California employers now on notice

In just a few short months, the agencies charged with enforcing civil rights laws in the workplace have filed high profile lawsuits alleging multiple incidents of discrimination in the workplace against companies doing business in California.

On Aug. 24, the U.S. Equal Employment Opportunity Commission (EEOC) filed suit against upscale Italian restaurant chain Il Fornaio, alleging a pattern of sexual harassment and retaliation against those who reported it dating back to 2016. Notably, the lawsuit highlights the allegation that complaints of sexual harassment had been made to supervisors, managers and human resources employees as far back as 2016, to no avail. In fact, the suit alleges, such complaints were often met with various forms of retaliation.

A few months earlier, the California Department of Fair Employment and Housing (DFEH) filed a lawsuit against Tesla, Inc., alleging that its factory in Freemont was a segregated workplace, wherein Black employees were harassed and subject to discrimination in discipline, job assignments and pay. Whether these allegations will be borne out in trial remains to be seen. However, what is abundantly clear is that these agencies will not shy away from going after those employers they deem to be systemic violators of workplace civil rights laws, and the fallout from those efforts can have significant consequences for the alleged violators.

These robust enforcement efforts are in line with a broader trend of society prioritizing a safe and secure workplace for employees. From the rise of the “Me Too” movement, to the banishment of secret settlements, non-disclosure agreements, and no-rehire clauses, to the federal elimination of mandatory binding arbitration for claims of sexual harassment in the workplace, there is fortunately a trend and comprehensive effort to eliminate unlawful discrimination and harassment from the workplace.

The practical takeaway from this trend and these robust enforcement efforts is that California businesses must prioritize regular reviews and assessments of current equal employment opportunity practices. In fact, the California Fair Employment and Housing Act makes it a separate unlawful act to “fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.” California Government Code Section 12940(k). This means that at minimum, California employers should prioritize the training of its employees on reporting and handling alleged incidents of discrimination and harassment, and should ensure that internal channels to report such incidents are available, user-friendly, adequately staffed and effective. Employers should regularly audit these channels to ensure that its human resources practices provide an adequate and enduring safety net for its employees. These channels should be reinforced by engaging with in-house or outside counsel to address incidents in advance of or as they occur. As this is far more effective in both cost and satisfactory resolution than waiting until a lawsuit is filed to consult an attorney. These efforts will go a long way in preventing systemic enforcement failures, which seems to be a flashpoint for the attention of the EEOC and DFEH.

Of course, employers have ample incentives to pay close attention to its reporting and enforcement practices to avoid allegations of systemic equal employment violations. First, there is the economic impact of facing a lawsuit from the EEOC or DFEH, let alone a private litigant, which includes attorneys’ fees incurred in defending the claims, liability for the agencies’ legal fees upon success, and exposure to a substantial award of damages on behalf of multiple victims.

There is also the reputational impact of being the subject of such a lawsuit, which can no longer be dodged by use of confidential settlements and non-disclosure agreements, thanks to recent advancements in California law. Finally, and perhaps most elementary, protecting workers from discrimination and harassment is part of a company’s moral and ethical obligations to its workforce. The EEOC and DFEH have put California businesses on notice that they have and will devote significant time and resources into enforcing these obligations, particularly in the case of avoidable systemic failures.