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Conduct that constitutes harassment can come from several sources, including supervisors, coworkers, customers and vendors. The courts determine who bears the liability for the harassing conduct when the conduct originates from different sources.
This topic contains the following information:
In most cases, the employer will be held responsible for harassment that occurs on the premises or in connection with the employment relationship. The degree to which the employer will be held liable depends, in part, on the unlawful conduct’s source.
Employers may be liable for harassment committed by supervisors, coworkers or third parties.
Employers are strictly liable for harassment of a subordinate by its agents or supervisors. Strict liability means that the employer has absolute legal responsibility for any harm regardless of whether you knew or should have known of the conduct.1 The employer does not have to be found careless or negligent.
In Burlington Industries v. Ellerth and Faragher v. City of Boca Raton, the U.S. Supreme Court ruled that an employer has strict liability for sexual harassment by a supervisor.2 This strict liability applies whether the harassment is quid pro quo or hostile environment.
However, if harassment occurs when an employee substantially deviates from employment duties for personal purposes, the California Supreme Court ruled that an employer is not strictly liable.3
For example, in one case, a California appellate court recently ruled that a supervisor’s lewd, late-night texts to a subordinate employee were unrelated to work and did not trigger strict liability for the employer — to constitute harassment under the FEHA, the conduct must relate to the worksite and the supervisor’s role. In this case, the evidence showed that the supervisor and the employee had cultivated a close, ongoing friendship unconnected to work, which began even before she was employed with the company.4
Because employers can be strictly liable for the harassing acts of their supervisors, the question of who actually is a “supervisor” under federal and state law matters.
California provides a statutory definition of who is a “supervisor” under the FEHA which is broader than the federal definition under Title VII.
The definition of “supervisor” under state law is as follows:
“Supervisor” means any individual having the authority, in the interest of the employer, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment.5
The state law definition of supervisor includes not just those with the power to make decisions, but also those with the authority to make recommendations. It further includes those with the responsibility for directing employees.
Under federal law, the U.S. Supreme Court decided an important case that determines who is a “supervisor” for purposes of employer liability in federal harassment cases brought under Title VII. The case, Vance v. Ball State University, provided a narrow definition of a supervisor as one who has the power to hire and fire or effect other significant change in employment status.6
The Court ruled that an employer can be automatically liable for an employee’s unlawful harassment only when the employer has given that employee the power to take “tangible employment actions” against the victim, such as hiring, firing demotion, promotion or transfer. In this case, the respondent directed the complainant’s daily activities, but, the parties agreed, the respondent had no power to hire, fire, demote, promote, transfer or discipline the complainant.
This U.S. Supreme Court ruling may have little impact on cases brought under state law because of California’s broader a statutory definition of who is a “supervisor” which includes individuals who have the responsibility to direct daily activities.
Despite subjecting employers to strict liability for the harassing acts of supervisors, the U.S. Supreme Court, in Burlington Industries v. Ellerth and Faragher v. City of Boca Raton, also created a defense to liability for federal claims in limited circumstances, now known as the “Ellerth/Faragher” defense.
In cases brought under federal law, the Ellerth/Faragher defense is available to employers in hostile environment harassment cases in which employer-sanctioned, adverse employment action did not occur. An employer can claim the Ellerth/Faragher defense to liability or damages if:
However, the Ellerth/Faragher defense is available only if the harassment did not result in a tangible adverse employment action, such as termination or demotion. If an adverse employment action occurs, then the employer’s corrective or preventive actions do not prevent an employer’s liability for a supervisor’s conduct.
The Ellerth/Faragher defense does not guarantee that the employer can avoid liability in a federal sexual harassment lawsuit. A 2012 federal court decision emphasized the fact that a company should not merely go through the motions of posting policies and providing training. If the policies and training are inadequate or never fully implemented, the company cannot use the Ellerth/Farager defense to avoid liability.7
Example of defense: An employee claimed that she suffered sexual harassment at the hands of her supervisor for more than 2.5 years. She admitted that she never reported his actions to company officials during that time. She also admitted that the employer fired the supervisor two days after she made a complaint through the employer’s sexual harassment hotline.8
The Eighth Circuit Court of Appeals found that the employer’s anti-harassment policy was more than reasonable for purposes of the Ellerth/Faragher defense to sexual harassment under the Title VII of the Civil Rights Act. The court reasoned that the employer maintained a zero tolerance policy that required investigation and documentation of every report of sexual harassment. The policy was widely disseminated through training videos and handbooks for all new employees, as well as posters displayed in all of its stores. The court also found that there was nothing objectionable in the employer requiring confirmation of sexual harassment before taking action against alleged harassers. Finally, the employer demonstrated the unreasonableness of the employee’s failure to report the supervisor’s harassment sooner.
If the claim is brought under state law, corrective or preventative actions may not provide a complete defense, but can limit liability.
In State Department of Health Services v. Superior Court of Sacramento County, the California Supreme Court ruled that the Ellerth/Faragher defense is not applicable to FEHA sexual harassment claims. In harassment cases brought under state law, there is no complete defense to liability for the harassing acts of supervisors. However, while not allowing a complete defense, the court provided employers with the clear opportunity to reduce the extent of their liability in these cases.9
The court said that the “doctrine of avoidable consequences” is applicable to hostile environment cases as well as those involving a tangible employment event. You can limit damages by showing that:
The court further explained that each case requires a fact-intensive analysis of the reasonableness of the employee’s delay in reporting. Courts can consider how well the employer’s policies were made known, the extent of employee training about available procedures, the reasonableness of the procedures in the context of the particular case, employee perception of the confidentiality and effectiveness of the employer’s process for investigating and remedying claims and justifiable employee fear of retaliation.
You are liable for the harassment of employees, applicants or independent contractors committed by an employee who is not a supervisor/agent only if you knew (or should have known) about the conduct and fail to take immediate and appropriate correction action.10
Employers are liable for a supervisor’s harassment of an employee even if off-duty and away from work. And, managers who socialize with subordinate employees may see or learn things about off-duty conduct that place the manager, and the company, at risk.
If a supervisor sees harassing conduct of one employee by another, and does nothing to stop it, employees may argue that the manager and, by default, the company, sanctioned the conduct. Employees could also argue that having a manager present, even after work and off-site, turns a social event into a company-sponsored event.
Though most employers know of their duty to protect employees from harassment by other employees, employers also must protect employees from harassment by third parties, such as customers.11
You may be responsible for the acts of nonemployees who harass employees, applicants or independent contractors in the workplace if you, your agents or supervisors knew or should have known of the harassment and you fail to take immediate and appropriate corrective action.12 The obligation to protect against harassment committed by nonemployees is part of FEHA. When reviewing harassment cases that involve nonemployees, the CRC, the EEOC and the courts consider the extent of your control of and legal responsibility for the conduct.13
Example: Joyce Turman worked the night shift at a halfway house that transitioned felons from prison back into the workforce and society. Turman complained that she was frequently subjected to sexual gestures, sexual propositions and derogatory comments. The halfway house argued that the harassment by these former prisoners was inherently part of the job.
The court disagreed, and held that the employer has a duty to investigate and take corrective action, even when harassment may be inherently part of the job. Employers are not off the hook just because they have rude or inappropriate customers.14
Example: After a trespasser was observed by other employees wandering around and making sexually harassing comments to other housekeepers, he sexually assaulted and battered a hotel housekeeper for two hours. Although hotel management broadcasted the trespasser’s activities to all housekeeping staff and sent the housekeeping manager and/or supervisors to check on employees, the floor where the battered housekeeper was working was not checked even though the housekeeper’s cart was in front of the room she was assaulted in.
A court of appeal held that the employer responsibilities under the FEHA arose when the trespasser appeared on the premises and began aggressively propositioning hotel employees for sexual favors. The hotel had a duty to take an immediate corrective action to stop the conduct and prevent future harassment from occurring. An employer must “protect a likely future employee victim” once it knows a person’s conduct “places employees at unreasonable risk of sexual harassment.” The more serious or egregious the harassing conduct, the more the employer must do to prevent future harm.15
Managers and supervisors serve as your first line of defense in avoiding liability for sexual harassment. Their actions or inaction can result in costly judgments against your company and themselves. In some circumstances, the supervisor may also be subject to personal liability.
Supervisors who harass employees can be held personally liable.16 Although the company can be held partially legally responsible for the conduct, the supervisor’s personal assets are also at risk.
In Farmers Ins. Group v. County of Santa Clara, the California Supreme Court decided that an employer is not obligated to reimburse a supervisory employee who was forced to pay money to settle a sexual harassment claim. The court said that sexually harassing conduct is outside of the scope of an employee’s duties, and that the employer has no obligation to indemnify its employee for the cost of the misconduct.17
A supervisor who was not the harasser is not personally liable for failing to stop known harassment. In Fiol v. Doellstedt, a California Court of Appeals decided that a supervisor who was informed that another employee was sexually harassing his subordinate was not personally liable for the sexual harassment simply because he failed to act on the complaint. The court ruled that the supervisor’s failure to prevent the employee’s sexual harassment did not make him personally liable for sexual harassment as the harasser’s aider and abettor, the employer’s aider and abettor or as an agent of the employer under FEHA.
This decision does not eliminate the employer’s or harasser’s liability.18
In Jones v. The Lodge at Torrey Pines Partnership, the California Supreme Court ruled that supervisors are not personally liable for retaliation under FEHA. Retaliation is different from harassment, for which supervisors can be held personally liable. At issue was the legal meaning of the word “person,” and if the Legislature intended to make individual employees personally liable for retaliation.19
Employees also can be held personally liable for harassment. Therefore, the employee’s personal assets are at risk.20 Employees can be held personally liable for harassment regardless of whether you know or should have known of the conduct.
You must reimburse employees for expenses they incur while performing their duties.21 In Jacobus v. Krambo Corp., a Court of Appeal addressed the question of when an employer must reimburse an employee for defense costs. Two coworkers admitted to joking and trading personal information on sexual matters at work. The court ruled that the employer’s liability for reimbursement is based on whether the conduct was in the course and scope of employment.22 The court noted that because a jury found that the male employee did not engage in sexual harassment and both parties admitted that the sexually explicit comments were consensual, the conduct was “part of the social intercourse that occasionally occurs in modern office settings.”
Franchisors are generally not liable for employment claims brought by employees of the franchisee. In most instances, the franchisee, not the franchisor, is the “employer” and only the franchisee will be liable for employment claims. Franchise agreements are normally crafted in such a manner as to limit the potential liability of the franchisor for the franchisee’s conduct.
A decision from the California Supreme Court in Patterson v. Domino’s Pizza, LLC., affirmed protections for franchisors. The court ruled that a franchisor, in this case Domino’s Pizza, can’t be held responsible for unlawful harassing conduct committed by a franchisee’s employee, where the franchisor exercises no control over the franchisee’s relevant day-to-day operations, such as hiring, supervising and disciplining employees. The court ruled that Domino’s lacked the general control to be liable as the employer in this situation.23
In this case, Taylor Patterson, a 16-year-old employee of Sui Juris, a Domino’s Pizza franchise, brought a sexual harassment claim against both Sui Juris (the franchisee) and Domino’s (the franchisor). Patterson alleged she was sexually harassed and assaulted by an adult male assistant manager.
The state supreme court dismissed the lawsuit against Domino’s, focusing on the fact that in this case the franchisee, not Domino’s, retained control over the “day-to-day decisions involving the hiring, supervision, and disciplining of his employees.” Although Domino’s retained control over things such as branding and uniformity in products and services, it did not retain control over the day-to-day employment relationship.
The terms of the actual franchisor/franchisee agreement played an important role in the court’s decision. The agreement:
The court’s ruling does not mean that franchisors can never be held accountable for harassment occurring at a franchised location. Franchise agreements are important, but the conduct of the franchisor in attempting to control franchisee operations may also be examined by the courts.
In this case, the court found that the actual practices of the franchisor and franchisee further demonstrated that Domino’s did not exercise the necessary control over day-to-day operations:
Courts will look at the actual circumstances and how much real control the franchisor exercises.
1. 2 CCR sec. 11034(f)(2)(C)
2. Burlington Industries v. Ellerth, 524 U.S. 742 (1998); Faragher v. City of Boca Raton, 524 U.S. 775 (1998)
3. Farmers Ins. Group v. County of Santa Clara, 11 Cal. 4th 992 (1995)
4. Atalla v. Rite Aid, 89 Cal.App.5th 294 (2023)
5. Govt. Code sec. 12926(t)
6. Vance v. Ball State University, 570 U.S. 421 (2013)
7. EEOC v. Management Hospitality of Racine, 666 F.3d 422 7th Cir. (2012)
8. Adams v. Reilly Automotive, Inc., 538 F.3d 926 (8th Cir., 2008)
9. State Department of Health Services v. Superior Court of Sacramento County, 31 Cal. 4th 1026 (2003)
10. 2 CCR sec. 11034(f)(2)(C)
11. Govt. Code sec. 12940(j)
12. 2 CCR sec 11034(f)(2)(C)
13. Govt. Code sec. 12940(j)(1)
14. Turman v. Turning Point of Central California Inc., 191 Cal. App. 4th 53 (2010)
15. M.F. v. Pacific Pearl Hotel Management, LLC, 16 Cal.App.5th 693 (2017)
16. Page v. Superior Court of Sacramento County, 31 Cal. App. 4th 1206 (1995); 2 CCR sec.11034(f)
17. Farmers Ins. Group v. County of Santa Clara, 11 Cal. 4th 992 (1995)
18. Fiol v. Doellstedt, 50 Cal. App. 4th 1318 (1996)
19. Jones v. The Lodge at Torrey Pines Partnership, 42 Cal. 4th 1158 (2008)
20. Govt. Code sec. 12940(j)(3)
21. Lab. Code sec. 2802
22. Jacobus v. Krambo Corp., 78 Cal. App. 4th 1096 (2000)
23. Patterson v. Domino’s Pizza, LLC., 60 Cal. 4th 474 (2014)