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Discrimination Lawsuits and Liability

Claims and Lawsuits: Employees have the right to pursue remedies for discrimination with both state and federal agencies and in both state and federal courts. The outcome of a claim will often hinge on the jurisdiction where the claim is heard. If properly handled, you may be able to convince one agency to defer processing a claim that is pending before another agency. Your attorneys may seek to litigate a case in one court system rather than another because of some perceived advantage. In any case, knowledge of the procedural aspects of responding to a claim is invaluable and may determine the success of a defense.

Consider encouraging or requiring the use of alternate dispute resolution techniques to resolve employment discrimination claims. Both the EEOC and the DFEH established mediation processes to encourage early and informal claim settlement. In addition, many employers attempt to convince or require employees to resolve discrimination issues through the use of arbitration.

Because of the complexity of dealing with employment discrimination claims, consult with counsel or other experienced resources immediately upon receiving notice of a discrimination claim against your company.​​​​​​​​​​​​​​​​​​​

Department of Fair and Equal Housing Can File a Civil Action: Prior to 2013, the DFEH could file an accusation against the employer and set an administrative hearing before the Fair Employment and Housing Commission if the DFEH’s conference and conciliation efforts failed to eliminate an unlawful employment practice.

This changed in 2013, when SB 1038 took effect. SB1038 eliminated the Fair Employment and Housing Commission and also eliminated administrative adjudication of FEHA claims.

The DFEH is authorized to file cases directly in court when the agency believes a complaint is valid and conciliation efforts have failed. If the DFEH chooses to file a civil action, it brings the action in the name of the DFEH and on behalf of the person claiming to be aggrieved. The aggrieved party has the right to participate in the civil action as a party and be represented by his/her own counsel. The DFEH is also authorized to collect attorneys fees and costs when it is the prevailing party in FEHA litigation.

Under SB 1038, prior to filing a civil action, the DFEH has the authority to require all parties to participate in mandatory dispute resolution in the DFEH’s Internal Dispute Resolution Division, free of charge to the parties, in an effort to resolve the dispute without litigation.
Dispute resolution will be mandatory for all claims for which the DFEH will file a civil action.

Although an employee must file a complaint with the DFEH to proceed with a suit under FEHA, the DFEH does not provide the exclusive remedy for employee challenges to alleged employment discrimination. For example, the California Constitution protects people from sex, race, color, religious and national origin discrimination. Employees who claim constitutional violations or tort claims can bypass the DFEH administrative processes and go directly to court to pursue common law claims that are related to employment discrimination but are not covered by FEHA. For example, an employee can bring claims for intentional infliction of emotional distress directly to court

Supervisors not Personally Liable for Discrimination: The California Supreme Court ruled that supervisors are not personally liable for employment discrimination. In Reno v. Baird, an employee claimed that she was terminated because she had cancer. The employee sued her employer and her supervisor for discrimination based on the medical condition, as well as for wrongful termination under FEHA. The court refused to hold the supervisor individually liable, finding that FEHA, while imposing personal liability for harassment, was not intended to impose personal liability for discrimination. ​​​

The court explained that a fundamental difference exists between discrimination and harassment. Acts that might be labeled discriminatory are the very acts inherent to a supervisor’s job, for example, hiring, promotions and terminations. On the other hand, harassment consists of a type of behavior that is not necessary for a supervisor’s job. Although it is possible for a supervisor to avoid harassment, it is not possible to avoid making personnel decisions, nor to prevent the claim that those decisions were discriminatory.

The California Supreme Court has held that, in addition to discrimination, a supervisor cannot be held personally liable for acts of retaliation against employees.

Employers Liable for Inaction by Supervisors: In Swinton v. Potomac Corp., the Ninth Circuit Court of Appeals upheld an award to an employee who was subjected to repeated racial slurs in the presence of a supervisor who did nothing to stop or report the incident to higher management. This case was decided under the Civil Rights Act of 1866, 42 U.S.C. 1981 and a state civil rights statute. As with claims brought under FEHA, there is no cap on damages, which permitted a jury to award $1 million in damages along with $5,612 in back pay and $30,000 for emotional distress.

The company published a policy forbidding discrimination, indicating that supervisors should be responsible to receive and act upon complaints. The court concluded that despite the policy’s existence, the company was liable for punitive damages where the inaction of even low-level supervisors permits the unlawful conduct to continue.

The court rejected the employer’s request to reduce the amount of punitive damages because of actions the employer took after litigation began. The court said that evidence of employer action upon learning of a complaint could be presented at trial as a factor to be considered when awarding punitive damages, but the court refused in this case, saying that the company’s actions were too little too late.

The court’s opinion emphasizes the importance of giving supervisors the training and authority to deal with discrimination. Supervisors must be held accountable for maintaining a workplace free of harassment. They must report incidents of harassment to management whenever they observe it. The court’s comments encourage employers to take prompt action upon learning that a supervisor failed in these responsibilities in an effort to reduce the size of a punitive damage award.