If you are a business owner or HR executive in California, few things induce more immediate anxiety than receiving a certified letter from the California Civil Rights Department (CRD)—formerly known as the Department of Fair Employment and Housing (DFEH).
The letter usually contains a “Notice of Filing of Discrimination Complaint.” It signals that a current or former employee has formally accused your company of violating the Fair Employment and Housing Act (FEHA). Whether the allegation involves discrimination, harassment, or retaliation, your initial response to this document is a critical legal event.
Unfortunately, many employers view this as a simple administrative annoyance. They ask their internal HR team to “handle it” or, worse, they try to explain it away themselves. This is a dangerous miscalculation. The transition from the DFEH to the CRD represents more than a name change; it reflects a broader, more aggressive mandate for civil rights enforcement in the state.
At Nowland Law, we have seen how easily a defensible case can be destroyed by unforced errors in the first 30 days. Based on our legal analysis of recent enforcement trends, here are the seven biggest mistakes California employers make when responding to a CRD charge—and how to avoid them.
1. The “Retaliation” Trap: Letting Emotions Dictate Strategy
By far the most expensive mistake employers make is retaliating against the accuser.
When a loyal business owner reads a complaint accusing them of racism, sexism, or unfair treatment, the natural human reaction is often hurt and anger. You may feel the urge to “set the record straight,” discipline the employee for their “lies,” or isolate them to protect the team.
The Legal Reality: Filing a CRD complaint is a “legally protected activity.” It is strictly unlawful to fire, demote, discipline, or otherwise punish an employee because they filed a complaint.
The trap is broad. “Retaliation” in California is not limited to firing. It includes any “adverse employment action” that might deter a reasonable employee from making a complaint. This can include:
- Giving the employee the “silent treatment” or excluding them from meetings they usually attend.
- Sudden, unjustified negative performance reviews shortly after the complaint is filed.
- Transferring the employee to a less desirable shift or location.
- Micromanaging their work or scrutinizing their attendance more closely than others.
We often see cases where an employer successfully proves that the original discrimination claim was baseless, only to lose a multi-million dollar verdict on the retaliation claim because of how they treated the employee after the complaint was filed.
The Fix: Freeze the status quo. Do not take any disciplinary action against the complainant without explicit approval from employment counsel.
2. The “Ostrich Effect”: Ignoring the 30-Day Deadline
The CRD generally provides 30 days to respond to an investigative request or accusation. A surprising number of employers, particularly smaller businesses, ignore this deadline, hoping the issue will simply disappear.
Ignoring the CRD does not make the case go away; it hands the agency a weapon. Failure to respond can lead to a default judgment or an administrative finding against you based solely on the employee’s version of the facts. Under Government Code Section 11506, failure to file a “Notice of Defense” within 15 days of an accusation can result in a waiver of your right to a hearing.
Furthermore, the CRD has the power to issue subpoenas to compel testimony and document production. If you force them to use this power, you have already lost credibility with the investigator.
The Fix: Immediate calendaring. If you need more time, the CRD often grants reasonable extensions, but you must ask for them proactively and professionally.
3. Spoliation: The IT Failure That Can End Your Case
Upon receiving notice of a complaint, your company has an immediate affirmative duty to preserve all evidence that may be relevant to the claim. This is known as a “litigation hold”.
A catastrophic mistake occurs when employers fail to suspend their automatic document destruction policies. For example, if your IT system automatically deletes emails after 90 days, and you fail to turn this off for the key witnesses, you are destroying evidence. This is called “spoliation of evidence.”
California courts take spoliation incredibly seriously. If a judge finds you negligently or intentionally destroyed evidence (even by just failing to stop an auto-delete), they can give the jury an “adverse inference instruction.” This instructs the jury to assume the missing evidence would have proven the employer’s guilt.
The Fix: Issue a formal, written Litigation Hold Letter to all relevant custodians of records (IT, HR, supervisors) immediately upon receipt of the complaint.
4. The “Waiver Trap”: Flawed Internal Investigations
Under the FEHA, employers have a duty to “take reasonable steps to prevent and correct” harassment and discrimination. This implies a duty to investigate complaints promptly.
However, a major strategic error occurs when employers rely solely on an internal investigation conducted by HR and then use that investigation to defend themselves in court. If you argue, “We are not liable because our HR director investigated and found no wrongdoing,” you may have inadvertently waived the attorney-client privilege for that entire investigation file.
This means the plaintiff’s lawyer gets to see your internal notes, witness interview summaries, and early drafts—which often contain damaging admissions or “bad facts” you didn’t intend to share.
The Fix: Bifurcate your investigation. Conduct a remedial investigation for HR purposes, but engage outside counsel to conduct a separate, privileged investigation for the purpose of providing legal advice. This “attorney-only” file remains protected from discovery.
5. The “Kitchen Sink” Position Statement
The Position Statement is your formal written response to the CRD. It is your first opportunity to tell your side of the story. A common mistake is the “kitchen sink” approach: throwing every possible defense against the wall, attacking the employee’s character, and sharing irrelevant details.
Over-sharing is dangerous. By volunteering information that wasn’t requested, you may inadvertently open up a “class” investigation. For instance, providing a spreadsheet of all terminations to prove this termination was fair might reveal a statistical bias against older workers that the CRD wasn’t even looking for.
Furthermore, providing inconsistent explanations is fatal. If you told the employee they were fired for “budget cuts” but tell the CRD they were fired for “performance,” a jury will view this inconsistency as “pretext” (a lie to cover up discrimination).
The Fix: Your Position Statement should be a strategic, narrative document drafted by counsel. It should answer the specific allegations narrowly and accurately, without volunteering extraneous data.
6. Misunderstanding the “Right-to-Sue” Notice
Sometimes, an employee will bypass the CRD investigation entirely and request an immediate “Right-to-Sue” notice. When employers receive a document saying the CRD has “closed the case” and issued a Right-to-Sue, they often mistakenly believe they have won.
This is a dangerous misunderstanding. A Right-to-Sue letter is not a dismissal of the merits; it is a procedural step that clears the way for the employee to file a civil lawsuit against you in Superior Court.
The Fix: Treat a Right-to-Sue notice as a “pre-lawsuit warning.” The employee has one year from that date to file suit. Use this time to prepare your defense, not to relax.
7. Ignoring the Mediation Opportunity
The CRD offers free, voluntary mediation through its Dispute Resolution Division (DRD). Many employers reject this out of hand, refusing to “negotiate with terrorists” or pay a dime on principle.
While the sentiment is understandable, it ignores the economic reality of California employment litigation. The average cost to defend an employment lawsuit through trial can exceed $150,000 in legal fees alone—even if you win. Furthermore, California’s “fee-shifting” rules mean that if the plaintiff wins even a small verdict, you may have to pay their attorney’s fees, but you generally cannot recover yours if you win.
Mediation offers a confidential, low-cost off-ramp. It pauses the investigation and allows for creative resolutions (like re-hiring or neutral references) that courts cannot order.
The Fix: Always analyze the cost-benefit of mediation. Settling a nuisance claim for $10,000 is often a smarter business decision than spending $100,000 to prove a point.
Conclusion
The shift from DFEH to CRD signals a new era of enforcement. The agency is better funded, more aggressive, and focused on systemic change. Responding to a complaint is not a DIY project for your HR department; it is the first step in a complex legal proceeding.
At Nowland Law, we help California businesses navigate these treacherous waters, protecting your assets and your reputation from the initial charge through litigation. If you have received a Notice of Filing of Discrimination Complaint, contact us immediately. The clock is already ticking.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Every case is unique. Contact a qualified employment attorney for advice regarding your specific situation.