In a new ruling, the California Supreme Court has affirmed employers are automatically liable for sexual harassment committed by supervisors, but damages for an employee who doesn’t take reasonable steps to avoid or report supervisor harassment can be reduced. We’ll examine the new case and suggest smart employment practices that can help you limit damages—and even liability—if you’re sued for harassment.
Harassment Lawsuit Filed
Theresa McGinnis, who worked at the California Department of Health Services, claimed her supervisor, Cary Hall had sexually harassed her for some time. Although McGinnis confided in a co-worker about the harassment, she didn’t report the problems to management for more than two years. Once she complained, the department investigated, concluded Hall had violated department policy prohibiting harassment, and disciplined Hall.
Employer Says It’s Not Liable
McGinnis sued the department for sexual harassment under the California Fair Employment and Housing Act (FEHA). She contended that under the FEHA employers are automatically liable for a supervisor’s harassing behavior. The department, however, said it shouldn’t be held liable for Hall’s misconduct because the U.S. Supreme Court established a defense to supervisor harassment that allows employers to escape liability—provided no adverse action was taken against the employee—if 1) the employer exercised reasonable care to prevent and correct harassing behavior and 2) the employee didn’t take advantage of the employer’s corrective or preventive opportunities or otherwise failed to avoid harm.
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The department pointed out that it had a strong written policy against sexual harassment, it provided sexual harassment training to all employees, including McGinnis, and McGinnis hadn’t availed herself of the department’s comprehensive complaint procedures in a timely manner.
A California Court of Appeal, however, gave McGinnis the OK to proceed with her lawsuit, ruling the U.S. Supreme Court’s defense didn’t apply to FEHA harassment claims but only to claims filed under federal law.
New FEHA Defense
The California Supreme Court has now affirmed that the FEHA, unlike federal antiharassment law, specifically holds employers automatically liable for harassment by supervisors. However, ruled the court, the damages a victim can recover can be reduced if they don’t take steps to avoid further harm, such as reporting the harassment to their employer in a reasonably timely way.
The court said that to take advantage of this defense and limit a victim’s damages, an employer must show all of the following:
- The employer took reasonable steps to correct and prevent the harassment.
- The employee unreasonably failed to use those corrective and preventive measures.
- The employee’s reasonable use of the employer’s procedures could have prevented at least some of the alleged harm.
According to the court, this defense will encourage conscientious employers to quickly learn about harassment, stop it, and minimize injury to the victim. However, there could be circumstances justifying a victim’s delay in reporting. For example, the employer may lack an adequate antiharassment policy or complaint procedure or perhaps hasn’t told employees about these policies and procedures. Or, the employee may fear retaliation or have feelings of embarrassment and shame that excuse a delay.
Practical Impact
Although the new ruling confirms that employers are automatically liable if a supervisor harasses an employee, it also reinforces that good employment practices can help minimize, or even eliminate, compensatory damages in these cases. Also, Shawna Swanson, a partner in the San Francisco office of Fenwick & West LLP, points out that a California appeal court recently ruled in another case that punitive damages must bear a reasonable relationship to compensatory damages. Therefore, says Swanson, it is possible that an employer that implements and enforces a strong antiharassment program may be able to substantially limit compensatory damages and reduce the risk of getting hit with a big punitive damages award.
Prevent and Stop Harassment
In light of these developments, employers should continue to take all reasonable measures to prevent harassment and promptly intervene to stop it when it occurs. This means having strong antiharassment and antiretaliation policies and comprehensive complaint and investigation procedures as well as thorough training for all employees and managers. Spell out what employees should do if they feel they are being treated inappropriately and encourage employees to report such treatment immediately. Taking steps to preserve confidentiality, to the extent practical, when a harassment complaint is raised will help encourage employees to come forward promptly.
Also, Swanson says that although many policies inform employees to complain to “any manager,” the best practice is to instruct employees to bring all complaints to the human resources department. This will both increase the likelihood that complaints get to the right people in your organization and help avoid a situation in which a manager learns of harassment but sits on the information.