A California appeals court just upheld the dismissal of a sexual harassment lawsuit against Wells Fargo. The big takeaway? An employer isn’t automatically on the hook under the Fair Employment and Housing Act (FEHA) when the accused supervisor had no actual authority over the employee who complained. This matters if you own a business or work in Los Angeles County, Orange County, San Bernardino County, or Riverside County — West Covina, Anaheim, San Bernardino, Riverside, Ontario, Pomona, all of it. Here’s what changed and what you need to do about it.
Background: What This Means
FEHA is California’s main law protecting workers from harassment and discrimination on the job. You’ll find it in California Government Code Section 12940, available through the California Legislative Information website. Under FEHA, employers can face strict liability for harassment committed by a “supervisor.” That’s a big deal — strict liability means the company can get hit even if it had no idea what was going on and never took part in it.
So the real question in this case: does someone count as a “supervisor” under FEHA if they can’t hire, fire, discipline, or direct the work of the person who was harassed? Our read on the court’s answer — just calling someone a supervisor isn’t enough. For strict liability to kick in, that person needs actual authority over the plaintiff’s job, discipline, or employment status. Here, the accused didn’t have that authority over the plaintiff. No authority, no strict liability. That’s why the court backed Wells Fargo and kept the dismissal in place.
This decision does not mean harassment claims are harder to bring. It means courts will look closely at the working relationship between the accused person and the complaining employee before applying the stricter standard of liability. Legal industry publications that track California appellate decisions, including Law360 and the Daily Journal, have noted that this ruling gives California employers clearer guidance on how courts will evaluate supervisor status going forward.
How This Affects Southern California Employers and Employees
Businesses in West Covina, City of Industry, Newport Beach, and throughout the Inland Empire and Orange County should pay attention to this ruling for several reasons:
- Job titles alone do not decide liability. Calling someone a “team lead” or “senior associate” does not automatically make the company strictly liable for that person’s conduct toward every coworker.
- Actual authority matters. Courts will ask whether the accused person could hire, fire, promote, discipline, or direct the daily work of the person who was harassed.
- Negligence claims may still apply. Even without strict liability, an employer can still be held responsible if it knew or should have known about harassment and failed to act. Businesses should not read this ruling as removing all risk.
- Employees still have protections. Workers in Riverside, San Bernardino, Ontario, Pomona, Anaheim, and Los Angeles County who face workplace harassment still have legal options under FEHA, even if the harasser is a coworker rather than a direct supervisor.
- HR structure and documentation become more important. How a company defines reporting lines, job descriptions, and disciplinary authority can affect how a court views a harassment claim.
What You Should Do Now
Whether you run a business or believe you have experienced workplace harassment, consider these steps:
- For employers: Review job descriptions and org charts to confirm who actually has authority to hire, discipline, or direct other employees. Vague or outdated titles can create confusion later.
- For employers: Update anti-harassment policies and training so employees understand how to report concerns, regardless of whether the accused person is a formal supervisor.
- For employers: Keep records of complaints and how they were handled. Even without strict liability, a quick and documented response can reduce negligence exposure.
- For employees: Report harassment in writing to HR or a manager as soon as possible, and keep copies of any messages, emails, or notes related to the incident.
- For employees: Understand that a claim may still move forward even if the harasser was not your direct supervisor, depending on what the company knew and did.
- For both sides: Speak with a business law attorney before making major decisions, since every workplace situation involves different facts.
How TEZ Law Firm Can Help
TEZ Law Firm advises Southern California business owners on employment policies, workplace complaint procedures, and business litigation matters arising from FEHA and related state laws. The firm also represents employees and employers in disputes before California courts and agencies, including matters involving workplace conduct claims. Founding attorney JJ Zhang (California Bar #326666) leads the firm’s work from offices in West Covina, City of Industry, and Newport Beach, with an additional office in Flushing, New York that handles immigration matters only.
Frequently Asked Questions
Does this ruling mean employers are no longer liable for workplace harassment?
No. Employers can still face liability under FEHA, including through negligence claims if the company knew or should have known about harassment and failed to respond. The ruling only limits strict liability for people who are called “supervisors” but who lack real authority over the complaining employee.
What counts as “authority” over an employee under FEHA?
Courts generally look at whether the person can hire, fire, promote, discipline, or direct the daily work of the employee. A title alone, such as “lead” or “manager,” does not automatically meet this standard without actual decision-making power.
Can an employee still sue if the harasser was a coworker, not a supervisor?
Yes. An employee can still bring a claim if the employer knew or should have known about the harassment and did not take reasonable steps to stop it. This is a negligence-based claim rather than a strict liability claim.
What should a business do to reduce risk after this ruling?
Businesses can review job descriptions, confirm who truly has supervisory authority, update anti-harassment training, and keep clear records of how complaints are handled. These steps may help reduce exposure under both strict liability and negligence theories.
Where can I read the FEHA statute itself?
The Fair Employment and Housing Act is codified in California Government Code Section 12940 and can be reviewed through the California Legislative Information website, which is maintained by the state legislature as of October 9, 2026.
Workplace harassment rules can affect your business operations or your job, and the standards courts apply continue to change. If you have questions about this ruling or about a business dispute or litigation matter, or if your company needs guidance on corporate policies through TEZ Law Firm’s public companies practice, you can schedule a consultation with TEZ Law Firm to discuss your situation.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws and agency practices change; contact TEZ Law Firm (West Covina, California) at 626-678-8677 or [email protected] about your situation. Prior results do not guarantee a similar outcome.