Prevailing Employer in California May Recover Costs in FEHA Claims—But Only if that Claim was “Objectively Frivolous”

In January 2024, the California Fourth District Court of Appeal issued an instructive decision in the case of Neeble-Diamond v. Hotel Cal. By the Sea, LLC. The court reversed the award of costs that had been entered in favor of an employee in a Fair Employment and Housing Act (FEHA) claim. The court emphasized that it may award an employer costs only if the employee’s claim is “objectively frivolous.” Within this blog post, our California employment lawyer for employers provides an overview of the court’s decision.

Case Review: Neeble-Diamond v. Hotel Cal. By the Sea, LLC 

Background 

Amanda Neeble-Diamond filed an employment lawsuit against an employer called Hotel California By the Sea, LLC—an alcohol and drug rehab facility in Orange County. Along with other things, she filed a claim under the Fair Housing and Employment Act (FEHA). Notably, the court eventually found that Ms. Neeble-Diamond was a properly classified independent contractor and not an employee. The employer sought financial relief for ‘attorneys’ fees and legal costs as was its right under FEHA.

 Issue 

A key issue in this case was whether or not the employer was entitled to recover attorneys’ fees and other legal costs. There was no question as to whether or not the employer was responsible for a violation of FEHA. The employer had already prevailed on that matter.

 Decision 

Upon review, the California appellate court denied the hotel’s request for ‘attorneys’ fees. In doing so, it highlighted a key aspect of FEHA—that a prevailing employer can only recover attorneys’ fees if the action brought against it was “objectively frivolous.” In this case, the court emphasized that the plaintiff—while incorrect in her assertion that she should have been classified as an employee rather than an independent contractor—had a sufficiently reasonable claim to warrant a finding that her lawsuit was not frivolous.

 Implications 

Employers must proactively comply with California’s Fair Employment and Housing Act (FEHA). If they fail to do so, they could face legal action from an employee. An employer that commits a FEHA violation could face significant liability. Of course, not all employee claims are legitimate. If a worker files a totally baseless complaint under FEHA, an employer should absolutely raise a strong legal defense. If that claim is “objectively frivolous,” the employer has the right to counterclaim for ‘attorneys’ fees once they prevail in court. An action is considered objectively frivolous if it so clearly lacks a legal basis or factual support that no reasonable person could believe it would succeed.

Contact Our California Employment Law Attorney Today

At Sloat Law Group, we provide solutions-focused legal representation to employers. If you have any specific questions or concerns or concerns about defending a FEHA claim, please do not hesitate to contact us today for a confidential consultation. We represent employers in Coachella Valley, Riverside County, and throughout California.

Source: 

law.justia.com/cases/california/court-of-appeal/2024/g061425.html