DFEH is itself the harasser

California’s Department of Fair Employment and Housing (DFEH) says it’s committed to creating safe, harassment-free workplaces. Now it’s the department itself that’s doing the harassing.

DFEH was built to mediate disagreements between workers and business owners. These days, the agency goes direct to warfare — hiring private law firms to sue California companies and funding its operations from the resulting million-dollar settlements. That strategy often deprives plaintiffs of the money you might suppose they’re entitled to.

All of this is clear in the department’s high-profile, ongoing case against Santa Monica-based Activision, the company behind such games as World of Warcraft, Call of Duty and Overwatch.

Following a lengthy investigation, DFEH sued the video game maker in July for a “pervasive

‘frat boy’ workplace culture” that DFEH says drove female employees to quit. Two months later, Activision settled a separate lawsuit with the federal Equal Employment Opportunity Commission (EEOC) by agreeing to establish an $18 million fund for alleged victims.

That’s when things got weird — California weird.

Alleging that Gov. Gavin Newsom was interfering with her lawsuit, Janette Wipper, the chief counsel for the DFEH, resigned from the case against Activision. Newsom fired her. Then Wipper’s deputy resigned, claiming interference by the governor. But a deeper read of the roster changes at DFEH suggests a department that has gone rogue and a governor trying to rein it in.

Under Wipper, DFEH tried to block the EEOC’s settlement with Activision in order to pursue its own case, which could take years to conclude. That move delays victims’ access to the $18 million fund created by the EEOC settlement and prompted the EEOC to admonish DFEH for its questionable tactics.

Why would a state agency do this? For starters, DFEH, unlike EEOC, does not pay out all settlement money to victims of harassment or discrimination. Instead, it relies on massive settlements to help cover the agency’s operations costs, including outsourcing work to private law firms.

That money motivation explains DFEH’s tendency to overreach.

In a case against Riot Games, the state stepped in to block a settlement in a case brought by the company’s employees. Outraged, the plaintiffs complained that the California agency was trying to hijack a case they had already settled — delaying by three years the payments they had won.

Activision isn’t alone in fighting the state juggernaut. Consider the case of Tesla. In February, DFEH sued the California automaker, alleging systematic racial discrimination and harassment. The state’s suit refers to the factory as “racially segregated” and a “slave ship.” In a blog post, Tesla points out that there is no real evidence in the filing: “Over the past five years, the DFEH has been asked on almost 50 occasions by individuals who believe they were discriminated against or harassed to investigate Tesla. On every single occasion, when the DFEH closed an investigation, it did not find misconduct by Tesla.”

Before filing its lawsuit, the DFEH declined several requests to provide Tesla with the specific allegations or the factual bases.

Watching a self-declared civil rights agency block or delay payments to victims would strike most people as extraordinary. But it’s a pattern of abuse at DFEH, and one that runs through the Activision case. That abuse is certainly obvious to the federal

EEOC. Early in the investigation, the feds and state regulators signed on to a work sharing agreement: While the EEOC reviewed allegations of harassment, the DFEH was supposed to review pay equity and related issues. DFEH specifically agreed that it would not investigate sexual harassment claims.

But the DFEH broke its agreement with the EEOC, violated its own procedures and filed a surprise, 11th-hour lawsuit against Activision when it learned the company was on the verge of settling with the EEOC. DFEH did not complete the independent investigation it started in order to determine the accuracy of the allegations in its lawsuit. Nor did that lawsuit focus on pay equity, but instead leveled sexual harassment allegations outside the stated scope of its investigation.

DFEH’s intervention here is unprecedented, but even more extraordinary is the EEOC’s response: It has accused state attorneys of ethical misconduct because they worked on the Activision case at the EEOC and then continued that work at DFEH without disclosing their prior work — a violation of California legal ethics rules.

California’s Fair Employment and Housing Act established DFEH and clearly states that the department shall investigate all claims and mediate disagreements — not advance immediately to lawsuits without looking for the facts and finding paths to improvement. Somewhere in its evolution, the Department of Fair Housing and Employment lost sight of the “healthy business climate” part of its mission. Today, the agency is engaged in a war against business — just one cause of the mass exodus of California companies to other states.