Prevailing Employers Sued Under FEHA Do Not Recover Costs of Suit As a Matter of Right

In part because eradicating discrimination and retaliation in the workplace is a compelling public policy, the California Fair Employment and Housing Act ("FEHA") motivates employees and their attorneys to pursue their claims under FEHA by awarding the prevailing party "reasonable attorney's fees and costs, including expert witness fees." Cal. Gov't Code section 12965(b). Although prevailing employees will usually recover these fees as a matter of right, prevailing employers must first demonstrate that the employee's case was frivolous, unreasonable, or groundless before being awarded attorney's fees.

In contrast, the prevailing party is generally entitled to the costs of suit. Cal. Code of Civ. Proc. section 1032(b). These costs typically include filing fees, jury fees, and costs of necessary depositions and transcripts, among other things. While attorney's fees are generally far more substantial, litigation costs are not insignificant and can run tens of thousands of dollars. Because costs were awarded as a matter of right, the specter of an award of costs to an employer can motivate an employee to prematurely settle his or her case.  

Recently, however, the California Supreme Court in Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97 held that Cal. Gov't Code section 12965(b) (the fee shifting provision in FEHA) applies not only to fees but governs awards of costs as well. And further, the same standard with respect to attorney's fees applied: prevailing employers may only recover costs in cases when the employee brought or continued the case with no objective basis in believing the suit had merit. The Court noted that "even ordinary litigation costs can be substantial, and the possibility of their assessment could significantly chill the vindication of employees' civil rights."

So what does this mean for plaintiffs? Simply put, this ruling will make it more difficult for employers to use costs of suit as a bargaining chip in settlement. Also, by decreasing the risk that employees face by going to trial on their FEHA claims, hopefully more employees will seek to vindicate their rights.

If you have any questions or you believe that your rights have been violated under FEHA, please contact us today for a free consultation from our San Jose employment law firm.