A California Court of Appeal recently held that an employer is not strictly liable under the California Fair Employment and Housing Act (FEHA) for harassment allegedly perpetrated by a supervisor merely because that individual supervises others. The court held that strict liability applies only when the alleged harasser is both the plaintiff's supervisor and acting in a supervisory capacity at the time of the harassment. The decision appears to be the first published California appellate opinion to address the question.

The Facts of the Case

The plaintiff, a female wealth adviser, alleged that a male investment strategist sexually assaulted her during a business trip. The strategist supervised certain support staff but had no supervisory authority over the plaintiff. When she reported the conduct, the employer placed the strategist on paid leave and investigated. The investigation did not substantiate the assault allegations but found violations of workplace conduct policies, and the employer issued him a final warning.

The plaintiff argued that the employer was strictly liable for harassment by any supervisor. In the harassment context, strict liability means that an employer is automatically responsible for sexual harassment committed by a supervisor, even if the employer did not know, approve, or participate in the harassment.

The Court's Reasoning

FEHA's text leaves room for interpretation

FEHA does not use the term "strict liability." Courts have inferred a strict liability standard under the Act for harassment by supervisors, in contrast with the negligence standard FEHA applies to harassment by non-supervisory employees. Because the text does not say whether "supervisor" means any supervisor or the plaintiff's supervisor, the court looked to FEHA's purpose, prior case law, and the practical consequences of each reading.

Strict liability follows authority over the victim

The court explained that strict liability exists because of the power a supervisor holds over the victim. When the harasser has no authority over the victim, that imbalance is absent and, as to the plaintiff, the harasser is simply a co-worker. According to the court, a contrary rule would produce arbitrary results. For example, between two equal-ranking employees, the employer's liability would turn on which one happened to have direct reports. Accordingly, the court found that strict liability will apply only when the alleged harasser is both the plaintiff's supervisor and acting in a supervisory capacity at the time of the harassment. 

Key Takeaways for Employers

Employers now have published authority to defeat strict liability claims based solely on an alleged harasser's title. However, employers should keep in mind that FEHA defines "supervisor" broadly to include anyone who can discipline, assign, or direct employees, or who can effectively recommend those actions. To fully preserve available defenses, employers should make sure their organizational charts and job descriptions reflect who actually exercises that authority.

Defeating strict liability also does not end the case. Harassment claims would then shift to the negligence standard of whether the employer knew or should have known of the harassment and failed to act. Employers can strengthen defenses by maintaining multiple reporting channels, investigating complaints promptly, and training all employees, not just managers, to escalate concerns.