As most of you know, California’s Fair Employment and Housing Act (“FEHA”) prohibits discrimination and harassment on the basis of sex, race, religion, color, national origin, ancestry, disability, medical condition, marital status, age, pregnancy, and sexual orientation. FEHA also prohibits retaliating against an employee for opposing or complaining about discrimination or harassment.

For the past decade, both the California Legislature and the California Courts have grappled with the issue of whether individual supervisors or co-workers can be held personally liable for discrimination, harassment or retaliation. Ten years ago, the California Supreme Court held that individuals may not be held personally liable for discrimination, and that liability for discrimination instead lies only with the employer. For example, assume that Company X is found to have terminated an employee because of her race. Company X can be held liable for discrimination. The supervisor who made the termination decision, however, cannot be held liable.

In contrast, FEHA specifically provides that individual supervisors and co-workers can be held liable for harassment. So assume that Supervisor Y, who works for Company X, is found to have sexually harassed an employee. In this case, Company X and Supervisor Y can both be held liable for harassment.

What about retaliation? For the past five to ten years, most courts that have considered the issue have held that individuals can be held liable for retaliation. On March 3, 2008, however, the California Supreme Court held that individuals cannot be held personally liable for at least some forms of retaliation. Here’s an example of what this means. Assume an employee of Company X complains to the HR Department that he believes he was passed over for a promotion because of his sexual orientation. The HR Department discusses the issue with the employee’s supervisor, who is angry to learn of the employee’s complaint. One month later, the supervisor fires the employee for performance issues. If the employee can prove that the performance issues were pretextual, and that he was actually fired because of his discrimination complaint, Company X may be liable for retaliation. The supervisor, however, may not be held personally liable.

What if the employee in the above example had instead complained to the HR Department that he was being harassed based on his sexual orientation? Would the result be different? Maybe. That’s because the California Supreme Court stated in a footnote that it was expressing no opinion on whether an individual who is personally liable for harassment would also be personally liable for retaliating against someone who reports that same harassment. Whether or not personal liability exists in this situation is thus a question that will have to be answered by another court or by the California Legislature.

Note that there are 7 Justices on the California Supreme Court, and 3 of them dissented. The dissenting Justices ended by opining that the California Legislature should clarify FEHA to specify precisely whether individuals can be liable for retaliation, and, if so, under what circumstances. It remains to be seen whether the Legislature will take that advice.

While this new decision is a boon to individual supervisors, it does nothing to change an employer’s liability for retaliation. Employers thus need to remain vigilant about promulgating and enforcing policies against discrimination, harassment, and retaliation.