A first response to reports that California taxpayers have paid roughly $25 million in the last three years to settle sexual harassment-related cases is outrage. A closer look reveals a more complex picture. LAPD paid, on average, $30 million annually from 2012-2014 to resolve legal claims involving officers’ conduct. Since 2006, CHP has paid over $25 million in similar claims. Undoubtedly, California taxpayers pay far more than these amounts to resolve claims of negligence and misconduct by state employees. Taxpayer funded sexual harassment settlements aren’t anomalies; they’re part of a broader structure where the state, as employer, pays for injuries caused by employee actions.

Why does the law make employers pay for bad acts by their employees? One reason is that employers direct and control their employees’ actions, making them partially responsible for employee actions within their job’s scope. When employers have to pay out money for employees’ bad behavior they should be motivated to make the appropriate changes.

Another reason is that the purpose of civil damages judgments is to compensate victims – not punish perpetrators. Employers are in a better position to buy insurance or accumulate enough funds to pay for injuries.

What about employees who’ve engaged in egregious behavior? Shouldn’t they be punished by paying? In civil suits, juries may award punitive damages to punish an employee who’s found to have acted in a way that’s more blameworthy than workplace negligence or misconduct (acting with oppression, fraud, or malice); generally the employee, rather than the employer, pays. If the employee’s conduct is criminal, then they may be charged and, if convicted, punished with fines or imprisonment.

Back to sexual harassment…isn’t that bad enough that the perpetrator, rather than taxpayers, should pay? Again, a closer look reveals that it’s more complicated than it seems. For one, sexual harassment settlements are just that – settlements. They’re not adjudicated liability.  Even if we’re talking about sexual harassment judgments, the reasons mentioned above still apply.

Additionally, and importantly, another consideration is the impact that an “employee pays” rule would have on state employees doing their jobs, interacting with other employees and members of the public every day.  We want to deter bad behavior but we don’t want to “over-deter” it with a rule that makes employees frightened to act because if they – maybe – cross a line, or someone claims they did, they’ll be paying for a lawyer and a judgment, if it comes in. UCLA Law School Professor Johanna C. Schwartz, who conducted the aforementioned study of police department payouts, concludes that in most instances the departments, rather than the officers, should pay for misconduct claims because requiring officers to pay would result in this type of over-deterrence. She recommends transparency of payouts, and making the departments pay from their budgets rather than charging the taxpayers from the general fund..

Another note on “over-deterrence” comes from the Constitution. The Constitution provides the President absolute immunity from lawsuits for damages arising from his actions as President.  These lawsuits include claims by an employee of sexual harassment. The Supreme Court has also interpreted the Constitution to give different levels of immunity to different types of government officials. In doing so, the Court explains the Constitution creates “breathing room” around the actions of government officials, shielding them from paying damages even when conduct violates the law:

Public officials, whether governors, mayors or police, legislators or judges, who fail to make decisions when they are needed or who do not act to implement decisions when they are made do not fully and faithfully perform the duties of their offices. Implicit in the idea that officials have some immunity— absolute or qualified —for their acts, is a recognition that they may err. The concept of immunity assumes this and goes on to assume that it is better to risk some error and possible injury from such error than not to decide or act at all.”

Most state employees are not government officials entitled to constitutional immunity. Even state government officials entitled to immunity may lose it if their actions violate clearly established law. Nevertheless, the over-deterrence concern runs through legal and policy judgments about who should pay for employee misconduct and explains why often, when the employer is the state, the taxpayers pay.

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