Plaintiff Pamela Pollock is a customer service representative at defendant Tri-Modal Distribution Services, Inc. (Tri-Modal), a corporation that ships freight by truck. She alleges that Tri-Modal passed her over for several promotions in part because she refused to have sex with defendant Michael Kelso, Tri-Modal’s executive vice-president. We granted review to address two questions. First, when does the statute of limitations begin to run in a failure to promote case brought under the harassment provision of the Fair Employment and Housing Act (FEHA) (Gov. Code, §§ 12940, subd. (j), 12960)? We hold that such a FEHA claim accrues, and thus the statute of limitations begins to run, at the point when an employee knows or reasonably should know of the employer’s allegedly unlawful refusal to promote the employee.
Second, does Government Code section 12965, subdivision (b)’s directive that a prevailing FEHA defendant “shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so,” apply to an award of costs on appeal? The answer is yes. The Court of Appeal in this case erred in awarding costs on appeal to defendants without first finding that Pollock’s underlying claim was objectively groundless.