When an employer is sued for employment-related discrimination in California, a number of steps need to be taken quickly. Steps must be taken to protect evidence relating to the alleged discrimination. The company also must prepare quickly to understand and respond to the employee’s claims. The first several days are important ones in the litigation process.
Several Laws Protect a Job Applicant or Employee from Discrimination.
Under California law job applicants and employees are protected from discrimination based on a wide range of factors and characteristics (also called “protected categories”). These protected categories are:
- Race, color;
- Ancestry, national origin;
- Religion, creed;
- Age (40 and above);
- Disability, mental and physical;
- Sex, gender (including pregnancy, childbirth, breastfeeding or related medical conditions);
- Sexual orientation;
- Gender identity, gender expression;
- Medical condition;
- Genetic information;
- Marital status; and
- Military and veteran status
A number of different California anti-discrimination laws also protect job applicants and employees who work in California. Employees in California typically choose to file discrimination claims under the California Fair Employment and Housing Act, however. Other California laws, including the California Equal Pay Act of 1949 and the California Fair Pay Act, address discrimination as well. Depending on the circumstances, a discrimination lawsuit might include allegations relating to more than one kind of discriminatory conduct under more than one theory of liability.
Protections afforded employees under federal anti-discrimination laws are narrower and cover fewer protected categories. Title VII of the Civil Rights Act of 1964, for example, prohibits employment discrimination based only on race, color, religion, sex, or national origin. At least seven separate federal laws prohibit employment discrimination, including the Age Discrimination in Employment Act of 1967, and Title I and Title V of the Americans with Disabilities Act of 1990, as amended.
Once the Litigation Process Begins, Quick and Decisive Steps Must be Taken.
In this article I focus on the time frame that begins on the date a company receives notice that an employment discrimination lawsuit has been filed against it through the date the company files a written response to the employee’s civil complaint in court or arbitration. Excluded from this discussion are issues relating to the prevention of discrimination in the workplace and the steps that must be taken when the employer receives notice of alleged past or ongoing discrimination in the workplace before a lawsuit is filed.
For the purposes of this article, I assume that the company first received notice of the discrimination claim when it is served with a summons and complaint. I also assume the employee is represented by counsel. From the perspective of the employer, the litigation process begins at that moment.
The employer’s duty to preserve evidence relating to the employee and their allegations begins immediately. The employer’s opportunity to lay the groundwork for its defense begins on that date as well.
So, what should an employer do upon receiving notice that a discrimination lawsuit has been filed against it?
Determine Whether the Company’s Insurance Policies Provide Coverage.
Employment practices liability insurance, or “EPLI,” generally covers claims of discrimination. Talk with the company’s insurance broker or agent immediately. If insurance coverage is available, defense counsel will be quickly assigned to work with management.
Hire Employment Counsel.
If the company does not have insurance coverage for the claim, it is best to find and retain employment counsel as soon as possible. Defending a discrimination lawsuit is not a good candidate for a DIY project. Discrimination claims generally are too complex. In addition, the rules that govern litigation, called the Code of Civil Procedure in California state courts, is too complicated for an employer to handle without legal assistance.
Furthermore, if the company is incorporated, it must be represented by a licensed attorney. An incorporated business is deemed to be a “person” that must be represented by a licensed attorney in court.
Finding and retaining an employment attorney requires some effort and time. So, the process should begin as quickly as possible. If the company is personally served with a summons and complaint, it has only 30 days to file an answer or to challenge the legal sufficiency of the compliant in court. Please see my recent Kitchin Legal Takeaway blog about this process: “10 Steps You Need to Follow to Find the Best Labor Law Attorney.”
Preserve Evidence.
California employment law requires employers to retain personnel records for at least three calendar years. Once the employer receives notice of a claim, including the filing of a lawsuit, its duty to preserve personnel records is extended until the claim is fully and finally resolved.
At or around the time an employee files a lawsuit, their attorney often will send the company a notice to preserve electronically stored information or “ESI.” Whether the company receives an ESI letter or not, the company should place a “litigation hold” on all evidence relating to the employee, including ESI.
This might require the company to identify and modify or suspend features of its information systems and devices that, in routine operation, operate to cause the loss of potentially relevant ESI. Preserving evidence also requires the company to preserve ESI in its native forms. If, for example, timekeeping data is maintained in Excel format, it should be kept in that format and not be converted to a PDF if the original data in Excel will be compromised or lost.
Preserving evidence might also require the company to identify and secure laptops and data from employee cell phones that contain potentially relevant information. This sometimes applies to electronic devices that are in the possession and control of third parties, including, for example, outside legal counsel.
In addition, if information is held by third parties like outsourced timekeeping vendors, they should be notified to ensure that data relating to the relevant employees is safeguarded and maintained.
Put a Lid on It.
Don’t inadvertently create bad evidence. Communications within the company between employees, including management-level employees, is not protected from disclosure in the lawsuit unless it is in the presence of the company’s attorneys, or under certain conditions, at counsel’s instruction.
After learning about the lawsuit, internal written communications about the claim can create a record that can jeopardize the company’s defense strategy. Conversations about the claim among employees can also create an evidentiary record that is not helpful.
Until the company has retained an employment attorney to help manage the discrimination claim, including the evidence, it is best to restrict information about the claim to those who have a legitimate need to know.
It is not generally a good idea to begin an investigation of the allegations on your own after a lawsuit has been filed. An attorney can develop an appropriate investigation protocol and help protect communications about the claims and defenses under the attorney-client privilege.
If the Employee is Still Working for the Company, Avoid Anything that Might be Construed as Retaliation Against Them.
Regardless of how the company feels or thinks about the claims, it is critical to avoid any conduct that a current employee might perceive to be retaliatory. Asserting a claim of employment discrimination, whether in a lawsuit or through less formal channels, is a “protected activity.” An employee has the legal right to claim discrimination, on their own behalf or on behalf of another employee. Retaliating against the employee for doing so violates the law and exposes the company to additional liability.
The Take Away
Once a company receives notice that a discrimination lawsuit has been filed against it by a current or former employee, time is of the essence. If the company does not have employment counsel, one of the most important first steps to take is to do so. After the company retains legal counsel, it can be guided by that person throughout the rest of the case.
While quickly researching and interviewing attorneys, institute a litigation hold on all potential evidence. If potentially relevant evidence is destroyed after receiving notice of a discrimination claim, the court could issue a damaging jury instruction at trail. A “Willful Suppression of Evidence” instruction tells the jury, “You may consider whether one party intentionally concealed or destroyed evidence. If you decide that a party did so, you may decide that the evidence would have been unfavorable to that party.” Therefore, refrain from intentionally or inadvertently destroying anything related to the issues raised in the employee’s complaint.
Responding to a complaint based on allegations of discrimination requires a company to act promptly to protect its interests. The financial risks created by missteps and lost opportunities are significant.