New Defense for Employers in Harassment Cases: How Your Diligence Can Protect You From Multimillion Dollar Claims

Last December, the California Supreme Court confirmed that California employers have a powerful defense against harassment claims.  Specifically, the Court declared that if an employer has in place appropriate policies and procedures for preventing and correcting sexual harassment and if an employee unreasonably fails to use the procedures provided, the employee may not recover damages which could have been avoided if the employee would have used the company’s policies and procedures.  Known as the “avoidable consequences” doctrine, this defense has long been available in California, but has never specifically been applied to harassment cases.

To avail itself of the “avoidable consequences” defense, an employer first must have in place appropriate policies and procedures for preventing and correcting sexual harassment.  As we have advised numerous times in this newsletter, an employer must have in place a policy prohibiting sexual harassment and discrimination (as well as harassment and discrimination on any other protected basis) and must disseminate that policy to its employees.  Ideally, the employer should obtain written confirmation from the employee that the employee has received and read the policy.

Just as important as having and disseminating an effective policy is responding to complaints made pursuant to the policy.  While most employers have an effective sexual harassment policy in place, many fail to train supervisors regarding prohibited conduct and effective responsiveness to employee complaints.  Failure to provide this training renders the policy ineffective.  In order to meet the requirements of the “avoidable consequences” defense, the employer should train all supervisors at least once a year on the company’s anti-harassment policies and, in particular, on the necessity of reporting all instances of improper conduct to Human Resources.  Many supervisors believe that it is their responsibility to deal with inappropriate conduct themselves.  Unfortunately, most supervisors fail to respond appropriately to complaints when they are made and fail to report the actions taken to Human Resources, leaving the employer open to claims that complaints were not taken seriously.  Supervisors must be made aware that it is their responsibility to report all harassing conduct, whether that conduct is personally witnessed by them or reported to them by another source, to Human Resources.

Once supervisors are trained to appropriately report instances of potential workplace harassment, the ball is then in the court of the Human Resources Department to make sure that the employer’s defense is airtight.  This requires training of the Human Resources professionals on their obligations regarding intake and investigation of complaints.  Ideally, the Human Resources Department should have in place a policy for conducting defensible investigations into all complaints of harassment.  The policy should instruct Human Resources to proceed as follows after receiving a sexual harassment complaint:

  • Document all complaints in writing upon receipt.
  • Create a written plan for the investigation, including the laws or policies involved, the identification of documents to be reviewed and witnesses to be interviewed, and a timeline for completion of the investigation.
  • Strictly follow the written plan for conducting the investigation and, if the written plan is deviated from, document the necessity for the deviation.
  • Apprise the complainant, the alleged harasser and all witnesses who are interviewed of the confidentiality of the investigation and remind all parties of the company’s non-retaliation policy.  Document all interviews in writing.

At the conclusion of the investigation, a written report should be produced regarding the conclusions reached by the Human Resources Department.  The report should contain the following information:

  • The nature of the complaint.
  • The investigatory steps followed.
  • The conclusions of the investigation, which may include any of the following:
    • The alleged harassment occurred.
    • The alleged harassment cannot be substantiated.
    • Insufficient information was gathered to enable the investigator to conclude that the harassment either did or did not occur.

Once a conclusion has been reached, remedial or disciplinary action must be taken if it has been determined that the alleged harassment occurred.  The nature of the remedial or disciplinary action will vary depending upon the severity of the misconduct.  However, the disciplinary action must be designed to prevent future instances of misconduct and correct the misconduct that occurred.  Types of remedial and/or disciplinary actions that can be considered include, but are not limited to (1) sexual harassment training; (2) suspension with or without pay; (3) demotion; and (4) termination.

Both the complainant and the alleged harasser must be made aware of the conclusion of the investigation and, if harassment was found, must be advised that remedial or disciplinary action will be taken, although the nature of the remedial or disciplinary action need not be disclosed to the complainant.

Finally, both the accuser and the harasser should be advised that retaliation will not be tolerated and that, if any future instances of harassment or retaliation occur, they should be promptly reported.  It is important to note that the employer may still have a defense even if the conclusion reached by the employer was incorrect, so long as the conclusion was made in good faith.  Certainly, it is unlikely that a jury would punish an employer with punitive damages if the employer acted promptly to investigate a complaint and reached a reasonable conclusion, even if it turned out that that conclusion was wrong.