State Department of Health Services v. Superior Court (McGinnis), 2003 Westlaw 22764580 (November 24, 2003).
A recent court decision drives home the need for every employer to have an up-to-date, effective, and well-communicated sexual harassment policy. On November 24, 2003, the California Supreme Court recently held that, although an employer is strictly liable for a supervisor's sexual harassment under California's Fair Employment and Housing Act (FEHA), the employer can avoid liability for certain damages by promulgating and enforcing appropriate anti-harassment policies.
What should an employer do after McGinnis?
Employers should ensure that strong anti-harassment policies are in place, that the policies are communicated to employees, and that the policies are enforced evenhandedly. Such policies should at the very least do the following: (1) specifically address to whom complaints should be made; (2) provide alternative avenues for reporting harassment in the event the harasser is the designated recipient of complaints; and (3) contain anti-retaliation provisions.
Facts of the McGinnis case
Plaintiff Theresa McGinnis was employed by the Department of Health Services (DHS). She was sexually harassed by her supervisor from early 1996 through late 1997. Despite a DHS policy designed to prevent harassment, McGinnis waited nearly 20 months before reporting the harassment. As soon as it received notice of McGinnis's allegations, DHS investigated the matter, determined that the claim of harassment was substantiated, and took disciplinary action against the harasser. McGinnis nonetheless sued DHS for "hostile work environment" sexual harassment.
DHS argued that it was not liable for the sexual harassment because McGinnis failed to utilize DHS's established policies and procedures for eliminating sexual harassment in the workplace. (Under federal law, an employer has a complete defense to strict liability for hostile work environment sexual harassment based on a supervisor's conduct if: (1) the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior; and (2) the plaintiff unreasonably failed to take advantage of those preventive/corrective opportunities – the so-called Ellerth-Faragher defense.)
The McGinnis ruling
After analyzing the language of FEHA, the California Supreme Court declined to strictly follow federal law and held that the failure to timely report the harassment did not provide a complete defense to the sexual harassment claim. However, the court did rule that an employer can effectively assert the late reporting as a defense to limit an employee's recoverable damages for harassment. The court held that an employer's liability under FEHA was subject to the common law defense of "avoidable consequences," which generally precludes recovery of damages that the plaintiff could have avoided by reasonable effort or expenditure. To establish that defense, the employer must prove three elements:
- the employer took reasonable steps to prevent and correct workplace sexual harassment;
- the employee unreasonably failed to use the preventive and corrective measures that the employer provided; and
- reasonable use of the employer's procedures would have prevented at least some of the harm that the employee suffered. The court held that an employer establishing these elements, could escape liability for damages the employee could have prevented had she utilized the employer's anti-harassment procedures.
The court emphasized that, in order to take advantage of the avoidable consequences defense, an employer must be able to demonstrate that it has adopted anti-harassment policies and communicated to its employees essential information about the policies and the implementing procedures.