Budget Trailer Bill Allows Department of Fair Employment and Housing to File Lawsuits in Discrimination Cases

Governor Brown signed Senate Bill 1038 (Chapter 46, Statutes of 2012) last month, a bill that mostly implemented his state agency reorganization plan. However, the bill was amended on June 25 (and signed on June 27) and contains an expansion of authority for the Department of Fair Employment and Housing (Department), essentially allowing the Department to bring civil actions to state and federal trial courts on behalf of allegedly aggrieved employees.

The bill eradicates the Department’s sister agency, the Fair Employment and Housing Commission (Commission), and instead creates the Fair Employment and Housing Council under the Department, transferring many of the Commission’s regulatory responsibilities to the Department. More importantly, SB 1038 expands the Department’s powers regarding discrimination complaints under the Fair Employment and Housing Act (FEHA). 

Current Law. Currently, and until January 1, 2013, the Department mainly processes FEHA complaints internally. When an aggrieved party files a complaint with the Department, the party may either have the complaint investigated by the Department or request a right-to-sue document – if the aggrieved party proceeds with his or her complaint in the court, the Department is no longer involved in the investigation of the matter. Should the complainant move forward with the Department’s administrative process, the Department starts an investigation and can issue subpoenas, serve written interrogatories, depose witnesses and file petitions with a superior court to get an order compelling a witness or organization to comply with subpoenas, interrogatories, requests for production of documents or exam under oath. If after the investigation, the Department determines there has been a violation under FEHA, the Department, after offering voluntary mediation, settlement negotiations and conciliation conferences, can file an accusation with the Commission and the respondent has a right to a hearing within 90 days of the accusation filing. If no settlement is reached or if the respondent does not request that the matter be transferred to a court, the Department will prosecute the accusation before an administrative law judge employed by the Commission.

New Process. After January 1, 2013, the administrative process outlined above within the Department will no longer exist; once an aggrieved party files a claim with the Department, the Department, if it determines an unlawful action has occurred under FEHA, must require parties to participate in mandatory dispute resolution, free of charge to the parties and within the Department’s internal dispute resolution division, in an effort to resolve the dispute without litigation. However, if the unlawful action is not eliminated through conference, conciliation, mediation or persuasion, the Department can now bring a civil action in the name of the Department on behalf of the complainant. 

It should be noted that removing the administrative accusation process from current law also eliminated the $150,000 cap on actual damages that can be assessed against the respondent for unlawful practice. When cases are litigated in a civil court, the employee may recover unlimited monetary damages, including back pay, emotional distress damages, punitive damages, any other out-of-pocket losses and attorney’s fees and costs.