A California appellate court held that employees have the right under the Labor Code to discuss their wages. Accordingly,
an employer who fires an employee for participating in a group discussion about the fairness of a bonus can sue for wrongful
discharge in violation of public policy.
CALIFORNIA CASES
A. Employee Fired For Discussing Bonus Pay Structure Can Sue On Grounds Of Public Policy
In Grant-Burton v. Covenant Care, Inc., 143 D.L.R. A-1(Cal. Ct. of App. No. B151342, 7/10/02), the California
Court of Appeals held that a nursing home marketing director who was fired at least in part because she discussed
with co-workers the fairness of the company's bonus pay structure may proceed with her claim for wrongful
discharge in violation of public policy.
Covenant owns 42 skilled nursing and assistant living facilities, each of which has a marketing director supervised
by an executive director. Grant-Burton was hired as a marketing director in June of 1998. At a monthly meeting of
Covenant's seven marketing directors working in Southern California, one marketing director asked the others about
their bonus structure. Three or four described the criteria applicable to them for determining a bonus. Grant-Burton
said she did not receive any bonuses because her executive director did not believe in them. Grant-Burton also said
she did not mind not receiving bonuses because the company was paying for her continuing education classes. One
marketing director was offended by the discussion, who then told her boss, who then sent an email to other
executive directors, including Grant-Burton's supervisor, saying the marketing directors should not have been
discussing their bonuses. In turn, Grant-Burton's executive director fired Grant-Burton six days after the meeting.
Grant-Burton sued in part for wrongful discharge in violation of public policy, breach of contract, breach of the
covenant of good faith and fair dealing, and for violation of the California Labor Code Section 232. The Los
Angeles County Superior Court granted summary judgment to Covenant on these claims.
Reversing summary judgment for Covenant, the California Court of Appeals found that Grant-Burton's wrongful
discharge claim is based on public policy established by the National Labor Relations Act and the California Labor
Code protecting employees' right to discuss their compensation with each other. In this regard, the Appeals Court
noted that even though Grant-Burton and the other marketing directors may not have been members of a Union or
governed by a collective bargaining agreement, their concerted activity -- participating in a group discussion about
the fairness of their compensation -- is protected under the NLRA, which protects workers' right to engage in
concerted activities for mutual aid or protection, including discussion of wages. The court also held that California
Labor Code Section 232 prohibits employers from taking adverse action against "an employee who discloses the
amount of his or her wages." Furthermore, the term "wages" is defined to include "all amounts for labor performed
by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece,
commission basis, or other method of calculation." The Appeals Court also found that California Labor Code
Section 923 declares that it is the public policy of the state that workers must be free to engage in concerted
activities for mutual aid or protection.
Covenant argued that Section 232's reference to "wages" should be limited to compensation already earned by the
employee. However, the Appeals Court held that this argument, if accepted, would render Section 232 virtually
meaningless because under this definition, an effort by employees to obtain a pay increase would not involve wages,
and as a result, would not be covered by Section 232.
Covenant also argued that Section 232 was not triggered because the marketing directors did not disclose the amount
of their bonuses. The Court of Appeal, however, disagreed stating that an amount of wages can be disclosed without
mentioning dollars and cents. Such a disclosure necessarily includes the discussion of a pay structure that allows for
an increase or decrease in wages through the awarding of bonuses. In this regard, the Appeals Court identified that
Grant-Burton said that she did not receive a bonus at all.
Finally, Covenant argued that it had good cause to fire Grant-Burton because of her allegedly poor performance and
unprofessional conduct. However, the court found that the company failed to cite any evidence to support this
assertion. Further, the Court held that Covenant's "good cause" argument was meritless because it was evidenced
that Grant-Burton was terminated, at least in part, because she participated in the discussion about bonuses. The
Court concluded that this indeed was an unlawful reason to terminate Grant-Burton and that the burden of proof
must shift to the company to show it would have fired Grant-Burton regardless of the bonus-pay discussion.
Discusses Khajavi v. Feather River Anesthesia Medical Group, 84 Cal.App. 4th 32 (2000) in which the Court
reversed nonsuit on the ground that Bus. & Prof. Code § 2056 prohibits the termination of a physician’s
employment for advocating medically appropriate health care.
Termination of Physician Who Questioned
Medically Appropriate Health Care for Patient
May Have Violated Public Policy
Khajavi v. Feather River Anesthesia Medical
Group, 84 Cal.App. 4th 32 (2000)
Plaintiff, an anesthesiologist, alleged that his
employment with the Medical Group was terminated
after he engaged in an altercation with
a surgeon over the wisdom of proceeding with
cataract surgery on an elderly patient.The trial
court granted defendants’ motion for nonsuit as
to plaintiff’s cause of action for wrongful termination
in violation of public policy, and the jury
awarded plaintiff $26,069.80 for the Medical
Group’s breach of an oral employment contract.
The Court of Appeal reversed the nonsuit
as to the Medical Group on the ground that Bus.
& Prof. Code § 2056 prohibits the termination
of a physician’s employment for advocating
medically appropriate health care.The appellate
court held that the trial court had erroneously
speculated that the statute only applied to
disputes with health-care payors. The Court
affirmed the nonsuit that was granted as to the
defendant surgeon on the ground that the
Medical Group, not the surgeon, was plaintiff’s
employer. Rejecting defendants’ challenge to
the trial judge’s refusal to instruct the jury that
an honest but mistaken belief could have justified
plaintiff’s discharge, the Court held that
such a defense applied only to the breach of a
contract that was not for a specified term. In
this case, plaintiff alleged that his employment
was subject to an oral contract for a specified
period of two years. Finally, the Court affirmed
the trial court’s denial of the award of attorneys’
fees to plaintiff on the ground that the contract
that was allegedly breached did not contain an
attorneys’ fees provision.