BILL ANALYSIS AB 1825 Page 1 Date of Hearing: March 31, 2004 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Paul Koretz, Chair AB 1825 (Reyes) - As Amended: March 24, 2004 SUBJECT : Sexual harassment: training and education. SUMMARY : Requires specified employers to provide training on sexual harassment. Specifically, this bill : 1)Requires employers with 50 or more employees to provide two hours of training and education to all supervisory employees within one year of January 1, 2005, unless the employer has provided sexual harassment training and education to employees after August 1, 2002. 2)Provides that an employer's compliance with the training requirement does not insulate the employer from liability for sexual harassment of any current or former employee or applicant. EXISTING LAW 1)Makes certain specified employment practices unlawful, including the harassment of an employee directly by the employer or indirectly by agents of the employer with the employer's knowledge. 2)Requires every employer to act to ensure a workplace free of sexual harassment by implementing certain minimum requirements, including posting sexual harassment information posters at the workplace and obtaining and making available an information sheet on sexual harassment. FISCAL EFFECT : Unknown COMMENTS The Fair Employment and Housing Act (FEHA) primarily covers sexual harassment in state law. FEHA is enforced by the Fair Employment and Housing Commission. FEHA defines sexual harassment to include, verbal harassment, physical harassment, and visual harassment. Unwelcome sexual advances toward an employee of the same sex and harassment on the basis on AB 1825 Page 2 pregnancy disability are both considered unlawful sexual harassment under FEHA. It should be noted that employers may be held liable for sexual harassment of a subordinate by a supervisor, as well as harassment between co-workers. Recent legislation also provides that employers may potentially be liable for sexual harassment committed against their workers by clients, customers and other third parties. The author argues that, despite legal protections, sexual harassment in the workplace remains a major problem in California. Even with current laws to prevent sexual harassment, during the 2002-03 fiscal year, 4,231 sexual harassment cases were filed with the Department of Fair Employment and Housing (DFEH)-totaling 22% of all cases filed at DFEH. The impact of sexual harassment on businesses is significant. Harassment costs the average Fortune 500 company $6.7 million per year in indirect costs alone. According to the author, the state of Connecticut has recently taken a pro-active approach in reducing sexual harassment. Connecticut requires employers to provide training and education to all supervisory employees and post information about sexual harassment and the remedies available to victims of sexual harassment. According to the Hartford Business Journal on July 23, 2001, "Most legally sophisticated companies provide such training to all supervisory and non-supervisory employees. That's the smart thing for small and large employers to do to minimize their legal exposure to [sexual harassment] claims." Recent Case Law In Department of Health Services v. Superior Court (2003) 31 Cal. 4th 1026 the Supreme Court of California ruled that employers are strictly liable when a supervisor harasses an employee, as is traditionally the initial presumption when a prima facie case has been established by the employee. The Court, however, also held that in terms of damages, employees cannot recover damages that they could have avoided with reasonable effort and without undue risk, expense, or humiliation. The Court's opinion in Department of Health Services was based upon the common law "doctrine of avoidable consequences," under AB 1825 Page 3 which a plaintiff cannot recover damages that could have been avoided with reasonable effort. In the context of sexual harassment, an example would be an employee's failure to promptly use an employers anti-harassment complaint policies and procedures. To base a defense upon these ideas an employer must, among other things, have taken steps to prevent and correct sexual harassment, such as sufficiently communicating anti-harassment policies to employees. In its Department of Health Services opinion, the Court referenced the United States Supreme Court opinions in Burlington Industries, Inc. v. Ellerth (1998) 524 U.S. 742 and Faragher v. City of Boca Raton (1998) 524 U.S. 775 which created an affirmative defense for employers under Title VII of the Civil rights Act of 1964 (42 U.S.C. Sec. 2000e et seq.). In both cases, the United State Supreme Court stated in identical language a standard of employer liability, but recognized a defense that the employer could use in sexual harassment cases: "When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages, subject to proof by a preponderance of the evidence?. The defense comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventative opportunities provided by the employer or to avoid harm otherwise." While the Court gave little weight to federal precedent in Department of Health Services , due primarily to substantial differences in the statutory language of state and federal law, it did lead to a similar conclusion regarding the standard of employer liability and affirmative defenses. The Court in Department of Health Services emphasized that the avoidable consequences defense affects damages, not liability. The Court also emphasized that in order for an employer to avail itself of this defense, it will need to show that it had effectively communicated anti-harassment policies and procedures to employees. Finally, the Court also stated that Legislative intent clearly shows that in enacting and amending FEHA the Legislature wanted employers to establish policies to stop sexual harassment. Arguments in Support AB 1825 Page 4 The American Federation of State, County, and Municipal Employees, AFL-CIO supports this bill because it seeks to ensure that employees are infomed about their rights regarding sexual harassment. Arguments in Opposition The California Chamber of Commerce writes in opposition that employers who employ anywhere from 50 to 100 employees still consider themselves to be small. The Chamber further argues that these employers do not have in-house training staff to accommodate the mandate of this bill. Adding another cost of doing business, the Chamber writes, will be difficult for employers at a time when they are paying increased worker's compensation and unemployment insurance. The California Employment Law Council (CELC) argues that under this bill employers will be made per se liable for sexual harassment, regardless of the employer's action following the harassment. CELC also argues that the issue of which employees are supervisory is unclear and constantly debated. Other Legislation AB 2889 (Laird) of this year makes employers responsible for the acts of non-employees with respect to all forms of harassment in the workplace where the employer or its agents or supervisors knew or should have known of the conduct and failed to take immediate and appropriate corrective action. This bill has been referred to both the Assembly Judiciary and Labor and Employment Committees AB 76 (Corbett), Statutes of 2003, Chapter 671, amends the Fair Employment and Housing Act (FEHA) to prohibit sexual harassment of an employee in the workplace by a person other than an employee, agent, or supervisor of the employer. AB 1229 (Simitian) of last year makes an employer liable for unlawful sexual discrimination against individuals who are qualified for, but are denied an employment opportunity or benefit, where the individual who is granted the opportunity or benefit received it because that individual submitted to sexual advances or requests for sexual favors. This bill was held in the Senate Appropriations Committee. AB 1825 Page 5 AB 1856 (Kuehl), Statutes of 2000, Chapter 1047, expressly provides that employees of any entity covered by the California Fair Employment and Housing Act (FEHA) are personally liable for their acts of harassment, regardless of whether their employer knows or should have known of the conduct and fails to take immediate and appropriate corrective action. REGISTERED SUPPORT / OPPOSITION : Support American Federation of State, County and Municipal Employees California National Organization for Women Commission on the Status of Women, State of California San Francisco Unified School District Opposition California Chamber of Commerce California Employment Law Council California Manufacturers & Technology Association Analysis Prepared by : Nick Louizos / L. & E. / (916) 319-2091