Major Changes to the Enforcement of the Fair Employment and Housing Act (“FEHA”) Take Effect January 1, 2013

Effective January 1, 2013, Senate Bill 1038 will eliminate the Fair Employment and Housing Commission and permit the Department of Fair Employment and Housing (“DFEH”) to enforce FEHA via civil action rather than administrative adjudication. The procedures by which consumers bring complaints under FEHA will remain the same.

Authorization to Seek Civil Action, Attorney’s Fees and Costs

The Fair Employment and Housing Commission, an independent entity responsible for the administrative adjudication of claims brought by the DFEH, will be replaced by the Fair Employment and Housing Council (“Council”). Comprised of 7 Governor-appointed and Senate-approved members, the Council will be devoted to rule-making and holding public hearings. Administrative adjudication of DFEH-initiated claims will no longer be an option. Instead, the DFEH will be authorized to bring civil suit, where it will be able to seek attorney’s fees and costs, and where the $150,000 cap on emotional distress damages and administrative fines will not apply.

Mandatory Dispute Resolution

Where the DFEH intends to bring a civil action, all parties will be required to participate in free mandatory dispute resolution in the DFEH’s internal Dispute Resolution Division. Mediation will become mandatory after the DFEH completes its investigation and decides to file in civil court. Prior to and during the investigation of a claim, the DFEH will continue to offer its dispute resolution services. Should dispute resolution fail, a new DFEH attorney will be assigned to the case and the contents of the dispute resolution will remain confidential throughout litigation.

Pending Claims

There are two options for any claim pending with the DFEH on January 1, 2013. First, the matter may be removed to civil court. If there is a prayer for emotional damages or administrative fine, the respondent must consent to such removal; in all other cases, the matter may be removed with either party’s consent. Second, where there is no removal, the Office of Administrative Hearings will administratively adjudicate the claim.

With these major changes only months away, it is important to assess the status of current and future FEHA claims. The DFEH’s ability to seek attorney’s fees and costs and the removal of the damages cap provide the DFEH with greater leverage in settlement discussions and raises the stakes of failing to reach a resolution.

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