How to Respond to Harassment and Discrimination Demand Letters
Employer defense strategies for FEHA, Title VII, and retaliation claims

Harassment and discrimination demand letters expose employers to significant liability under California's Fair Employment and Housing Act (FEHA), federal Title VII, and related statutes. These claims often seek substantial damages for emotional distress, lost wages, punitive damages, and attorney fees, making early case assessment and strategic response critical.

This guide explains how to evaluate discrimination and harassment allegations, identify affirmative defenses, conduct internal investigations, and draft responses that minimize liability while preserving settlement and litigation options. Whether facing claims of sexual harassment, race discrimination, disability accommodation failures, or retaliation, understanding your response obligations is essential.

✍️ Need to Send a Harassment/Discrimination Demand Letter? If you've experienced workplace harassment or discrimination, see my guide on How to Write Harassment Demand Letters →
Immediate response to harassment/discrimination demand letters
First 48 hours: Critical steps
  • Preserve all evidence: Issue litigation hold to HR, managers, IT. Preserve emails, texts, personnel files, performance reviews, complaints, witness statements.
  • Notify insurance: Report claim to EPLI carrier immediately. Many policies require notice within 30-60 days.
  • Do not retaliate: If employee is still employed, do not fire, demote, or change terms of employment in response to demand letter. This creates separate retaliation claim.
  • Engage employment counsel: Discrimination claims are legally complex. Retain attorney within 5-7 days to conduct investigation and draft response.
    • Retaliation trap: Many employers' first instinct is to terminate employee after receiving demand letter. This is almost always retaliation under FEHA § 12940(h) and creates liability even if underlying discrimination claim is weak. Never take adverse action without attorney review.
    Types of claims commonly alleged
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    Discrimination (protected class)
    Adverse action based on race, gender, age (40+), disability, religion, national origin, sexual orientation, pregnancy, etc. (FEHA § 12940(a)).
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    Harassment (hostile work environment)
    Severe or pervasive conduct based on protected class that creates intimidating, hostile, or offensive environment (FEHA § 12940(j)).
    ♿
    Failure to accommodate (disability)
    Refusal to provide reasonable accommodation for known disability unless undue hardship (FEHA § 12940(m)).
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    Retaliation
    Adverse action because employee complained about discrimination, harassment, or other protected activity (FEHA § 12940(h)).
    Key questions for initial assessment
    • Is employee in protected class? Age 40+, racial minority, disabled, pregnant, etc.
    • Did adverse action occur? Termination, demotion, pay cut, denied promotion, hostile environment.
    • Is there causal link? Temporal proximity between complaint and adverse action, discriminatory comments, comparators treated differently.
    • Did employee exhaust administrative remedies? Must file DFEH/EEOC complaint before suing (with limited exceptions).
    • Is claim time-barred? FEHA: 3 years from last act. DFEH complaint: 3 years. Title VII: 300 days.
    Conducting internal investigation
    Why investigate before responding?

    Conducting prompt, thorough investigation demonstrates employer's good faith, helps identify defenses, and may support affirmative defenses (Faragher/Ellerth defense to harassment claims). Investigation also uncovers facts supporting settlement evaluation.

    Investigation steps
    1
    Appoint neutral investigator
    HR professional, outside attorney, or third-party investigator. Must be impartial, not involved in alleged misconduct, and trained in employment law.
    2
    Interview complainant
    Get detailed account: who, what, when, where. Ask for witnesses, documents, and evidence. Document verbatim quotes where possible.
    3
    Interview accused harasser/discriminator
    Get their version of events. Ask open-ended questions. Don't lead or suggest answers. Document denials and admissions.
    4
    Interview witnesses
    Anyone with knowledge of alleged conduct. Include bystanders, coworkers, supervisors. Ask what they saw/heard, not conclusions.
    5
    Review documentary evidence
    Emails, texts, performance reviews, disciplinary records, HR complaints. Look for contemporaneous evidence supporting or refuting claims.
    6
    Make credibility findings
    Determine who is more credible based on consistency, corroboration, demeanor, motive to lie, contemporaneous documentation.
    7
    Document conclusions
    Written report: summary of allegations, investigation steps, findings (substantiated, unsubstantiated, or inconclusive), recommended corrective action.
    Attorney-client privilege: If investigation is conducted by or at direction of attorney, investigation report may be privileged and not discoverable in litigation. Consider having attorney conduct or oversee investigation to preserve privilege.
    Corrective action (if claims substantiated)

    If investigation confirms harassment or discrimination occurred:

    • Discipline harasser: Proportional to severity (warning, suspension, termination). Document discipline in personnel file.
    • Separate employees: Transfer one party (preferably harasser, not victim) to different department/location to prevent ongoing contact.
    • Retrain staff: Provide anti-harassment training to harasser, witnesses, and broader team.
    • Monitor compliance: Follow up with complainant to ensure harassment stopped. Document follow-up.
    Affirmative defense: Employers who can prove they (1) exercised reasonable care to prevent/correct harassment, and (2) employee unreasonably failed to use complaint procedures, may avoid vicarious liability for supervisor harassment (Faragher/Ellerth defense). Prompt investigation and corrective action support this defense.
    Common employer defenses to discrimination/harassment claims
    Legitimate, non-discriminatory reason for adverse action

    Employer must articulate lawful reason for termination, demotion, or other adverse action. Common legitimate reasons:

  • Poor performance: Documented performance issues, missed deadlines, quality problems. Must have contemporaneous documentation (performance reviews, warnings).
  • Misconduct: Policy violations, insubordination, dishonesty, harassment of others. Must have investigation and progressive discipline.
  • Business necessity: Layoff, restructuring, position elimination. Must show decision was based on legitimate business factors, not discriminatory animus.
  • Attendance problems: Excessive absences, tardiness, no-call no-show. Must have attendance policy and consistent enforcement.
    • Pretext: Even if employer provides legitimate reason, employee can prove discrimination by showing reason is "pretext" (false excuse). Evidence of pretext: inconsistent reasons, different treatment of non-protected employees, discriminatory comments, timing (fired shortly after complaint).
    Other defenses
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    Statute of limitations
    FEHA: 3 years from last discriminatory act. DFEH complaint: 3 years. Title VII: 300 days. Claims outside these timeframes are time-barred.
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    Comparator evidence
    Employees outside protected class treated same way defeats discrimination claim. Example: Terminated Hispanic employee; also terminated white employee for same misconduct.
    🛡️
    Faragher/Ellerth defense
    Employer not liable for supervisor harassment if: (1) employer had anti-harassment policy and complaint procedure, (2) employee unreasonably failed to use it.
    ⚠️
    Not severe or pervasive
    Harassment must be severe (single egregious act) or pervasive (ongoing pattern). Isolated, minor incidents don't create hostile environment.
    Disability accommodation defenses

    For failure-to-accommodate claims:

    • Undue hardship: Accommodation imposes significant difficulty or expense relative to employer size, resources, and operations.
    • Not qualified: Employee cannot perform essential job functions even with accommodation.
    • No reasonable accommodation exists: Employer engaged in interactive process but no accommodation would enable employee to perform job.
    • Employee refused accommodation: Employer offered reasonable accommodation but employee declined.
    Response strategy and settlement considerations
    Response letter components
    1
    Acknowledge and deny
    Acknowledge receipt of demand letter. Deny allegations of discrimination, harassment, or retaliation. State employer's version of events.
    2
    Assert legitimate reason
    Explain non-discriminatory reason for adverse action. Attach supporting documentation: performance reviews, warnings, investigation reports.
    3
    Cite affirmative defenses
    Invoke statute of limitations, Faragher/Ellerth defense, lack of causal connection, failure to exhaust administrative remedies (if no DFEH/EEOC complaint filed).
    4
    Summarize investigation (if conducted)
    State that employer conducted prompt, thorough investigation. Findings did not substantiate claims. Employer took appropriate corrective action (if any harassment found).
    5
    Settlement offer (if appropriate)
    If case has weaknesses, offer nuisance-value settlement (e.g., $10,000-$25,000) to avoid litigation costs, conditioned on full release and confidentiality.
    Do not admit liability: Even if settling, response letter should not concede that discrimination or harassment occurred. Settlement is to avoid litigation costs, not admission of wrongdoing.
    When to settle vs. litigate
    Settle when: Litigate when:
    • Evidence supports employee's claims (emails, witnesses)
    • Supervisor made discriminatory comments
    • Comparators treated more favorably
    • No documentation of performance issues
    • Retaliation timing is obvious (fired days after complaint)    		 • Strong legitimate reason (documented performance issues)
    • Employee has no evidence of discrimination
    • Claim is time-barred
    • Employer conducted investigation, took corrective action
    • Employee unreasonably failed to use complaint procedures
    Attorney services for harassment and discrimination defense

    I represent employers responding to harassment, discrimination, and retaliation demand letters under FEHA, Title VII, ADA, and related statutes. My practice focuses on conducting privileged investigations, identifying defenses, and negotiating settlements or defending litigation.

    How I help employers
    🔍
    Privileged investigations
    I conduct attorney-directed investigations to preserve privilege, interview witnesses, make credibility findings, and recommend corrective action.
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    Defense strategy
    I analyze claims, identify affirmative defenses (statute of limitations, legitimate reasons, Faragher/Ellerth), and assess litigation risk.
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    Response letter drafting
    I draft strategic response letters denying liability, asserting defenses, and positioning settlement negotiations favorably.
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    Settlement negotiation
    I negotiate with plaintiff attorneys to resolve claims cost-effectively, including structured settlements with releases and confidentiality provisions.
    Received a harassment or discrimination demand letter?
    Schedule a consultation to discuss your defense strategy. I'll review the allegations, conduct or oversee investigation, assess defenses, and explain settlement vs. litigation options.
    Email: owner@terms.law