Use It or Lose It: SCOTUS Decision Clarifies that Employers Must Assert an Administrative Exhaustion Defense Early During Litigation
"Failure to exhaust administrative remedies" defense to escape harassment, discrimination, and retaliation lawsuits
September 27, 2019
For decades, federal and state courts have dismissed employment lawsuits because the person suing his or her employer for harassment, discrimination, or retaliation did not first exhaust "administrative remedies" by filing a complaint with either the California Department of Fair Employment and Housing (DFEH) or the U.S. Equal Employment Opportunity Commission (EEOC) and obtaining a "right to sue" notice. Employers have used the "failure to exhaust administrative remedies" defense to escape harassment, discrimination, and retaliation lawsuits at various stages of litigation. Fortunately for employees, and unfortunately for employers, a June 2019 ruling from the U.S. Supreme Court in Fort Bend County, Texas v. Davis has diminished this defense, finding that an employer may waive the defense by failing to assert it in a timely manner.
In the Davis case, Lois Davis submitted an intake questionnaire to the Texas Workforce Commission (TWC) accusing her employer, Fort Bend County, of sexual harassment and retaliation. A month later, she submitted a formal complaint to the TWC, which relayed her documents to the EEOC. While her complaint was pending, the County fired her for attending a church event instead of coming into work. Ms. Davis then amended her intake questionnaire by writing "religion" in the "Employment Harms or Actions" section and checking the boxes for "discharge" and "reasonable accommodation" on the form. However, Ms. Davis failed to add the religious discrimination allegations to her formal complaint.
The EEOC eventually issued Ms. Davis a right to sue notice, and she sued the County in federal court for retaliation and religious discrimination. Several years into the litigation, the County had managed to eliminate all claims except the religious discrimination claim. The County then filed a motion to dismiss the lawsuit, alleging for the first time that the trial court lacked jurisdiction to decide Ms. Davis' religious discrimination claim because she had failed to exhaust her administrative remedies with the EEOC. The trial court and appellate court agreed Ms. Davis' amendments to the intake questionnaire did not satisfy her pre-lawsuit procedural obligations. However, the courts disagreed about whether the County had waived its defense by waiting until several years into the litigation to raise it. Consequently, the Supreme Court agreed to review the issue.
The Supreme Court concluded that the complaint filing requirement is not jurisdictional, meaning Ms. Davis' failure to comply with the pre-lawsuit requirement did not bar the court from considering her religious discrimination claim. Instead, the Court deemed the pre-lawsuit requirement as a claim-processing rule that can be waived if not timely raised. The Court found the County waived its objection because it did not raise it until several years after becoming aware of it.
From a legal standpoint, the Supreme Court's decision that the pre-lawsuit claim filing requirement is not jurisdictional is significant for at least two reasons. First, a party may raise jurisdictional issues at any stage in a lawsuit. If a court lacks jurisdiction, it cannot decide a case, regardless of how much time and how many resources have been used up to the point the jurisdictional issue is raised. Second, a court has authority to dismiss a lawsuit on its own, without a party raising the issue, if the court lacks jurisdiction. Under the Davis decision, these two scenarios are no longer possible in failure to exhaust cases.
From a practical standpoint, the Supreme Court's decision is significant because an employer may now forfeit a defense that an employee has failed to exhaust his or her administrative remedies. The decision makes it clear that filing a pre-lawsuit complaint and obtaining a right to sue notice are still prerequisites to a lawsuit; however, an employer may waive any objections to an employee's noncompliance if the employer fails to raise the defense early during litigation. To preserve the defense, employers should promptly analyze an EEOC or DFEH complaint with legal counsel upon receipt. Absent a strategic reason for delay, an employer should raise the defense in its response to a lawsuit. Note that if an employer does not receive an employee's DFEH complaint, the employer can obtain a copy by making a Public Records Act request for the document from the DFEH at https://www.dfeh.ca.gov/news-and-public-records/.
Jesse Maddox is a Partner in Liebert Cassidy Whitmore's Fresno and Sacramento offices and is an experienced trial attorney who represents clients in all aspects of employment and labor law. He also regularly defends public employers on wage and hour claims under state law and the Fair Labor Standards Act. His e mail is [email protected]