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