September 25, 2012

Employer Alert: 2013 Legislative and Regulatory Expansion under California FEHA


On June 28, 2012, Governor Brown signed a budget reconciliation bill that made widespread changes to the organization of many state agencies. Buried in the 160 page bill are very significant amendments to the California Fair Employment & Housing Act (FEHA).

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On June 28, 2012, Governor Brown signed a budget reconciliation bill that made widespread changes to the organization of many state agencies. Buried in the 160 page bill are very significant amendments to the California Fair Employment & Housing Act (FEHA), which is the comprehensive statutory framework for California’s prohibition on categories for discrimination, harassment and retaliation in employment and housing. The Department of Fair Employment & Housing (DFEH) is the agency that enforces these anti-discrimination standards.

Among the key administrative changes, effective January 1, 2013, the FEHA amendments will:

  • disband the Fair Employment and Housing Commission (FEHC), which was the agency that adopted regulations and acted as the judicial body that conducted evidentiary hearings for accusations of discrimination brought before the commissioners instead of in a civil court;
  • expand specified powers of the DFEH related to complaints, mediations and prosecutions;
  • eliminate a specified cap of actual damages under FEHA (in particular the cap of $150,000 on emotional distress damages when raised in an administrative accusation rather than a civil action);
  • mandate mediation of discrimination, harassment or retaliation charges, at no cost to the parties, but with beefed up penalties for violating any agreement reached by way of alternative dispute resolution;
  • require that certain actions be brought in court by civil action, rather than by “administrative accusations” previously heard by the FEHC;
  • transfer the responsibilities for adopting regulations to the DFEH, through an internal council;
  • shift the venue for claims for emotional distress damages that are pending before the Commission to be tried in Superior Court (subject to agreement of the parties, although how that will operate is ambiguous at this point). Other claims may be heard before an administrative law judge rather than the Commission;
  • New claims, filed on or after January 1, 2013, that the DFEH elects to bring on behalf of individuals or a class of aggrieved employees, may be brought to civil court by the DFEH.

These administrative changes will have potentially profound impact on how every charge of discrimination is investigated, mediated or prosecuted. It could also result in increased risks for hefty damage awards against employers. Consider the contrast between some recent FEHC administrative awards compared to damage verdicts assessed by jurors in civil lawsuits the FEHA:

Fair Employment & Housing Commission Administrative Awards

  • DFEH v. Air Canada — The Commission found violations of FEHA for terminating a customer service agent because of her disability; failing to provide reasonable accommodations; ignoring the employee’s attempts to communicate with the company to return her to work; and ignoring its own accommodations and leave policies. The Commission awarded $102,737.60 in back pay, $19,720 in lost benefits, reinstatement to the same or comparable position, front pay from the first day of the hearing to the date of reinstatement, $125,000 in emotional distress damages, and $25,000 administrative fine.
  • DFEH v. Avis/Budget — The Commission found in favor of a customer service representative at SFO airport because Avis failed to engage in the interactive process, delayed in communicating, made unlawful inquiries about the employee’s disabilities when it initially required her to release her psychiatric medical file or submit to a medical examination, placed her on involuntary leave and failed to reasonably accommodate. The award was $89,863.70 ($14,863.70 back pay & $50,000 emotional distress), plus a $25,000 administrative fine
  • DFEH v UPS — Commission found in favor of a UPS employee who handled customer calls and complaints on shipments. She was allegedly denied a reasonable accommodation and fired based on an inflexible maximum leave policy. FEHC awarded a total of $96,170 representing $31,170.00 in lost wages, $25,000 in emotional distress and a $10,000 administrative fine, plus interest and future wages.
  • DFEH v Acme Electric
    — This case is a notable exception for administrative awards being significantly lower than jury awards in comparable cases. In 2011, the DFEH obtained the largest-ever administrative award of $846,300 against Acme Electric for firing a sales manager who requested limitations on his travel requirements after returning from leave for kidney and prostate surgeries and while still undergoing treatment. The Commission found Acme failed to reasonably accommodate his known travel limitation due to his cancer treatments, failed to engage in a good faith interactive process and failed to take all reasonable steps necessary to prevent discrimination from occurring. The DFEH awarded the employee $748,571 for lost wages, $22,729 for out-of-pocket expenses and $50,000 for emotional distress.

Note: FEHC had power to award damages for emotional distress up to $150,000 per aggrieved person under Govt. Code section 12970(a)(3). In contrast, employees suing in civil court can — and do — often obtain hefty awards for their emotional distress, pain and suffering. Likewise, civil litigants who sue and prevail under FEHA may recover their reasonable attorneys’ fees and costs, even if their “win” is for a lot less than they asked from the jury. Until now, DFEH, which prosecuted administrative actions on behalf of employees before the commission, did not recover attorneys’ fees and/or litigation costs, because all of the matters were handled internally within the agency. This new legislation changes this system and authorizes the DFEH to pursue civil lawsuits on behalf of aggrieved parties and seek comparable remedies. The amendments do not change the remedies and requirements for individuals whom the DFEH elects not to represent; but may choose to expand on investigations and mediations in many of those matters prior to issuing a Right to Sue Letter, which is the trigger for the individual to engage counsel for their own civil lawsuit.

Contrasting Jury Verdicts in Civil Lawsuits

  • Wysinger v Auto Club: The jury found that the employer failed to engage in an interactive process when an employee requested a transfer to a different office that would limit his commuting time, due to his disability, although it also concluded that the requested transfer would not have been a reasonable accommodation. The jury award that was upheld on appeal: $2.26 million: (representing $204,000 in economic damages for lost wages; $80,000 non economic damages; $1 million punitive damages; and $978,791 reasonable attorneys’ fees as an item of damage.
  • Schermerhorn vs. Los Angeles Unified School District: a teacher had hip replacement surgery for an industrial injury. He asked to return to work with temporary restrictions before he had reached his maximum medical improvement, but was repeatedly rebuffed. He prevailed on his claims for disability discrimination and failure to engage in the interactive process to consider reasonable accommodations. The award, also upheld on appeal (in an unpublished decision) was $971,750 (representing $380,306 compensatory lost income and emotional distress; $21,836 costs and $568,108 in plaintiff’s attorneys’ fees as an item of damage.
  • Jones v Lodge at Torrey Pines: Jones brought an action against his former employer and his former supervisor for harassment and discrimination based on sexual orientation and retaliation. After his harassment claim was dismissed, the jury returned a verdict on the discrimination and retaliation claims, awarding compensatory damages of approximately $1.4 million against the Lodge and $155,000 against the supervisor individually. The judge set aside the verdict against the supervisor, holding that she could not be held liable for retaliation under the FEHA. The Court of Appeal reversed and the Supreme Court overturned that appeals court. The Supreme Court noted that individual supervisors can avoid engaging in harassment and, therefore, it is fair to subject them to personal liability for harassment. However, in the case of discrimination and retaliation, which involve job actions, supervisors cannot avoid making the personnel decisions which are allegedly discriminatory or retaliatory. These are often joint decisions made by more than one person such that it would be difficult to apportion blame. Nevertheless, the jury’s award against the Lodge was upheld on appeal.
  • Cuiellette v. City of Los Angeles: a jury awarded a Los Angeles Police Department officer $1,571,500 on his claim that he was denied a reasonable accommodation after he asked to return to a lighter duty position following the resolution of his workers’ compensation claim.
  • Bradley v. Department of Corrections: A licensed social worker who was assigned temporarily by a hiring registry to a state prison, where she was subjected to sexual harassment and retaliation, was an employee of the state for the purposes of FEHA even though she was not a state employee under civil service and benefits standards. A jury found that she was subjected to sexual harassment by the prison chaplain and that the prison officials failed to investigate her claim, failed to take corrective action and retaliated against her by firing her in response to her complaints. The jury awarded her $744,000 in damages and attorneys’ fees, which were upheld by the Appeals Court. ($300,000 non economic damages; $87,000 past economic damages; $50,000 “non-duplicative” past economic damages on her retaliation claim; $2,000 future economic damages on the harassment claim and $305,000 attorneys fees as damages).

The legislation is new and it will take some time to digest the changes and to identify where employer policies and procedures will require updating. DFEH will be holding a webinar addressing these changes to their regulatory and enforcement powers on July 25, 2012.

Before it is disbanded, the FEHC is expected to adopt expansive new regulations governing disability discrimination charges and workplace accommodations for pregnant employees. DFEH will handle enforcement and future rulemaking. At its meeting on June 13, 2012, the FEHC made several changes based on public comments. The second public comment period ended on 7/3/12. The regulations, effective on January 1, 2013, significantly expand who is entitled to reasonable accommodations and what employers must consider in making decisions. For example, “essential job functions” must be based only on tasks actually required, as reflected in recent performance evaluations or current job descriptions. The scope of pregnancy-related conditions requiring accommodation is broader. The list of disability accommodations to consider has doubled.

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