The California Court of Appeal has ruled that Wells Fargo Bank, N.A. is not strictly liable for sexual harassment claims when the alleged harasser is a supervisor of other employees but not the victim's direct supervisor. This decision, made on October 5, 2026, affects how companies handle sexual harassment claims under the Fair Employment and Housing Act (FEHA) and clarifies the standards for employer liability in such cases.
The case, Doe v. Wells Fargo Bank, N.A. (B344642), centers around Jane Doe, a former employee of Wells Fargo, who accused Eric Pagel, an investment strategist at the bank, of sexual harassment and assault. The ruling is significant as it addresses the legal standards for employer liability regarding harassment claims, particularly in cases where the alleged harasser does not directly supervise the victim.
Jane Doe began working for Wells Fargo in 1994 and returned in 2018 as a wealth advisor in the bank's private bank division. During her employment, she accused Pagel of sexual harassment, claiming he made inappropriate comments and assaulted her during a business trip in January 2020. Doe reported the incidents to Wells Fargo's ethics hotline and her direct supervisor, leading to an internal investigation.
The investigation concluded that while Pagel's behavior was inappropriate, it did not violate the bank's sexual harassment policy, as he was not Doe's direct supervisor and had no authority over her. Following this, Doe filed a lawsuit against Wells Fargo, Pagel, and other employees involved in the incident, claiming sexual harassment under FEHA.
Wells Fargo moved for summary judgment, arguing that it could not be strictly liable for Pagel's actions because he did not supervise Doe. The court agreed, stating, "where the alleged harasser is not plaintiff’s supervisor and only supervises other employees, strict liability does not apply." The court found that Doe could not establish her claim for sexual harassment under the strict liability standard, as there was no evidence that Pagel supervised her.
The ruling clarified the distinction between strict liability and negligence standards for employer liability in sexual harassment cases. Under FEHA, employers are strictly liable for harassment by a supervisor if that supervisor has direct authority over the victim. However, if the harasser is not the victim's supervisor, the employer can only be held liable if it is found negligent in addressing the harassment.
The court also noted that Doe did not adequately argue her negligence theory on appeal, leading to the forfeiture of that argument. As a result, the court upheld the lower court's decision, affirming that Wells Fargo acted appropriately in its investigation and response to Doe's complaints.
This ruling has important implications for employees and employers alike. For employees, it highlights the necessity of understanding the dynamics of workplace relationships and the importance of reporting harassment to direct supervisors. For employers, it emphasizes the need for clear policies and training regarding harassment and the responsibilities of supervisors.
The decision may also influence future cases regarding workplace harassment, as it sets a precedent for how courts interpret the relationship between alleged harassers and victims in determining liability. Companies may need to reevaluate their policies and procedures to ensure they are compliant with the standards established in this ruling.
Looking ahead, it remains to be seen whether this decision will be appealed to a higher court or if related cases will emerge that challenge the interpretation of supervisor liability under FEHA. As the legal landscape surrounding workplace harassment continues to evolve, both employees and employers must stay informed about their rights and responsibilities.