2025 has delivered a series of powerful—and practical—employment law decisions. These five cases carry direct lessons for every California employer, especially in areas where minor missteps can lead to major liability.

1. Iloff v. Bridgeville Properties, Inc. – California Supreme Court (2025) – “Good Faith” Requires Real Effort

This case involved a handyman who performed maintenance work on a rural property owned by Bridgeville Properties. Under an informal arrangement, the worker lived rent-free in a house on the property but received no wages, no time records, and no benefits.

When he was terminated, he filed claims with the Labor Commissioner. Both the Commissioner and the trial court held he was an employee, not an independent contractor. The trial court denied liquidated damages, finding the owners acted in “good faith.”

The Supreme Court reversed, clarifying that:

  • A good-faith defense requires evidence the employer actually researched or attempted to comply with minimum wage obligations.
  • “Good intentions” or “ignorance of the law” are not enough.
  • Employers appealing Labor Commissioner decisions must expect employees to raise Paid Sick Leave claims as part of the appeal—even if the Commissioner declined to address them.

More Facts:

  • The employer never sought legal advice or reviewed wage requirements.
  • There was no written agreement regarding housing-for-work exchanges.
  • The Court found the arrangement “informal, undocumented, and unlawful.”

Employer Lesson:
You must be able to prove compliance efforts—policies, legal consultation, documentation. Good faith now requires a paper trail.

2. Kruitbosch v. Bakersfield Recovery Services – Cal. Ct. App., 5th Dist. (Sept. 2025) – HR’s Response Can Create Liability

This case underscores how an employer’s response to a harassment complaint can itself create a hostile work environment under FEHA—even when the underlying conduct occurs off-duty.

The plaintiff, a male employee, was harassed off-duty by a female coworker, Sanders, who allegedly sent him nude photos, propositioned him for sex, offered him drugs, and even showed up at his home uninvited.

Critical Additional Facts:

  • The plaintiff immediately reported Sanders’s behavior to acting program director Stephanie Carroll.
  • HR representative Kimberly Giles was also informed that Sanders had sent nude photos, made sexual propositions, offered drugs, and appeared at the plaintiff’s residence.
  • Carroll told the plaintiff there was “not much she could do” about Sanders’s conduct.
  • That same day, Giles posted a social media video of whining dogs with the caption: “‘This is a work day at thr [sic] office … lmbo.’” This was widely understood by staff as mocking the plaintiff’s complaint.
  • Later that week, Giles sarcastically told the plaintiff: “‘I hope you don’t get no more pictures.’”
  • At no point did Carroll, Giles, or Bakersfield Recovery Services (BRS) attempt to separate the plaintiff from Sanders, investigate, or take corrective action.
  • No discipline was issued to Sanders.

The Court Held:

  • The employer’s mockery, dismissiveness, and inaction—not the off-duty conduct—created a hostile work environment.
  • FEHA liability arises when the employer’s response is itself harassing, belittling, or indifferent to an employee’s safety.
  • Other claims (retaliation, constructive discharge) were dismissed only because there was no adverse employment action.

Employer Lesson:

An employer doesn’t get to hide behind the fact that harassment occurred off-duty. What also matters is how management responds when concerns are raised. Mockery, sarcasm, or inaction can transform an external problem into an internal FEHA violation.

3. Carranza v. City of Los Angeles –California Court of Appeal (2025) – Digital Harassment, Employer Inaction, and a Difficult Judgment Call

This case involved a LAPD Captain, one of the highest-ranking female officers in the department. She learned that a topless photo purporting to be her (but it was not) was circulating among officers on duty.

Key Additional Facts:

  • Officers were seen viewing the photo in police stations and making lewd remarks.
  • Multiple officers reported the image was being shared “everywhere” in the department.
  • Carranza repeatedly asked the Department to issue a message stating the photo was not her and ordering officers to stop circulating it.
  • LAPD leadership discussed issuing the statement but ultimately declined.

Why the Employer’s Position Was Complicated:
The City argued—and the evidence confirmed—that leadership faced a genuine dilemma:

  • Issuing a department-wide notice might amplify the issue, causing 13,000 employees who had never seen the photo to now seek it out.
  • Leadership feared that a public statement might increase curiosity and worsen the situation.
  • They believed an ongoing investigation could be compromised by an all-hands notice.

Nevertheless, the Court held the employer liable because:

  • The City took no visible action to stop or condemn the conduct.
  • Carranza’s knowledge of widespread circulation alone was enough to establish a hostile work environment.
  • The environment became “severe or pervasive” when the employer refused to repudiate the conduct.

Outcome:

  • Jury awarded $4 million in noneconomic damages.
  • Court of Appeal affirmed the verdict and the attorney fee award.

Employer Lesson:
Digital harassment—including doctored images, rumors, and misinformation—creates new challenges. Even when an employer’s instinct is to avoid “drawing attention,” FEHA requires affirmative action when harassment is known.

4. Hohenshelt v. Sup. Ct. (Golden State Foods Corp.) – California Supreme Court (2025) – Arbitration Fee Deadlines Clarified

This case addressed whether late payment of arbitration fees automatically forfeits the employer’s right to arbitrate under CCP §1281.98.

More Facts:

  • The employer’s payment was slightly late due to internal administrative error.
  • The employee attempted to escape arbitration by arguing the employer forfeited its rights.
  • The trial court found forfeiture; the employer petitioned the Supreme Court.

The Supreme Court Held:

  • The FAA does not preempt California’s statute—but the statute must be read consistent with traditional contract principles.
  • There is no automatic forfeiture for late payment caused by mistake, excusable neglect, inadvertence, or non-willful delay.
  • Courts must consider the specific circumstances.

Employer Lesson:
Employers should still implement tracking systems for arbitration invoices—but this case gives relief from “gotcha” attempts to weaponize minor payment delays.

5. Noland v. Land of the Free, L.P. – California Court of Appeal, Second District (2025) – AI “Hallucinations” Lead to $10,000 Sanction

This case has drawn attention as one of the first California appellate decisions sanctioning an attorney for unverified generative AI work product.

More Facts:

  • Plaintiff’s counsel used AI to generate appellate arguments, including fake cases, fake quotations, and misstatements of law.
  • The offending attorney admitted he had not read or verified the authorities and had used AI to generate the brief.
  • The Court referred the attorney to the State Bar.

The Court’s Warning:

“[N]o brief, pleading, motion, or any other paper filed in any court should contain any citations…that the attorney responsible for submitting the pleading has not personally read and verified.”

Final Outcome:

  • Judgment for the employer was affirmed.
  • The attorney was sanctioned $10,000.

Employer Lesson:
AI-generated content is increasingly making its way into legal disputes, employee complaints, and internal reports. While it can be a good starting point Employers and counsel must verify accuracy—not assume AI outputs are reliable.

Final Thoughts

Across these decisions, a few themes stand out for California employers in 2025:

  • Documentation = defense. Courts want to see real compliance efforts.
  • Employer response matters. HR missteps often create more liability than the underlying misconduct.
  • Silence is rarely safe. Especially in digital harassment cases.
  • When in arbitration – ensure all fees are paid promptly to avoid losing ability to keep a case in arbitration.
  • AI must be supervised. Verification is mandatory.