Addressing a claim under California's Fair Employment and Housing Act [FEHA], the California Supreme Court has held that an employer will be held strictly liable for the wrongful acts of a supervisor whose conduct gives rise to a claim of sexual harassment on a "hostile environment" theory. However, the Court has also concluded that the employee may not recover any damages that the employee "could have avoided with reasonable effort and without undue risk, expense, or humiliation", such as by reporting the incidents to the employer at the time they occurred.
Under the language of FEHA relating to sexual harassment, an employer is only liable for harassment by a non-supervisor when the employer has actual or constructive knowledge of the harassment and fails to take immediate steps to correct the situation. This is essentially a negligence standard. When the harassment is committed by a supervisor, however, the Court concludes that the language of FEHA imposes strict liability: that the acts were committed by a supervisor is sufficient to impose liability on the employer without regard to the employer's knoweldge or opportunity to take remedial measures.
However, the lack of notice to the employer may still operate to reduce the damages that the harassed employee can claim. The Court concludes that harassment claims against an employer under FEHA must be subject to the "avoidable consequences doctrine," and that the employee may not recover any damages that might have been avoided had the employee complained or taken other reasonable steps for the employee's own protection. The application of the doctrine is required largely as a matter of public policy:
The avoidable consequences doctrine is well established and broadly applied, and nothing in the FEHA’s language and structure indicates that the Legislature intended to abrogate this fundamental legal principle. On the contrary, failure to apply the avoidable consequences doctrine to FEHA sexual harassment claims could undermine a basic goal of the FEHA—to make employers the first line of defense against sexual harassment in the workplace. A rule making employers liable even for those damages that an employee could have avoided with reasonable effort and without undue risk, expense, or humiliation would significantly weaken the incentive for employers to establish effective workplace remedies against sexual harassment.
The Court's opinion in State Department of Health Services v. Superior Court (McGinnis) (Nov. 24, 2003), Case No. S103487, is available at these links in PDF and Word formats.
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