This week’s post is the first in a four-part blog series entitled Dealing with California Agencies.  Here, we highlight recent developments at the California Department of Fair Employment and Housing (“DFEH”). 

DFEH 2.0: How to Deal with the Rebooted DFEH

The DFEH recently received an “update” to its authority to enforce the California Fair Employment and Housing Act (“FEHA”).  As we previously reported, effective January 1, 2013, the Fair Employment and Housing Commission was eliminated, as well as its ability to adjudicate claims.  Instead, the DFEH is now authorized to file cases directly in court, seek damages, and to collect attorneys’ fees and costs.  The DFEH has made very clear it intends to use every “byte” of its  authority to prosecute suspected and “systemic” violators, and seek fees, costs, and damages.  

Employers beware.  The DFEH’s promise to flex its newly-found muscle brings an increased need to tread cautiously with the DFEH.  Below is a brief look into the “new and improved” DFEH as well as few tips to help employers deal with DFEH 2.0.

The Background:

The DFEH’s new authority came on the heels of two game changing decisions – Wal-Mart Stores, Inc. v. Dukes (which we blogged about here and here) and DFEH v. LSAC (which we blogged about here and here).  

Emboldened by the LSAC decision, the DFEH has expressed an intention to file class actions challenging systemic discrimination under the FEHA.  To help it carry out its mission, it upgraded its systems to include: (1) an electronic case management system, which helps identify employers about whom multiple workers have lodged complaints, (2) a case grading system, which fast tracks complaints the DFEH views as requiring more urgent action or that have a broader impact (like pregnancy discrimination or CFRA violations), and (3) a Special Investigations Unit (“SIU”), responsible for high impact cases.  See our related blog posts here and here.

In 2010, with the assistance of the SIU, the DFEH settled its first class investigations in over ten years.  The DFEH settled four investigations totaling $1,180,137; the average settlement was $295,034.  In late 2010, the DFEH also settled a class action for $6,011,190 against Verizon Services Corporation that challenged the company’s family medical leave policies.  This is the DFEH’s largest settlement ever.  And, for the year 2012, the DFEH boasts that it settled 668 cases for a grand total of $15,478,750, $6.3 million of this total recovery is attributed to settling Class/Group Actions.  They have been busy!

Workplace Solutions: How Can An Employer Keep DFEH 2.0 From Crashing Its OS?  

Staying off the DFEH’s radar: As made clear from recent large settlements and the statistics and grading system above, the DFEH’s SIU has a few pet areas, like leave and disability issues. Unlike the EEOC, however, the DFEH does not have set priorities; it uses the complaints it receives to determine what cases to pursue. 

Out-of-state companies with California employees are likely the brightest blips on the DFEH’s screen.  The DFEH appears to have a preconception that out-of-state companies are probably oblivious to California’s complicated employee-friendly environment.  

In light of the above, some best practices to help stay off the DFEH’s radar are:  (1) ensure all policies comply with California and federal law (especially leave and reasonable accommodation policies), and revise policies to as necessary to comply with rapidly changing regulations; (2) implement and use process maps and flowcharts to make it easier for Human Resources personnel and management to comply with all aspects of the law; (3) ensure job descriptions are accurate, up to date, and clearly set forth all essential requirements of the position; (4) ensure all required notices are posted and disseminated as required by law; (5) train Human Resources personnel and managers/supervisors on triggers for interactive process, reasonable accommodation and leave obligations; and (6) ensure policies reference the California Family Rights Act (“CFRA”) and Pregnancy Disability Leave Law (“PDLL”) - not just FMLA – to demonstrate awareness of the differences in state and federal law, and incorporate the minimum content required under both California and federal law.  

Limiting Pre-Suit Discovery: During an investigation, the DFEH has power to compel production of documents, information, and testimony.  This power is broad but not unlimited, and  employers should consider the DFEH’s information requests or subpoenas carefully.  The employer can push back on discovery that is overbroad, irrelevant or outside the scope of the underlying charge.  In our experience, where the DFEH has filed a court petition to compel compliance with the discovery, the court will deny the petition if it finds the discovery overbroad and/or irrelevant.

Employers also should pay close attention to the language in the DFEH’s complaint. Unlike the EEOC administrative process where the investigation precedes conciliation, the DFEH’s administrative process is not linear.  The DFEH can begin settlement discussions with the employer while still investigating the claims, and during these discussions may decide to expand the scope of the claims.  In short, employers are faced with a moving target, and find themselves conciliating claims that could balloon in to class-claims in a matter of months.      

Engage in Conciliation/Dispute Resolution with the DFEH:  The recent FEHA amendments added a requirement that the DFEH engage in dispute resolution with the employer before filing suit. Courts have not yet had the opportunity to interpret the DFEH’s new pre-suit dispute resolution obligations, but we expect courts will look to federal district court decisions regarding EEOC conciliation for guidance.  Currently, conciliation is a “hot bed” of discussion in EEOC cases and circuits are split on the standard of review for EEOC conciliation efforts.  See our related blog posts here, here, here and here. Employers should familiarize themselves with the different standards before negotiating with the DFEH.

Employers also should keep in mind that the dispute resolution process can be a valuable discovery tool, and provide them a “peek behind the DFEH’s curtain” to get a general idea of the scope of the DFEH’s claims and size and scope of any proposed class. 

Coming Next Week:  Our blog series continues with a focus on the California Labor Commissioner’s Division of Labor Standards Enforcement aka the “DLSE”.

Chelsea Spuck