A California Court of Appeal has held, in an opinion certified for publication, that an employer is not strictly liable under the Fair Employment and Housing Act (FEHA) for sexual harassment by an employee who supervises other workers but has no supervisory authority over the plaintiff. In that situation the employer answers only under the negligence standard. The court described the question as one no California appellate case had directly decided.

The plaintiff in this case, Jane Doe, returned to Wells Fargo in 2018 as a wealth advisor in its private bank division, where advisors assemble teams of specialists to serve high-net-worth clients. Eric Pagel was an investment strategist who handled portfolios for many of her clients and was one of the bank’s top producers nationally. He was not her supervisor. Wells Fargo had not designated him a supervisor of anyone, and he could not hire, fire, or approve expenses or time off, although he gave input on the performance of the support associates who executed his trades and handled his scheduling.

In January 2020, Doe, Pagel and several coworkers traveled to Bakersfield for client meetings and had dinner and drinks afterward. Doe says she blacked out that night, that Pagel later came to her hotel room, and that she was too intoxicated to consent to the sex that followed. Pagel maintains that she invited him and consented. About a month later Doe told a colleague who had been on the trip that Pagel had been harassing her, without mentioning an assault. That complaint was not escalated or investigated.

On November 9, 2020, Doe reported harassment and assault to the bank’s ethics hotline, to her direct supervisor and to law enforcement. Wells Fargo flagged the complaint for expedited investigation eight days later and placed Pagel on paid administrative leave. After a ten-month inquiry, the internal investigator issued a 28-page report finding the harassment and assault allegations unsubstantiated, but concluding that everyone at the dinner had violated the workplace conduct policy and that Pagel had violated the professionalism policy. Pagel received a final notice warning that further violations could lead to immediate termination.

Doe sued Wells Fargo, Pagel and three other employees in Los Angeles County Superior Court in February 2023, alleging sexual harassment under FEHA and, against the bank, failure to prevent harassment and retaliation. Wells Fargo moved for summary judgment, arguing that it could not be strictly liable because Pagel never supervised Doe, and that it could not be liable in negligence because it responded promptly and appropriately once she complained. Doe’s opposition argued that strict liability attaches to harassment by any supervisor, whoever that person supervises, and did not address the negligence standard. Judge Tony L. Richardson granted the motion on both grounds and entered judgment for the bank.

In the published case of Doe v. Wells Fargo Bank, N.A., No. B344642 (October 2026), the Second Appellate District, Division Four, affirmed the judgment on Doe’s appeal. Justice Tamzarian, as acting presiding justice, wrote for a unanimous panel. Only the harassment claim against Wells Fargo was before the court, because Doe’s briefs did not address her other causes of action.

The court began with the statute. Government Code § 12940, subdivision (j)(1) expressly sets a negligence standard for harassment by an employee other than an agent or supervisor, and the California Supreme Court inferred from that wording, in State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, that employers are strictly liable when a supervisor is the harasser. The statute never uses the words strict liability, and the panel found that its text does not plainly answer whether “supervisor” means any supervisor or the plaintiff’s supervisor. Because the definition in Government Code § 12926, subdivision (t) turns on a person’s authority over other employees, the court reasoned that someone with no authority over the plaintiff is, as to her, simply a coworker.

With no helpful legislative history, the court looked to the purpose of the rule. Strict liability exists because a supervisor wields employer-conferred power over the victim, which makes harassment harder to resist and report and justifies imputing the conduct to the employer. None of that is present when the harasser’s authority runs only to other people. The panel also found that Doe’s reading would produce arbitrary results: an employer would be strictly liable when a shop foreman harasses an executive, or when a mid-level manager harasses her own boss, but liable only in negligence when a senior non-supervisory employee harasses a junior one.

The court read Health Services as consistent with this view. That opinion spoke of “the victim’s supervisor” and cautioned that the supervisor must be acting in a supervisory capacity when the harassment occurs. Later Court of Appeal decisions said the same, including Chapman v. Enos (2004) 116 Cal.App.4th 920, Atalla v. Rite Aid Corp. (2023) 89 Cal.App.5th 294, and Kruitbosch v. Bakersfield Recovery Services, Inc. (2025) 114 Cal.App.5th 200. A person who does not supervise the plaintiff at all, the panel concluded, cannot be acting as her supervisor.

Doe’s contrary authorities did not persuade the court. Two Fair Employment and Housing Commission decisions from the 1980s (Dept. of Fair Employment and Housing v. Hart & Starkey, Inc., FEHC Dec. No. 84-23, and Dept. of Fair Employment and Housing v. Community Hospital of San Gabriel, FEHC Dec. No. 86-08) predated both Health Services and the statutory definition of supervisor, and the court declined to follow them. Massachusetts cases she cited involved harassers with authority over, or clearly senior to, the victim. To the extent the Illinois Supreme Court’s decision in Sangamon County Sheriff’s Dept. v. Illinois Human Rights Com. (2009) 233 Ill.2d 125, 908 N.E.2d 39 treats direct supervisory authority as irrelevant under an analogous statute, the panel respectfully disagreed.

The holding has stated limits. The court assumed, without deciding, that Pagel supervised the associates, so it did not resolve whether giving input on reviews and directing support staff makes someone a FEHA supervisor. It emphasized that strict liability is not confined to a plaintiff’s direct boss or those above that boss in the reporting chain, since the broad statutory definition can make others the plaintiff’s supervisor as well. It also did not address liability for harassment by an employer’s agent, a theory Doe did not raise.

Finally, the court held that Doe forfeited her remaining theories. She did not argue on appeal that a triable issue existed on negligence, and her contention that Wells Fargo ratified Pagel’s conduct was raised for the first time in her opening appellate brief. The panel declined to exercise its discretion to reach it. As a result, the opinion does not review whether the bank’s handling of the February 2020 complaint or the length of its investigation met the negligence standard.

Court Sets Rules for Use of Strict Liability in FEHA Cases