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State's Measure Could Undercut Damage Rewards

February 25, 2005
Related Topics: Featured Article, Training & Development

In crafting a new sexual harassment prevention training law, California legislators did their best to minimize its potential legal impact. But employment law experts believe it could make a significant difference in one area: punitive damages.

    AB 1825, signed by Gov. Arnold Schwarzenegger in September, requires all employers with 50 or more employees in California to provide at least two hours of sexual harassment training to all supervisory employees by no later than January 1, 2006. The law makes California the third state--after Connecticut and Maine--to quantify an employer’s obligation to train supervisors. "It’s for employers who haven’t gotten it," says Michael W. Johnson, an attorney and managing director of Brightline Compliance in Washington, D.C. "Employers should have been doing this anyway."

    Under the U.S. Supreme Court’s landmark 1998 decisions inBurlington Industries v. Ellerth and Faragher v. City of Boca Raton, employers have had an affirmative defense if they took reasonable steps to prevent sexual harassment.

    Training companies, of course, have been quick to seize on AB 1825, offering online or on-site seminars in compliance. Unlike Connecticut’s law, it also requires retraining once every two years after January 1, 2006. Some attorneys believe similar legislation will spread to other states, but Steven Sprenger, a plaintiffs’ lawyer at Sprenger & Lang in Washington, D.C., says it may just be California making "a policy statement that EEO compliance is important."

    As for the litigation of sexual harassment cases, the law seems to cancel itself out. Failure to comply, it says, "shall not in and of itself" result in an employer being held liable for sexual harassment; on the other hand, compliance "does not insulate" the employer from liability.

    But if the employer is found liable and the case proceeds to punitive damages, AB 1825 may come into play.

    In a 1999 case, Kolstad v. American Dental Association, the Supreme Court ruled that punitive damages could be awarded if the employer intentionally discriminated against the employee and did so with "reckless indifference" to the employee’s rights. Employers who don’t comply with AB 1825 risk providing a basis for punitive damages, experts warn.

    "In view of the fact that the (California) Fair Employment and Housing Act already requires an employer to take ‘all reasonable steps’ to prevent discrimination and harassment, the plaintiffs’ bar will likely point to an employer’s failure to comply with AB 1825 as evidence of reckless indifference," says defense attorney Barry D. Kellman of Greenberg, Glusker, Fields, Claman & Machtinger in Los Angeles.

    Conversely, Sprenger says he "wouldn’t like the chances of getting a punitive damages award if there is compliance" with the new law. "Reasonable people (on a jury) are going to have some sympathy for a company" that has met its training obligations, he adds.

    Ultimately, compliance "has the potential of eliminating punitive damages," Kellman says.

Workforce Management, March 2005, p. 21 -- Subscribe Now!

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