Employment Law 1

In the past year, two California Court of Appeal cases have concluded that employees cannot be held liable under California law for alleged sexual harassment by non-employees. However, the recent enactment of Assembly Bill 76, effective January 1, 2004, has made both these decisions and their impending reviews moot.

The Salazar and Carter Decisions
In October 2002, the California Court of Appeal ruled that California employers cannot be held liable under the California Fair Employment and Housing Act (FEHA) (Govt C §§ 12900-12996) for alleged sexual harassment by non-employees. In Salazar v Diversified Paratransit, Inc. (2002) 103 CA4th 131, the plaintiff, a bus driver for a company providing transportation for developmentally disabled adults, brought a FEHA sexual harassment claim against her employer based on the allegation that she was repeatedly harassed by a passenger. She also claimed that her employer had knowledge of the passenger’s harassing conduct, but took no action to stop it. After engaging in a detailed analysis of the language of FEHA, as well as its legislative history, the Court of Appeal held that FEHA does not create employer liability for the sexual harassment of an employee by a non-employee, client, or customer. The Court further explained that an expansion of FEHA to include employer liability for sexual harassment by non-employees would require an act by the California Legislature.

On June 4, 2003, another California appellate court agreed with the conclusion reached in Salazar. In Carter v California Department of Veterans Affairs (2003) 109 CA4th 469, the plaintiff, a registered nurse who worked at a veterans’ residence facility, brought a FEHA sexual harassment claim against her employer. The allegation was based on the fact that one of the patient residents of the facility had consistently harassed her, and that her employer had taken little or no action to stop the harassment. The employer argued that such a claim was improper under FEHA because the alleged harasser was not its employee or agent, but a customer. As in Salazar, the Court of Appeal engaged in a detailed examination of FEHA’s language and legislative history and concluded that FEHA does not impose a duty on an employer to protect an employee from sexual harassment by a non-employee. The Court also concluded that a plaintiff could not “back door” such a lawsuit by alleging that the employer had violated FEHA’s general admonishment that employers must “take all reasonable steps necessary to prevent discrimination and harassment from occurring.”

Although both the Salazar and Carter decisions were taken up for review by the California Supreme Court, the enactment of Assembly Bill 76 has rendered the impending reviews moot.

Assembly Bill 76
Assembly Bill 76, which is specifically intended to overrule the Salazar decision, amends FEHA's anti-harassment provisions. Specifically, AB 76 modifies the language of FEHA to make employers expressly responsible for the sexually harassing acts of non-employees toward employees, applicants, or persons providing services pursuant to a contract in the workplace where the employer (or its agents or supervisors) knows or should have known of the harassing conduct and fails to take immediate and appropriate corrective action. This bill was passed by the California Legislature in September and approved by former Governor Davis on October 3, 2003. Thus, with one fell swoop of the pen, employers face potential liability for non-employee sexual harassment under California law.

Conclusion
It should be noted that, regardless of the enactment of Assembly Bill 76, California employers already faced potential liability for non-employee conduct under federal law. As a result, an employer's standard operating procedures should not change dramatically. As before, regular training and prompt, thorough investigations of any complaints of harassment should continue to be a part of an employer’s regular operations. Perhaps even more importantly, it is common sense and good business practice for every employer to prevent any distractions caused by harassing behavior and to promptly correct any such issues that may arise.

California Workers’ Compensation Practice
On the Desk of Every Workers’ Compensation Judge in California
4th edition, 1330 pages, 2 looseleaf volumes, updated 6/03
WC33150, $219.00