$90,000 Lesson for Employers: Sexual Harassment Is Now a Fair Work Act Risk
Sexual harassment is prohibited under the Fair Work Act 2009, with civil penalties and compensation available where the prohibition is breached.
Since 6 March 2023, the Fair Work Act 2009 has expressly prohibited sexual harassment in connection with work. The reforms created a new workplace law pathway alongside existing protections under discrimination law.
A recent Federal Circuit and Family Court decision shows how that risk can translate into significant financial consequences.
In Mejia v Capital City Café-Bar [2026] FedCFamC2G 468, decided on 26 March 2026, the Court ordered a café director to pay a total of $90,000 in compensation and penalties following a sexual harassment incident involving a young casual employee.
What happened in the café case?
The applicant was a 23-year-old casual employee working as a waitress at a café.
While they were alone in the workplace, the café's sole director engaged in unwelcome physical and sexual conduct towards her, including hugging her from behind, pressing against her and kissing her on the lips without consent. He also waved money at her and told her to take it.
The director admitted the sexual harassment contravention.
The Court approved orders requiring him to pay a total of $90,000, comprising:
$50,000 compensation for non-economic loss arising from the sexual harassment
$9,390 in civil penalties for the sexual harassment contravention
$30,610 in penalties for other Fair Work Act breaches, including underpayment and record-keeping contraventions.
This is the first concluded case applying the Fair Work Act's standalone prohibition on sexual harassment in connection with work.
Why this case matters for employers
The legal prohibition itself is not new. It has applied since 6 March 2023.
What is significant about Mejia is that employers and individuals now have judicial guidance on how the Fair Work Act provisions can operate in practice.
1. Sexual harassment is a Fair Work Act issue
Sexual harassment is not confined to discrimination law.
Under the Fair Work Act, sexual harassment in connection with work is prohibited. The Fair Work Commission can deal with sexual harassment disputes, including through conciliation, mediation and, where the parties agree, arbitration. If a dispute cannot be resolved, the Commission can issue a certificate allowing the matter to proceed to court.
The Fair Work Act therefore provides an additional legal pathway for workers experiencing sexual harassment.
2. The financial consequences can extend beyond the harassment itself
The $90,000 outcome in Mejia was made up of both compensation and penalties.
Importantly, not all of the $90,000 related to the sexual harassment. The Court also dealt with separate Fair Work Act contraventions involving the café's employment and payroll practices.
For employers, this is a useful reminder that workplace risks do not necessarily sit in isolation.
A sexual harassment issue may arise alongside other problems with employment arrangements, payroll, record keeping or workplace systems.
3. A single incident can be enough
Employers should not assume that sexual harassment needs to be repeated or form part of a pattern before it becomes a serious legal issue.
The Mejia case involved a single incident of sexual harassment, yet resulted in $50,000 in compensation and a $9,390 civil penalty for the sexual harassment contravention.
The focus should therefore be on preventing and responding to inappropriate conduct, rather than waiting for a pattern to emerge.
4. Prevention is a legal obligation
The Fair Work Act is only part of the picture.
The Sex Discrimination Act 1984 also imposes a positive duty on employers and persons conducting a business or undertaking to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment, sex-based harassment, sex discrimination, hostile workplace environments on the ground of sex and related victimisation.
Read 7 standards for satisfying the positive duty under Respect@Work >
The positive duty applies to organisations of all sizes, including small businesses. What is reasonable and proportionate will depend on the organisation's circumstances, including its size, nature, resources and specific workplace risks.
This means having a policy on its own is not the whole answer. Employers need practical measures that support prevention, reporting, response and ongoing risk management.
5. Business owners and directors can face personal exposure
The Fair Work Act can also create personal liability for individuals who are involved in contraventions.
In Mejia, the café's sole director was personally ordered to pay the compensation and penalties following his admitted conduct and other Fair Work Act contraventions.
For small businesses in particular, where owners and directors may be closely involved in day-to-day management, workplace compliance cannot simply be delegated or treated as an HR issue.
What should employers do now?
Employers should take a proactive approach to sexual harassment prevention and workplace compliance.
1. Review your prevention framework
Check that your organisation has:
Clear expectations about respectful workplace behaviour
Up-to-date sexual harassment and discrimination policies
Training that helps workers and leaders understand their responsibilities
Clear and accessible reporting pathways
Appropriate processes for responding to concerns and complaints.
The Australian Human Rights Commission's positive duty framework focuses on seven areas including leadership, culture, knowledge, risk management, support, reporting and response, and monitoring, evaluation and transparency.
2. Make sure your response processes are fit for purpose
When a complaint or allegation is raised, employers need a fair and appropriate response.
Depending on the circumstances, this may involve an investigation, particularly where the allegations are serious, disputed or involve senior employees.
Where independence or specialist expertise is needed, an independent workplace investigation can help provide an objective, evidence-based process.
3. Look beyond sexual harassment in isolation
The Mejia decision also involved underpayment and record-keeping issues.
Employers should consider whether their broader HR and compliance systems are working as they should, including:
A strong compliance framework should support prevention rather than simply provide a response after something goes wrong.
What does the $90,000 case mean for employers?
The Mejia decision does not create a new sexual harassment law. The Fair Work Act prohibition has been in place since March 2023.
What the case provides is an early example of how the provision can operate in practice, including the potential for compensation, civil penalties and personal liability.
It also reinforces the importance of taking workplace sexual harassment seriously and having practical systems in place to prevent, identify and respond to inappropriate conduct.
If your organisation has not reviewed its approach to sexual harassment prevention since the 2023 reforms, it is worth checking whether your policies, training, reporting pathways and response processes are still fit for purpose.
Book a confidential discovery call with Workplace Plus to discuss your workplace compliance and risk management needs.
