Burlington/Faragher Defense Under FEHA

By Angela M. Bradstreet and Gowon Song

In 1998, two U.S. Supreme Court cases, Burlington Industries v. Ellerth and Faragher v. City of Boca Raton, held that employers are vicariously liable for supervisory employees’ sexual harassment of subordinates. This vicarious liability, however, was not "automatic" in every case. The Supreme Court held that where the plaintiff employee had not suffered a tangible job action, the employer should be allowed to plead an affirmative defense to avoid liability by showing that "(a) [it] exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) [] the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise."

Thus, after Burlington/Faragher, federal courts imposed vicarious liability on employers whose supervisory employees committed actionable harassment, unless no tangible employment action had been taken and the employer proved its affirmative defense.

In California Dept. of Health Services v. Superior Court (McGinnis), the California Supreme Court will soon decide whether it will adopt or reject the Burlington/Faragher affirmative defense for purposes of sexual harassment cases brought under FEHA.

Theresa McGinnis worked for California’s Department of Health Services, under the supervision of Cary Hall. McGinnis alleged that Hall began sexually harassing her in mid-1995. McGinnis confided in a co-worker but did not complain to management until more than two years later, in November 1997. After conducting an investigation and concluding that Hall had violated DHS policy against sexual harassment, disciplinary action was taken against Hall, leading to his eventual retirement. At the time that McGinnis claimed she was being harassed by Hall, DHS had a written policy on sexual harassment in its employee handbook. DHS also provided sexual harassment training programs for its employees which McGinnis attended.

McGinnis later filed suit against DHS and Hall, alleging causes of action for sexual harassment and sex discrimination in violation of FEHA. DHS moved for summary judgment, arguing in part that the Burlington/Faragher defense applied. DHS pointed out that McGinnis suffered no adverse, tangible job action. DHS had implemented a comprehensive policy and program to prevent and combat sexual harassment, and McGinnis had not taken steps to avail herself of those measures in a timely fashion. DHS argued that for these reasons, it should not be held vicariously liable for Hall’s actions.

The trial court denied DHS’ motion. Although it found the U.S. Supreme Court’s reasoning in Burlington and Faragher "persuasive," in the absence of California appellate authority, it declined to apply the Burlington/Faragher affirmative defense.

The Third Appellate District Court of Appeal affirmed the trial court’s ruling, holding that the Burlington/Faragher affirmative defense had no place in the FEHA statutory scheme.

FEHA provides that "[h]arassment of an employee . . . by an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action." According to the Court of Appeal, the quoted language "clearly indicates that, while an employer’s knowledge and action may be relevant in assessing employer liability for harassment by a nonsupervisory employee, these factors are irrelevant when determining employer liability for harassment by a supervisor." The statute, however, does not specify or even discuss the circumstances under which an employer is liable for supervisor harassment.

The Court went on to cite California case law stating that employers are "strictly liable" for supervisory employees’ harassment of subordinates, and defined "strict liability" as employer liability for harassment by supervisory employees even though the employer did not know, and did not have reason to know, of the supervisory employees’ conduct. From this, the Court of Appeal then made a leap in logic that because "strict liability" applies to supervisor harassment under FEHA, the affirmative defense under Burlington/Faragher cannot apply. Such analysis is fundamentally flawed.

The existence of knowledge of the alleged misconduct on the part of the employer is not the sine qua non of the application of the Burlington/Faragher defense; considerations distinctly different are involved: (1) the employer’s preventive actions to avoid harassment and (2) the plaintiff employee’s mitigation once harassment occurs. Thus, the issue of knowledge, or lack thereof, is a red herring. The Burlington/Faragher affirmative defense is neither expressly nor implicitly precluded by the "strict liability" standard under FEHA. Indeed one of the essential elements of the affirmative defense is expressly cited in FEHA; Govt. Code section 12940(j)(1) specifically requires employers to take "all reasonable steps" to prevent harassment.

There are strong policy reasons for permitting a Burlington/Faragher defense. As the Court of Appeal noted, "the defense may encourage employers to create antiharassment policies and effective mechanisms to combat harassment in the workplace. And it places what may be an appropriate burden on the employee to report harassment promptly and avoid the consequences that may result if the harassment becomes more severe and pervasive."

FEHA expressly mandates that employers "take all reasonable steps to prevent harassment from occurring." According to a 2001 decision by the Ninth Circuit, "the language of FEHA provides an even stronger basis for applying the federal affirmative defense than does Title VII itself." In Kohler v. Inter-Tel Technologies, the Ninth Circuit observed the requirement that all employers take reasonable steps to prevent harassment from occurring "mirrors the first prong of the affirmative defense under which an employer must show that it ‘exercised reasonable care to prevent and correct promptly any sexually harassing behavior.’" The Court went on to make the compelling point that "[b]ecause the United States Supreme Court interpreted Title VII to include an affirmative defense for employers in the absence of statutory language referring to preventative measures, the presence of such explicit language in FEHA supports [the] conclusion that the affirmative defense is compatible with the FEHA scheme."

Since Burlington and Faragher were decided, the majority of states that have reviewed the issue have adopted the federal affirmative defense under state law counterparts to Title VII, such as Florida, Kentucky, Louisiana, New Hampshire, Ohio, Tennessee, Texas, and Washington. A minority of states, such as Illinois and Missouri, have rejected the Burlington/Faragher defense. In adopting the affirmative defense, a Washington appellate court, in Sangster v. Albertson’s, Inc., cited the policy of encouraging "the creation and use of anti-harassment policies and grievance procedures."

The Burlington/Faragher defense is consistent with FEHA’s public policy objectives. The incentive for employers to prevent and promptly correct sexual harassment by their supervisory employees in accordance with legislative intent will be heightened if employers are allowed to plead the defense in those limited circumstances where the plaintiff employee suffered no tangible job action, where the employer had in place a bona fide anti-harassment policy and procedure, and the plaintiff employee unreasonably chose not to take advantage of the employer’s existing policy and procedure.

Yet, the Court of Appeal found that the goal of compensating victims outweighed these policy objectives, and the cost of compensating victims is "more easily and appropriately borne by the employer rather than the harasser." Of course, redress and compensating the victim for injuries caused by sexual harassment are integral to FEHA’s statutory scheme. But does that mean courts should ignore FEHA’s mandate to avoid harm in the first instance?

As the U.S. Supreme Court noted in Faragher, it is inherently unfair and contradictory to make an employer who attempts to prevent harassment as liable for supervisor harassment as those employers who do nothing. Prevention is an important public policy. Treating the employer who does nothing and the employer who takes reasonable steps to rid the workplace of sexual harassment the same undermines the Legislature’s goal of achieving a harassment-free workplace in California.

The Court of Appeal was wrong in its balancing of the policy objectives. It is better to encourage the cessation of sexual harassment before it becomes severe and pervasive through effective employer policies and preventive action than to simply attempt to compensate victims financially in the aftermath. Application of the Burlington/Faragher defense to sexual harassment cases in California will further the Legislature’s dual public policy goals of prevention and redress. Barring the defense will mean that employers are exposed to the same liability whether or not they have done anything to prevent sexual harassment in the workplace and deflates a strong legal incentive to adopt and implement anti-harassment policies and procedures. The California Supreme Court should not render meaningless this State’s employers’ bona fide anti-sexual harassment programs and remedial action that effectively protects all their employees and ensures that steps are taken to preserve a professional workplace environment.