Administrative Exhaustion: Court Chooses to Publish the Wrong Decision and Muddles Jurisidiction & Burden of Proof

A recent appellate decision highlights the fact that a California employer’s right to dismissal of a claim for violation of the California Fair Employment and Housing Act (FEHA), based on the employee’s failure to exhaust administrative remedies, has an expiration date. If an employer waits until after the close of evidence at trial to seek dismissal of FEHA claims based on failure to comply with the administrative exhaustion requirement, it will be deemed to have waived that right.

Kim involved a garden-variety sexual harassment case in which the employer-defendant included failure to exhaust administrative remedies as an affirmative defense in its answer, but then failed to seek dismissal of the FEHA claims until after the trial court issued its proposed statement of decision and judgment in favor of the employee. Kim held that the employer had thereby forfeited its right to seek dismissal FEHA claims based on administrative exhaustion grounds. By waiting until after the close of evidence, Kim reasoned that the employer had unfairly deprived the employee of any opportunity to present evidence that, in fact, she actually had timely exhausted administrative remedies.

By way of background, any employee who files an action for violation of the FEHA must first file a written charge with the DFEH (Department Of Fair Employment And Housing) within one year after the alleged unlawful practice. Following the DFEH’s issuance of a “right-to sue-notice,” the employee then has one year in which to file a lawsuit for violation of the FEHA. Timely compliance with this administrative exhaustion requirement is strictly enforced. Lack of compliance presents grounds for dismissal of any employee’s action for violation of the FEHA.

In a more interesting (albeit unpublished) April 2013 decision, the same appellate panel that issued Kim addressed the same issue in a disability discrimination case. (Dickinson v. Allstate Insurance Company (Cal. Ct. App., Apr. 19, 2013, G045033) 2013 WL 1695574) In Dickinson, however, it was the employee who was playing games, by not introducing any evidence of administrative exhaustion at trial, and trying to prevent the employer from introducing evidence of the employee’s DFEH complaint. Unlike Kim, however, on multiple occasions during trial, the employer in Dickinson sought (unsuccessfully) to dismiss the FEHA claims due to the employee’s failure to prove administrative exhaustion.

Dickinson framed the issue presented as follows: which party bears the burden on exhaustion of administrative remedies? Is it part of the plaintiff’s case-in-chief with the burden on the employee to show timely receipt of a right-to-sue letter? Or is administrative exhaustion an affirmative defense, i.e., “new matter,” the burden of which is on the employer to plead and prove? In answering that question, Dickinson provided some very useful observations: [1] the timely filing of an administrative complaint with the DFEH is a prerequisite to any civil action by an employee for violation of the FEHA; [2] an employee’s failure to exhaust administrative remedies cannot be an affirmative defense, because it is not “new matter.” Rather, administrative exhaustion is an “essential allegation” of any complaint based on the FEHA; [3] at trial, the burden is squarely on the employee to introduce evidence showing timely compliance with the administrative exhaustion requirement or show some reason why it was excused; and [4] although some courts have referred to the administrative exhaustion requirement as a “jurisdictional,” a judgment for violation of the FEHA will be upheld, despite an employee’s failure to exhaust administrative remedies, if the employer has failed to raise the exhaustion issue before the close of evidence and submission of the case to the judge or jury for a decision.

The decision that was published is Kim v. Konad USA Distribution, Inc. (Cal. Ct. App., June 12, 2014, G048443) 2014 WL 2612087

If you have any questions or would like more information please contact or Frank Conway at fconway@partonsell.com.

A recent appellate decision highlights the fact that a California employer’s right to dismissal of a claim for violation of the California Fair Employment and Housing Act (FEHA), based on the employee’s failure to exhaust administrative remedies, has an expiration date. If an employer waits until after the close of evidence at trial to seek […]