Sexual Orientation Discrimination Claims: California Employer Guide

California’s Fair Employment and Housing Act lists sexual orientation among the characteristics an employer can’t base a decision on, and it protects employees who are only perceived to be gay, lesbian, or bisexual. Most of these lawsuits aren’t about a single firing decision. They’re about name-calling that supervisors heard and didn’t stop. In Hope v. California Youth Authority (2005) 134 Cal.App.4th 577, the employer’s response was “too little, too late.” Prompt corrective action is the strongest defense an employer has.

What does California law protect?

Sexual orientation of every kind, actual or perceived, in hiring and firing decisions and in working conditions.

Government Code section 12940(a) bars an employer from refusing to hire, discharging, or discriminating in “terms, conditions, or privileges of employment” because of sexual orientation, among other characteristics. Section 12940(j)(1) separately bars harassment on the same bases. The definition is neutral. Under section 12926(s), “‘Sexual orientation’ means heterosexuality, homosexuality, and bisexuality.” A straight employee harassed for being straight has the same claim as a gay employee harassed for being gay.

The protection also reaches perception. Section 12926(o) defines the protected characteristics to include “[a] perception that the person has any of those characteristics.” An employer can’t defend a harassment claim by proving the employee isn’t actually gay. If coworkers targeted the employee because they believed it, the claim is the same.

How does federal law fit in?

It reaches the same conduct for larger employers, but California law usually controls the case.

In Bostock v. Clayton County (2020) 590 U.S. 644, the Supreme Court held that Title VII’s ban on sex discrimination covers firing an employee for being gay or transgender. The Court explained that “An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex.”

Title VII applies only to employers with “fifteen or more employees” for at least 20 weeks a year, under 42 U.S.C. § 2000e(b). FEHA’s discrimination provisions reach employers regularly employing five or more persons, and its harassment provisions reach employers with one or more. For a California business, the state claim is broader and is the one plaintiffs usually plead first. Bostock matters mostly when a case is in federal court or an EEOC charge is involved.

Why do sexual orientation claims so often turn into harassment cases?

Because the evidence usually comes from what coworkers and supervisors said, and what management did about it.

Hope v. California Youth Authority is a published Court of Appeal decision affirming a jury verdict for a cook at a state youth correctional facility. The employee testified to repeated slurs from a direct supervisor and from a security officer assigned to the kitchen. A second supervisor heard the slurs, told the officer to stop once, and did nothing more. That supervisor also told the employee that the employee was being “picked on” because some coworkers perceived the employee to be gay.

The court explained the two liability rules that applied. For harassment by a nonsupervisory employee, the employer is liable only if it “knew or should have known of the harassing conduct and (b) failed to take immediate and appropriate corrective action.” For harassment by a supervisor, the court quoted the Supreme Court’s statement that “by implication the FEHA makes the employer strictly liable for harassment by a supervisor.”

The employer argued it was in “an impossible position” because the officer denied the accusations. The court rejected that argument, reasoning that “because Hedgepath was a supervisor, his knowledge was imputed to CYA regardless of whether he was questioned.” The officer wasn’t removed from the kitchen until at least a year and a half after the employee’s written complaint, and the court concluded that “to the extent management took any corrective action, it was too little, too late.”

What makes these claims defensible?

A complaint process that works, investigations that reach a conclusion, and decisions documented on their merits.

Employers often overlook how supervisor knowledge works. In Hope, a supervisor’s decision to “turn it off and leave it alone” became the company’s knowledge. A policy that tells supervisors to report what they hear, and training that explains why, turns the same fact into a defense. When an employee complains, the investigation should interview the people who would have heard the comments, reach a written conclusion, and impose discipline the employee can see.

Harassment claims based on more than one trait, such as sexual orientation and race, now face the combination rule the firm covered in its post on intersectional discrimination. An investigator should look at the whole pattern of comments, not file each one under a single category.

Can an employer claim a religious exemption?

Sometimes, but the exemption is narrow and its scope differs between claims.

Section 12926(d) provides that “‘Employer’ does not include a religious association or corporation not organized for private profit.” That exclusion applies to most of FEHA’s discrimination provisions. The harassment provision has its own definition of employer, and religious nonprofits are subject to special rules in section 12940(j)(4) and section 12926.2. A for-profit business owned by people with religious beliefs isn’t a religious corporation under this language. Any employer relying on the exemption should have counsel review its organizational documents early.

Steps to take after a sexual orientation complaint or lawsuit

1. Preserve the complaint, investigation notes, witness statements, emails, chat and text messages, the employee’s personnel file, and the policies in effect, under a litigation hold once a claim arrives.
2. Calendar the response date on the CRD complaint, EEOC charge, or summons, and check for an arbitration agreement and an EPLI policy with notice requirements.
3. Identify every supervisor who heard or was told about the conduct, and stop any further action against the employee that could look like retaliation.
4. Pull the documents the defense depends on: what was reported and when, what management did in response, discipline imposed on the accused employees, and the reason for any adverse decision.
5. Talk to a lawyer before responding, contacting the employee or their lawyer, or offering anything to settle.

Harassment cases depend heavily on what management did after it learned of a problem, and that record is where employment defense counsel in California usually start.

FAQ

Can a straight employee bring a sexual orientation claim?

Yes. California defines sexual orientation to include heterosexuality, homosexuality, and bisexuality, so the protection runs in every direction. The same rules apply. The employee has to show the harassment or adverse decision happened because of sexual orientation, and the employer’s defenses are the same as in any other case.

Does it matter whether the employee is actually gay?

No. FEHA protects a person perceived to have a protected characteristic. If coworkers or supervisors targeted an employee because they believed the employee was gay, the claim doesn’t depend on whether that belief was accurate. An employer shouldn’t investigate or argue about an employee’s actual orientation as a defense. It won’t help, and it can make the case worse.

Is an employer liable for a coworker’s comments it never heard about?

For harassment by a nonsupervisory coworker, FEHA uses a negligence standard: the employer is liable if it knew or should have known and didn’t take immediate and appropriate corrective action. But a supervisor’s knowledge counts as the employer’s. In Hope, a supervisor heard the comments, and the court imputed that knowledge to the employer even though the supervisor never reported it.

Does Bostock change anything for California employers?

Not much in practice. FEHA has expressly covered sexual orientation for years, and it applies to smaller employers than Title VII does. Bostock matters most when a claim is in federal court or starts with an EEOC charge, because it confirms the federal statute reaches the same conduct. A California employer’s policies and training should already treat sexual orientation as protected.

If an employee alleges sexual orientation discrimination or harassment

If your company has received a CRD complaint, an EEOC charge, or a lawsuit alleging harassment or discrimination based on sexual orientation, what supervisors heard and what management did in response usually decide how strong the claim is. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including sexual orientation harassment and discrimination claims. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

42 U.S.C. § 2000e; Government Code sections 12926 and 12940; Bostock v. Clayton County (2020) 590 U.S. 644; Hope v. California Youth Authority (2005) 134 Cal.App.4th 577.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.