of FEHA, which is not found in Title VII:
Harassment of an employee . . . by an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action.
Like the Court of Appeal, the Supreme Court concluded this language indicates that, while an employer’s knowledge and action may be relevant in determining whether an employer is liable for harassment by a non-supervisory employee, these facts are irrelevant when determining employer liability under the FEHA for harassment by a supervisor. In other words, an employer is strictly (always) liable for harassment by a supervisor, even though the employer did not know, and did not have reason to know, of the supervisor’s conduct.
Nonetheless, even though the Supreme Court recognized the concept of strict liability for harassment by a supervisor, it also held that employers may be able to reduce their damages based on the legal doctrine of “avoidable consequences.” Under this doctrine, an employee who was subjected to sexual harassment by a supervisor may not recover damages that the employee could have avoided by reasonable effort or expenditure. To succeed in reducing the employee’s damages, the employer must prove three elements: “(1) the employer took reasonable steps to prevent and correct workplace harassment; (2) the employee unreasonably failed to use the preventive and corrective measures that the employer provided; and (3) reasonable use of the employer’s procedures would have prevented at least some of the harm that the employee suffered.” According to the Court, application of the avoidable consequences doctrine to cases of sexual harassment by supervisors “encourages preventive action by both the employer and the employee while affording compensation to the employee for harms that neither party could have avoided through reasonable care.”
However, unlike the defense recognized by the U.S. Supreme Court in Title VII cases, an employer may not totally escape liability by using the unavoidable consequences doctrine. “If the employer establishes that the employee, by taking reasonable steps to utilize employer-provided complaint procedures, could have caused the harassing conduct to cease, the employer will nonetheless remain liable for any compensable harm the employee suffered before the time at which the harassment would have ceased, and the employer avoids liability only for the harm the employee incurred thereafter.”
The Court gave some guidance to employers to help insure they will be able to utilize the avoidable consequences doctrine. In particular, it advised that employers should establish anti-harassment policies, communicate those policies to its employees, consistently enforce its policies, preserve the confidentiality of employees who report harassment, and prevent retaliation against reporting employees.
The Court sent the case back to the trial court for further proceedings.
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