California Supreme Court broadens sexual harassment.

On July 18, 2005, the California Supreme Court ruled that favoritism in the workplace might constitute unlawful sexual harassment in violation of the Fair Employment and Housing Act, otherwise known as FEHA.

Two former employees of the Valley State Prison for Women, Edna Miller and Frances Mackey, filed a sexual harassment lawsuit against the California Department of Corrections complaining about then-warden Lewis Kuykendall. The warden had sexual affairs with at least three women employees at the same time. Miller and Mackey were not sexually involved with the warden, but claimed that from 1991 until 1998, the warden "granted unwarranted and unfair employment benefits to the three women" because of their sexual relationships with him.

The lower court ruled against the women because they were not themselves subjected to sexual advances and were not treated differently than male employees. However, in a unanimous decision by Chief Justice Ronald M. George, the Supreme Court reversed concluding:

"Although an isolated instance of favoritism on the part of a supervisor toward a female employee with whom the supervisor is conducting a consensual sexual affair ordinarily would not constitute sexual harassment, when such sexual favoritism in the workplace is sufficiently widespread it may create an actionable hostile work environment in which the demeaning message is conveyed to female employees that they are viewed by management as 'sexual playthings' or that the way required for women to get ahead in the workplace is by engaging in sexual conduct with their supervisors or the management."

In its decision, the Court relied on a policy statement by the U.S. Equal Employment Opportunity Commission. The policy stated that if there is widespread favoritism based on the granting of sexual favors, both male and female employees who do not welcome this conduct, can establish a claim "regardless of whether any objectionable conduct is directed at them and regardless of whether those who were granted favorable treatment willingly bestowed the sexual favors."

The Court stressed that an "implicit" message is enough--that the way to get ahead is to engage in sexual conduct--even in the absence of explicit demands for sexual favors. It recognized, however, that mere office gossip is insufficient to establish the existence of widespread sexual favoritism.

The Court rejected the employer's arguments that this decision would inject courts into private and consensual relationships that are a natural consequence when people work closely together. It stated: "it is not the relationship, but its effect on the workplace, that is relevant" and that "FEHA already clearly contemplates some intrusion into personal relationships." The message the Court sent is thus that the right to privacy is outweighed by the right to be free of a hostile work environment caused when co-workers get benefits due to sexual relationships with members of management.

Retaliation claims

Separately, the Court analyzed whether the employees could proceed on retaliation claims for complaining about the conduct to their employer. The lower court rejected the claim because the employees did not specifically express opposition to "sex discrimination" or "harassment," but rather lodged general complaints of "unfairness." The Supreme Court reversed the ruling: "We do not believe employees should be required to elaborate to their employer on the legal theory underlying the complaints they are making, in order to be protected." Thus, an employee need not use the specific words "sexual discrimination" or "sexual harassment" to be protected against retaliation.

The case raises several issues for employers. Until now, an employer could likely defend a favoritism lawsuit if the complainant was not a direct victim (e.g., the supervisor did not condition the complainant's job benefits on his/her submission to a sexual demand; but simply provided better job benefits to his/her her paramour). However, this case changes the landscape. Now, employers will have to carefully navigate the fine line between preventing harassment and intruding into employees' personal lives and relationships. Employers will have to cautiously monitor employees--even when employees are having consensual sexual relationships.

Steps for Employers to Take:

* Take all complaints of "unfairness" seriously, particularly if the conduct complained of arises from interpersonal sexual relationships between employees;

* Promptly and thoroughly investigate all employee complaints of possible harassment and take steps to prevent further incidents from occurring;

* Train all supervisors and employees about sexual harassment and your company's complaint procedures:

* Monitor and respond to situations of favoritism to ensure material job benefits, like promotions, are not provided merely as a result of those relationships;

* Make sure job benefits are provided for legitimate business reasons, unrelated to sexual relationships between employees; and

* Revise employee handbooks to reflect that widespread favoritism based on the granting of sexual favors is strictly prohibited.

Sue Bendavid-Arbiv is chair of the Labor & Employment Practice Group Lewitt, Hackman, Shapiro, Marshall & Harlan in Encino