Violation of Unruh Act could lead to fines
A dealer principal recently informed Powersports Business news that his dealership had “learned the hard way” about a law in California that makes “Ladies’ Nights” at dealerships unlawful. As our dealer source said he would “hate for other dealerships to knowingly walk into this same issue,” we reached out to an expert on the topic. Bottom line? It may not be worth it to host any sort of discounted “Ladies’ Night” at your dealership.
As a management-side lawyer, all too often I see businesses bitten by laws they never knew existed, sometimes with serious financial consequences. One of these below-the-radar laws is the Unruh Act, a California state law that prohibits gender-based price discounts and imposes crushing financial penalties for even the smallest violations.
The Unruh Act makes it illegal to discriminate on various grounds, including on the basis of gender. For example, many bars and nightclubs have customarily offered a lower admission price for women to encourage them to patronize the establishment. This type of gender-based price discount is often referred to as a “Ladies’ Night” promotion. The Unruh Act outlaws these gender-based price discounts, and it is not just the bars and nightclubs that fall within the parameters of this law — your California powersports dealership does too. (The Unruh Act’s reach is limited to California, but similar laws have been enacted in other states, such as Maryland, Pennsylvania and Wisconsin.)
Although the Unruh Act has wide-ranging application, for those in the retail business, the Unruh Act most often rears its ugly head when the business offers a discount to women and either fails to offer the same discount to men or offers a lower discount for men. Offer women a 10 percent discount and men a 5 percent discount? You just violated the Unruh Act.
Here is where I get your attention, though. The minimum penalty for violating the Unruh Act is $4,000 per violation. Because the penalty is per violation, every individual that is unlawfully denied that same discount is entitled to $4,000. Obviously, the numbers can add up fast depending on how much business you do. Also, the size of the discount is irrelevant. (One court case deals with a discount of just 15 cents.) The smallest differential in discounts is still subject to the statute’s minimum penalty.
The statute also includes the right to attorneys’ fees. In other words, if an individual sues you under the Unruh Act, and wins, you not only have to pay the minimum of $4,000 per violation, you also have to pay for all the time that the individual’s attorneys spent suing your business. Although hourly rates for attorneys vary wildly, it would not be uncommon for you to find an attorney claiming $250-400 per hour. And the longer you fight in court, the more his/her attorney is going to claim in attorneys’ fees. Translation: violating the Unruh Act is very expensive.
I am not done scaring you, though. Like wolves in the wilderness, there are attorneys in California that prey on businesses’ lack of Unruh-awareness and specifically hunt for these types of claims. The attorneys look for unlawful promotions by reviewing newspaper advertisements, looking for the unlawful promotions online and just generally keeping an eye out. Once they find a gender-based price discount being advertised, they have a few individuals hurry out to that particular store, buy something small so that they can manufacture a claim under the Unruh Act, and then file a lawsuit shortly thereafter. It is often easy money for them.
I am not all doom and gloom though. Although the Unruh Act is pretty cut-and-dried when it comes to prohibiting gender-based price discounts, California courts have distinguished between a genuine gift and a price-based discount. (For example, one Major League Baseball team was unsuccessfully sued when it offered a free tote-bag to women on Mother’s Day.) Be cautious though. If the intent of giving the gift is to get around the Unruh Act, then a court will still deem it a violation of the Unruh Act. So consider carefully whether the gift-giving promotion is worth the potential hassle of a lawsuit.
The Unruh Act is one of the (many) little-known laws in California that can quickly cost a business thousands of dollars. Hopefully, your awareness of the law will now help keep you out of the courtroom.
Douglas Clifford is a management-side attorney at Paul, Plevin, Sullivan & Connaughton, a San Diego-based law firm specializing in representing both private and public sector employers throughout California in discrimination, harassment, wrongful termination, wage and hour, trade secret and other employment-related claims. He can be reached at 619/744-3648 or firstname.lastname@example.org.