Hot Off The Press! DFEH’s Annual Report

by Seyfarth Shaw LLP
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Seyfarth Synopsis: California’s Department of Fair Employment and Housing has just issued its Annual Report on civil rights complaints during 2016. Here are some highlights.

The DFEH hails as the largest state civil rights agency in the country, with 220 full-time employees operating out of five offices throughout California. Its annual report makes clear that its core work is litigation. It sues chiefly under the Fair Employment and Housing Act, California’s more expansive version of federal anti-discrimination law, and also sues under the Unruh Civil Rights Act, the Disabled Persons Act, and the Ralph Civil Rights Act.

The annual report comes in the DFEH’s fourth year as an active litigant. Beginning in 2013, the DFEH gained power to file lawsuits to pursue violations of the state’s anti-discrimination laws. No longer is there administrative adjudication of claims by the Fair Employment and Housing Commission (now defunct). The DFEH now has broad authority to sue California employers, housing providers, and other entities for unlimited compensatory damages, as well as attorney fees and costs. Moreover, the DFEH can launch state-wide class or representative actions for systematic or large-scale violations of state civil rights laws. And, like its big sister, the federal Equal Employment Opportunity Commission (which has always been able to sue in court), the DFEH may go beyond monetary damages and demand certain forms of “affirmative relief,” such as employee retraining, redrafting and posting of policies, and regular monitoring to ensure compliance. In short, the DFEH is now a fully operational litigation shop, employing investigators, litigators, paralegals, and mediators.

A Tidal Wave of Complaints. The DFEH received more than 23,000 general administrative complaints and inquires in 2016. The amount was on par with 2015, and significantly more than the 19,000 filed in 2014. About 93% of 2016 complaints were employment-related, 6% were housing matters; the rest involved claims under the Unruh, Ralph, and Disabled Persons Acts. About 17,000 complaints resulted in formal charges filed with the DFEH. Most of the formal charges (12,242) requested an immediate right to sue, thus bypassing the DFEH’s investigation process.

A plurality of the 2016 formal charges (6,614, or 38%) originated out of Los Angeles County. Next in order were Orange, San Diego, and San Bernardino Counties (7%, 6%, 4% respectively). Together, these four counties created most of the DFEH’s 2016 workload: SoCal employers beware! Surprisingly, Sacramento County—not San Francisco County—accounted for most charges filed in Northern California (Alameda County was the most active in the Bay Area). Placer County, with 120 formal charges, was the most litigious in 2016 in proportion to its population size.

In terms of demographics, little is known about the 2016 class of DFEH complainants. The DFEH tracked only race and national origin, on the basis of the complainants’ self-reporting. Only 51% of complainants identified their race, and 65% identified their national origin. Of those who self-reported, Caucasian individuals topped the list with 35% of complaints; American or U.S. national origin was most reported, at 52% of complaints. Individuals identifying as Hispanic or Latino filed 28% of complaints in 2016, and those identifying as African American filed 22%. The DFEH did not collect data on the complainants’ sex, gender, age, religion, marital status, household income, or other demographic information.

Most Complaints Did Not Settle. The DFEH investigated 4,799 complaints in 2016. The DFEH settled a total of 1,036 complaints (21%), and referred 118 to the Legal Division, which brought 31 civil actions. The remaining 3,700 complaints were presumably withdrawn by the complainant, settled without the DFEH’s participation, dismissed by the DFEH, or consolidated into a single lawsuit.

Moneywise, the DFEH’s Enforcement Division resolved 573 complaints for a total of $2,635,979, which was the most settlements for any division (averaging $4,600 per settlement). The Dispute Resolution Division, which conducts mediation when the parties voluntarily agree to mediate, brought in the highest dollar amounts via 417 settlements with $7,385,372 ($17,710 average). The Legal Division raised $1,553,800 by settling 46 complaints ($33,778 average). In total, the DFEH conducted 783 mediations in 2016 (up considerably from 632 in 2015 and 590 in 2014).

The DFEH Carefully Selects Which Cases To Try. Less than 1% of 2016 complaints resulted in litigation. Of the 4,799 claims the DFEH investigated, it referred only 118 (2%) to the Legal Division, which then brought only 26% of that total to litigation. As noted above, the DFEH filed 31 lawsuits for 75 complainants during 2016, while filing 36 lawsuits for 57 complainants during 2015.

One-half of the 118 complaints referred to the Legal Division were housing-related. Employment claims made up 40%, followed by Unruh Act claims at 6%, Ralph Civil Rights claims at 3%, and Disabled Persons Act claims at 1%. Substantially more employment claims had been referred to the Legal Division in 2015 (73 of 130 complaints, or 56%).

Housing-related complaints were statistically the DFEH’s priority in 2016. The annual report does not specify the total number of housing complaints, but nearly 70% of complaints involved claims for FEHA housing violations. This percentage is markedly higher than in 2015, where only 36% complaints related to housing issues. Employment complaints were king in 2015 comprising 59% of complaints, but that number decreased in 2016 to 25%. Overall, the DFEH was consistently more focused in 2015 and 2016 on FEHA violations—including employment and housing claims—than with complaints regarding the Unruh, Ralph, and Disabled Persons Acts.

Disability discrimination was the claim most frequently asserted by the DFEH in 2016 in litigated matters (as it was in 2015), appearing seven times in the employment context and 11 times in the housing context. Race and ancestry discrimination were asserted only once, sex/gender discrimination only twice, and sexual harassment only four times. Retaliation was asserted seven times against employers and five times against housing providers.

Lessons For 2017 And Beyond. The DFEH is evidently hand-picking the few complaints it takes to court each year. Only a small percentage of claims make their way to the DFEH’s Legal Division, which is the final stage before a lawsuit is filed, so employers and housing providers should consult with litigation counsel if they find themselves in that unfortunate position (or earlier).

The data and public filings, consistent with our experience with the DFEH, indicate that the DFEH did not target any particular industry or size of entity in 2016: public entities, such as high schools and cities, as well as small non-profit organizations found themselves in the DFEH’s crosshairs. And the DFEH hauled into court businesses in virtually all industries, including banking and financial services, food and agriculture, real estate, retail, hospital and healthcare, insurance, commercial carriers/airlines, manufacturing, and entertainment. Many cases were brought on behalf of multiple individuals, and we can expect that trend to continue as the DFEH appears to find multiple-complainant litigation an efficient way broaden its enforcement reach. Inasmuch as the EEOC has used systematic litigation for years as way to grab headlines and pressure employers to change their policies, we can expect the DFEH to follow suit. The DFEH went to trial on some cases, although verdict results are not summarized publicly (the DFEH has not issued any press releases of DFEH jury wins from 2016).

Finally, in that the DFEH’s focus on litigation in 2016 (and 2015) was on disability and retaliation issues in employment and housing, California companies would be wise to review policies and practices on disability accommodation over the next year.

Edited by Colleen Regan.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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