Labor Code Section 2802 requires an employer to indemnify an employee for all expenses and losses incurred “in direct consequence of the discharge of his duties”. Falling within the ambit of Section 2802 are litigation expenses. Depending on whether the acts complained of against an employee are within the course and scope of employment, such expenses may include the cost of a private attorney hired to defend the employee. Section 2802 also obligates an employer to indemnify the cost of any settlement or judgment arising out of employee conduct incidental to his/her employment.
In the recent case of Jacobus v. Krambo Corporation, (March 2000), the California Court of Appeal held that an employer must pay the attorneys fees of an employee who successfully defended a sexual harassment lawsuit filed by a co-worker. In defense of the civil action, Russell Jacobus personally incurred $82,000.00 in attorney fees and costs. Jacobus then sued his employer for reimbursement after Krambo refused to provide Rambo with a legal defense.
The court of appeal stated that the test for recovery is whether the employee’s alleged conduct occurred within the course and scope of employment. The court held that underlying allegations of sexual harassment by Jacobus, such as sexual bantering and revealing sexually explicit materials to a female coworker during working hours, were “simply part of the social intercourse (no pun intended) that occasionally occurs in modern office settings”. Such social interaction is considered to be incidental to the enterprise of the employer the court concluded. Accordingly, Jacobus was entitled to indemnification.
For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or daly@dalylawfirm.co.
