In a much anticipated decision issued on Monday, the California Supreme Court held that an employer may reduce liability for hostile workplace damages where the victim of unlawful harassment fails to use the employer’s anti-harassment complaint process.  Applying the doctrine of “avoidable consequences” to California’s anti-harassment laws, the court held that an employer may avoid liability for damages the victim could have prevented by using the internal complaint procedure or other corrective measures the employer provided. 

The case involved a claim by plaintiff Theresa McGinnis against her employer, the State Department of Health Services (“DHS”), for hostile work environment harassment by her supervisor, brought under the Fair Employment and Housing Act (“FEHA”).  Plaintiff alleged the harassment had occurred during approximately two years before she reported the conduct to senior personnel.  The DHS sought summary judgment, arguing that the plaintiff had unreasonably delayed availing herself of the department’s anti-harassment complaint procedure.  The trial court denied summary judgment, and that decision was affirmed by the Court of Appeal. 

On review to the California Supreme Court, the DHS and numerous amici curiae urged the court to apply the affirmative defense adopted by the United States Supreme Court in the 1998 Faragher and Ellerth decisions interpreting federal anti-harassment provisions.  In those decisions, the U.S. Supreme Court had held that, where an employer had exercised reasonable care to prevent and correct sexually harassing behavior, and the employee unreasonably failed to take advantage of opportunities to avoid harm, an employer may avoid liability under Title VII absent tangible harm.

Issuing a decision which could be described as “splitting the baby,” the California Supreme Court declined to allow employers to assert the Ellerth/Faragher as an absolute defense under FEHA.  The court confirmed that, under the language and legislative history of the FEHA, employers continue to face strict liability for the harassing conduct of supervisory employees.  However, by applying the common law avoidable consequences doctrine to claims of sexual harassment, the court has allowed employers to limit the extent of damages if they can show that:

1. the employer took reasonable steps to prevent and correct workplace sexual harassment;
2. the employee unreasonably failed to use the preventive and corrective measures that the employer had provided; and
3. reasonable use of the employer’s procedures would have prevented at least some of the harm that the employee suffered. 

The court emphasized that these determinations “in many and perhaps in most instances” will present disputed factual issues and that the analysis affects only the extent of damages, not liability.  As such, these issues will be difficult to resolve at summary judgment.  The court also warned that plaintiffs may be excused from pursuing complaint procedures that are not well publicized or applied.  The court advised that the employer’s practices in maximizing confidentiality and minimizing retaliation would also be relevant to determining whether the plaintiff should have sought internal resolution of the harassment problem.

Nonetheless, under this decision, employers which publish and honor procedures for harassment complaints have an invaluable tool for reducing litigation costs and risks when defending against claims of sexual harassment.